AI Drafter 
TaxTMI 
TaxTMI 
2024 (3) TMI 373
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....e facts and in the circumstances of the case and in law, the AO / DRP / TPO erred in making an adjustment to the Appellant's international transaction of receipt of intra-group services with its Associated Enterprises ("AEs") alleging that it does not satisfy the arm's length principle envisaged under the Act and thereby making an adjustment of INR 25,19,80,074 and in doing so have grossly erred in: 3.1. Ignoring the order passed by the Honorable ("Hon'ble") High Court wherein the Hon'ble High Court has directed the Ld. TPO to verify the evidences afresh i.e. uninfluenced by any observations made by the Hon'ble Income Tax Appellate Tribunal ("Tribunal") in its order; 3.2. Ignoring the specific directions of the Hon'ble Tribunal wherein the need and benefit test for the intra-group services had been accepted and the matter was referred to the AO / TPO only for verifying the rendition of the services and therefore, the arm's length price of the said intragroup services cannot be assumed to be Nil and the adjustment made ought to be deleted; 3.3. Ignoring the contemporaneous evidences submitted by the Appellant for each kind of intra ....
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....edless to mention that assesses shall be afforded adequate opportunity of being heard. Thus, ground No. 3 to 3.7 of the appeal are allowed for statistical purposes. Aggrieved with the order of the Hon'ble ITAT, the assessee approached Hon'ble Delhi High Court and Delhi High Court in its decision in 1TA No. 219/2019 and C.M No 10766/2019 has dismissed the assessee's appeal and being pertinent, the relevant extract of the decision of the Hon'ble High Court is reproduced below:- The only question which the assessee urged in this appeal under Section 260A of the Income Tax Act is that even while remitting the matter for reconsideration and verifying the evidence pertaining to intra-group services for the purpose of ALP determination, certain adverse observations with respect to the quality of evidence were made for Assessment Year 2012-13, which have been followed for the current year (Assessment Year 2013-14). This court has considered the submissions of the parties. It goes without saying that the observations of the tribunal for the previous years can be at best a guide. Nevertheless, in order to allay any apprehensions, the TPO is directed to carry out th....
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....ch year based on the evidences produced. Further the assessees has also cited the recent decision of the Hon'ble Tribunal in ITA No. 7960/Del/2019 and 7961/Del/2019 for A.Y. 2012-13 and 2015-16 respectively. From the perusal of the above order (para 11), it is seen that the department could not furnish its comments on the evidences furnished by the assessee with regard to Intra Group Services. Further the Hon'ble Tribunal has merely relied in its earlier order for A.Y. 2009-10. Also the Hon'ble Tribunal based its decision on the composite Agreement however no discussion on the evidence furnished for Intra Group Services has been made in the order (para 13) Thus it can be safely said that the evidence has not been examined by the Hon'ble Tribunal in the above referred recent order for the A.Y. 2012-13 and 2015-16. Moreover, as the issue in the case of assessee is mainly rendering of services accordingly it is humbly submitted that the decision of the earlier years cannot be taken as precedents because for each year rendering of services is different and it has to be established by evidences. The onus for establishing receipt of services from the Associated Ente....
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....thorities or before us to demonstrate that administrative services, indeed, were rendered by the AE and the nature and scope of such services, in our view, no useful purpose would be served in restoring the matter back to the Assessing officer for reconsidering the issue. In view of the aforesaid, we do not find any valid reason to interfere with the decision of learned Commissioner (Appeals) on the issue. However, at this stage, we must make it clear, we have come to the aforesaid conclusion based on the facts involved in the impugned assessment year, wherein, the assessee has failed to furnish cogent evidence to demonstrate that administrative services were actually received from the AE. Therefore, this decision of ours may not prejudice assessee's claim in any other assessment year, as, it has to be decided based on the evidences produce to establish the claim of receipt of services from AE. Ground no. 3 along with sub-grounds are dismissed." This decision of the Hon'ble Tribunal has also been confirmed by the Hon'ble High Court of Delhi in 145 taxmann.com 468 vide order dated 27 September 2022. Again the issue was of Intra Group Services and applicability of the decisio....
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....f Intra Group Services, assessee has to establish receipt of services with convincing evidence/details for each year, which assessee has failed to prove and accordingly its case cannot be taken as precedent from earlier years decision. Analysis of the documents /evidence furnished with regard to services rendered Before analyzing the individual documents, it is first necessary to refer to the comments of the Hon'ble 1TAT for A.Y. 2013-14 wherein reliance was made on the decision of A.Y. 2012-13. The directions of the Hon'ble Tribunal for A.Y. 2012-13 after considering the documents. In ITA No. 5578/Del/2016 are very pertinent and reproduced below:- "4.12 We have heard the rival submissions and perused the relevant material on record. This is undisputed that in the immediately preceding assessment year i.e. 2012-13, the issue of arm's length price of intra-group services has been restored back to the file of the Ld. AO/TPO by the Tribunal in Avery Dennison (India) (P.) Ltd. v. DCIT taxmann.com Trib). The finding of the Tribunal on the issue in dispute is reproduced as under: "13. We have perused the orders of the coordinate bench as well as Ho....
