TaxTMI 
TaxTMI 
2023 (9) TMI 1210
X X X X Extracts X X X X
X X X X Extracts X X X X
....red by SAP, the assessee undertakes marketing and promotion activities. It provides support to the subscribers of CRS like training to users, computer hardware support, third party communication lines, help desks support, etc. The assessee company gets compensation for its services in accordance with the provisions of the sub distribution agreement and addendum agreement entered into by it with SAP. During the period relevant to the assessment year under appeal, the assessee inter-alia entered into international transactions with its Associated Enterprise (AE) with respect to provision for marketing services. The assessee applied Transactional Net Margin Method (TNMM) as most appropriate method to benchmark the transactions. The assessee selected six comparables to benchmark the transaction. The Transfer Pricing Officer (TPO) vide order dated 11.12.2017 rejected all the comparables selected by the assessee and introduced fresh set of five comparables as under: Sr. No. Name of the Company OP/OC (%) 1 Marketing Consultants and Agencies Limited 8.75% 2 Killick Agencies and Marketing Limited 23.02% 3 Axis Integrated System Ltd. 17.32% 4 B V G I....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he Ld. Counsel submits that in immediate preceding year that is AY 2013-14, the TPO had made adjustment for identical reasons. The Tribunal in appeal by the assessee in ITA No. 7306/Mum/2017 for AY 2013-14 vide order dated 14.07.2021 deleted the adjustment. 4.2. In respect of disallowance of foreign exchange loss of Rs. 25,53,09,140/-, the Ld. Counsel submits that the assessee is consistently following same accounting principles and tax treatment for foreign exchange loss/gain over the years and the same has been accepted by the tax authorities in the past. The addition on account of foreign exchange loss was made in assessee's own case for AY 2009-10 and 2012-13. For identical reasons foreign exchange loss has been disallowed in AY 2014-15. The Tribunal in appeal of the assessee for AY 2013-14 (supra) deleted the disallowance. 4.3 No submissions were made by the Ld. Counsel for the assessee with respect to ground no. 2.1 to 2.6 and 2.8 to 2.10. 5. Per contra, Shri Vinod Tanwani representing the Department vehemently defended the impugned order. The Ld. Departmental Representative (DR) submitted that the assessee's objections with respect to selection of comparables were c....
X X X X Extracts X X X X
X X X X Extracts X X X X
....count of functional dis-similarities and also in the absence of segmental details for marketing support services. 9. The Revenue has not been able to distinguish the findings of the Tribunal in the case of assessee for AY 2013-14. The statement made by the Ld. Counsel for the assessee that there has been no change in the functions/business model of aforesaid comparables in the impugned assessment year remains unrebutted. Thus, following the decision of Co-ordinate Bench in assessee's own case and for parity of reasons, we direct the AO to exclude Apitco Limited, B V G India Limited, Axis Integrated Systems Limited and Killick Agencies and Marketing Limited from the list of comparables. Hence, ground no. 2.7 of the appeal is allowed, pro-tanto. 10. The assessee has raised additional grounds of appeal seeking direction to the AO for including Quadrant Communication Limited in the list of comparables as per the directions of DRP. We find that the DRP while deciding the issue of inclusion/exclusion of comparables has accepted assessee's comparable i.e. Quadrant Communication Limited to be valid comparable for assessment year 2014-15 as well. However, while passing the impugned as....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rice and has neither determined the arm's length price of marketing service fee separately nor has suggested any separate addition on account of the difference of Rs. 2 crore between the incentive paid to travel agent and the marketing support fee received from the AE. Rather, it is the Assessing Officer who while framing the draft assessment order has made a separate addition of Rs. 2 crore on the ground that the assessee should have received the amount of Rs. 2 crore from the AE as against the total incentives paid to travel agents. Nothing has been brought on record by the Departmental Authorities to demonstrate that the assessee has actually received the amount of 2 crore from the AE The Department has also not disputed or doubted the payment of incentives of Rs. 56,13,02,874 to the travel agents. That being the case, the addition made purely on presumption and surmises cannot be sustained. Moreover, it is evident from the order of the DRP that relying upon their own decision in assessee's case for assessment year 2010-11, they have upheld the disallowance Notably, while deciding the appeal of the assessee on identical addition of Rs. 2 crore on account of difference pa....