TaxTMI 
TaxTMI 
TaxTMI 
2023 (1) TMI 1310
X X X X Extracts X X X X
X X X X Extracts X X X X
....from records are; the assessee is a 100% subsidiary of Brink's Security International Inc. USA and Brink's Dutch Holding BV. Thus, the assessee is part of Brink's Global Services which provides global risk management and secure logistics for high valuables viz. diamonds, jewellery, precious metals, securities, currency, hi-tech devices, etc. During the period relevant to the assessment year under appeal, the assessee carried out various international transactions with its overseas Associated Enterprise (AE). The international transaction which is subject matter of dispute is management fees paid by the assessee to its AE Brink's Inc. USA. The assessee had paid management fees aggregating to Rs.4,30,77,526/- during the relevant period. To be....
X X X X Extracts X X X X
X X X X Extracts X X X X
....bmits that the assessee has entered into management and technical services agreement dated 01/01/2011. The assessee has paid management fee in accordance with the aforesaid agreement for the services rendered by its AE. The facts in the instant case are identical to the facts in assessment year 2012-13 and 2013-14. The reasons for making adjustment on account of payment of management fee is also identical. The TPO in para 7.2 of the order has mentioned that the facts of the case and the submissions made during the year are identical to previous year. Similarly, the DRP in para 2.5 of the directions have recorded that the assessee's claim with respect to management services is similar to assessment year 2013-14 and the method of benchmarking....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nd perused the material on record. We find merit in the contention of the Appellant that the Tribunal has, while disposing of appeal for Assessment Year 2012-13, rejected the basis on which addition/transfer pricing adjustment was made by the TPO. The relevant extract of the aforesaid decision of the Tribunal [ITA No. 343/Mum/2017, Assessment Year 2012-13, Pronounced on 27.12.2019] read as under: "3. Before us, the Ld. counsel for the assessee submits that the assessee has...... During the course of hearing the Ld. counsel relies on the order of the Tribunal in the case of Kellogg India Pvt. Ltd. v. DCIT (ITA No. 2866/Mum/2014) for AY 2009- 10; M/s CLSA India Pvt. Ltd. v. DCIT (ITA No. 1182/Mum/2017) for AY 2012-13; Firmenich Aromatic....
X X X X Extracts X X X X
X X X X Extracts X X X X
....beginning, for now over seven years. In all three previous assessment years i.e. from AY 2009-10 to 2011-12, wherein its international transactions with AEs were in the scrutiny, the assessments have been completed by accepting the transactions with AE being at arm‟s length holding TNMM as the most appropriate method. The assessee had submitted before the TPO that its operating revenue is Rs.168.88 crores and the operating profit is Rs.21.78 crores; the profit level indicator i.e. OP/OR works out to 12.90% for the year under consideration. The assessee submitted working of it before the TPO. Also it submitted the arithmetic mean of the profit level indicator of the comparables which worked out to 4.86% for the year under consideration....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y rejected the TNMM followed by the assessee in respect of management fees paid/payable by it to its AE and proposing an adjustment under CUP without benchmarking with comparable uncontrolled transactions. Also the TPO has resorted to an ad-hoc unilateral pricing of management fees, disregarding the facts of the case. In view of the above factual scenario and position of law, we delete the addition of Rs.3,83,75,622/- made by the AO as adjustment on account of transfer pricing. 6. In the result, the appeal filed by the assessee is allowed." (Emphasis Supplied) 6. On perusal of the above order of the Tribunal, it is apparent that for the Assessment Year 2012-13, the TPO had made transfer pricing adjustment by determining ALP of Managem....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e present case the Ld. TPO has not followed any prescribed methods and made the transfer pricing adjustment by estimating the man hours and the cost of service per hour. We therefore, find merit in the contention of the Ld. counsel that any ad-hoc determination of arms length price by the Ld TPO u/s section 92 de-hors section 92C(1) of the Act cannot be sustained. The contention of the Ld. counsel is further supported by the judgment of the Hon'ble jurisdictional High Court in the case of Commissioner of Income Tax vs. Merck Ltd. 389 ITR 70 (Mum). In the said case the Hon'ble High Court decline to interfere with the findings of the Mumbai Bench of the Tribunal that the transfer pricing adjustment made by the TPO without following on....