TaxTMI 
TaxTMI 
2023 (1) TMI 1310
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....e 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 benchmark the transaction the assessee relied on "other method". The Transfer Pricing Officer (TPO) following the decision in assessment year 2012-13 and 2013-14 applied CUP as the most appropriate method and thus, made adjustment of Rs.4,08,27,526/-. The assessee filed objections before the Dispute Resolution Panel (DRP) assailing the adjustment. The DRP observed that similar issue was decided by the DRP in assessment year 2012-13 and 2013-14 and had rejected the claim of assessee. For the similar reasons, the DRP dismissed the objections raised in the impugned assessment year as well. The Assessing Officer passed the order in line with the direction of DRP, hence, the present appeal. 3. Shri Farrokh V Irani appearing on behalf of the assessee submits at the outset that the issue raised in present appeal is identical to the one adjudicated by the....
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....71/Mum/2017(supra) decided the issue in favour of assessee by placing reliance on the decision of the Tribunal in assessee's own case in ITA No.343/Mum/2017 for assessment year 2012-13 (supra) and on the decision rendered in the case of CLSA vs. DCIT in ITA No.1182/Mum/2017 decided on 16/01/2019. For the sake of completeness the relevant extract of the Tribunal order in ITA No.7071/Mum/2017 for assessment year 2013-14 is reproduced herein below: "5. We have considered the rival submissions and 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.....
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....uring the year under consideration, the assessee had submitted before the TPO its working, calculation, allocation, method, rational and business expediency. In such a situation, the TPO should not have summarily rejected the TNMM in respect of management fees paid/payable by the assessee to its AE and proposed an adjustment of Rs.3,83,75,622/- under the CUP method, without benchmarking with comparable on a separate basis. It is further stated that the assessee has failed to show that specific and distinct services were rendered by uncontrolled transactions. In the instant case, the TPO has resorted to an ad-hoc unilateral pricing of management fees, disregarding the facts and circumstances of the case. In the case of Kellogg India Pvt. Ltd. (supra), the Tribunal has rightly held that: "Even assuming that the benchmarking done by the assessee was not correct, the Transfer Pricing Officer should have benchmarked the royalty payment by applying any of the prescribed methods. However, without applying any prescribed method he has simply determined the arm‟s length price of royalty payment at Nil. The aforesaid approach of the Transfer Pricing Officer i....
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....e prescribed by the Board. Hence, the TPO is bound to determine the ALP by following one of the prescribed methods, however, we notice that in the 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 one of the prescribed methods makes the entire transfer pricing adjustment unsustainable in law. The grievance of the revenue was that the consideration paid to the AE is only attributable to the services received / availed. 23. In the light of the facts of the case, provisions of the Law and the ....