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....dences for rendering of the services. Therefore the assessee is required to demonstrate with credible evidence to satisfy that such services have actually been rendered by the foreign AE to the assessee for the year. Evidences of services which have been submitted before the Id TPO for the following services are as under: SI No. Relevant IGS Evidences Submitted before TPO Marketing Support Services 1. Marketing Services Support Marketing - Product Brochures Email: Tracking Commercialized End use Projects via S5.com Email: SF.corn-May figures Email: Beer in India Product Size of ADIPL and ADC Email-Coca cola India RFS Solutions for Modern Trade & Juices Email- HFS India need your help Email-Improved draft business plant Multitrip Email-2011 OGSM Email: Bisleri - Vedica Mineral Water Email: Samples of MZ2001 to each countries Email: Samsung IMD1 label MZ1081 sample Email. Need forecast for MZ 2000 and MZ 2001 for 2012 Email: Mew projects from LPM-AP Dura....
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.... found that it is a marketing broacher for labeling solutions. We failed to understand that how this marketing broacher can show that the marketing support services have been rendered by AE. Page Nos. 254 to 259 is with respect to some conference call and webinar. Further the mails at Page No. 262 to 262 are with respect to 'Beer in India' which is just the information asked with respect to some connectivity as well as communication from Executive Vice President. Page No. 263 to 280 is a product finder and similarly some of the mails are very general and pertaining to team meetings and teleconference between the two parties. Similarly we have also perused such evidence with respect to other services also as per chart produced before us. Startlingly, assessee himself has not submitted any proof with respect to accounting administrative services and management information system listed at SI No. 6 and 7 of the chart. With respect to financial services only sector revenue forecast and Q3 forecast revenue were mentioned. Therefore, on analysis of the above documents we found that there are no proper evidences led before the Id TPO that services have infact been Actually rendere....
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....vered from earlier years orders and more recently from the order passed by the ITAT on 05.06.2023 in ITA No. 7960 and 7961/ Del/2019 for A.Y. 2012-13 & 201516 is clearly not tenable because as stated above, the documents/evidences of IGS has not been completely examined. Without prejudice to above, the comments of the department on the evidences submitted are given below:- (1) page no. 59 to 213 are the sample product brouchers which has been submitted as part of IGS the brouchers have been examined and it appears that these are related to the adhesive materials /labels etc. supplied by Avery Group to various customers across the globe and it has nothing to do with the services received by the assessee company (2) From the perusal of the various international transactions undertaken by the assessee company with its AEs it is seen that assessee company transacts with its AEs on many activities like purchase/ sale of raw material/goods/services, rendering of service/reimbursement of expenses etc. and these marketing brouchers appears to be related with those services and there price /cost has already been included in those services so it is unfair on part o....
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.... (7) page 378 to 399 are the copies of financial hand book /guidelines etc. prepared by the group company. Again these are just the standard manuals prepared by the head office for requiring a common approach by all AEs and at best this is more of asking for a report in common format by holding company and cannot be treated as IGS by any stretch of imagination. (8) page no. 400 to 402, these are again standard e-mails with regard to statutory audits/ printing of pots etc. and certainly does not show any rendering of services. (9) page no. 402 to 458 , the assessee claims these as emails correspondence in relation of support services. However, on perusal these appears to be normal corporate communication between employees of two AEs and certainly does not show any rendering of services. (10) Page no. 459 to 483 these are the documents which relate to global learning and development curriculum sent by Vice President of the Avery Group. This document appears to be a training document with regard to leadership development in the group. This activity is a common HR activity undertaken by the holding company for its own benefit in all MNCs. By this activity ....
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.... segments which inter-alia involves manufacture and trading of pressure sensitive and retail branded materials, the Appellant was availing marketing and support services from its Associated Enterprises ("AEs") vide agreement dated October 20, 2010. It is further submitted that various services received under the common agreement were benchmarked on an aggregate basis using Transactional Net Margin Method ("TNMM") and out of host of services availed, the services relating to ticketing hub and VIPFS have been accepted by the Transfer Pricing Officer ("TPO") and the Dispute Resolution Panel ("DRP") in the past and in this year by the TPO itself. 2. It may also be pointed out, that this is the second round of litigation and in the first round, the Hon'ble Bench of the Income Tax Appellate Tribunal ("Hon'ble Tribunal") vide order dated June 27, 2018 had remanded the matter back to the file of the TPO by holding that the facts of AY 2013-14 are similar to AY 2012-13 and thus following the order of the AY 2012-13, the matter is remanded back with the specific directions that the TPO shall not go into the need and benefit test for the intra group services ("IGS") and only verify t....
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....ellant. 7. In the written submissions dated October 13, 2023, Ld. Departmental Representative ("Ld. DR") has again tried to demonstrate that evidence is general in nature and therefore, the Nil ALP determination deserves to be accepted. The Ld. DR has also submitted that the Hon'ble Tribunal orders for AY 2012-13 and 2015-16 should not been followed as in that case, the Ld. DR was not able to rebut the evidence brought on record by the Appellant. 8. In this regard, it is submitted that Ld. DR has not appreciated the order of the Hon'ble ITAT, Hon'ble High Court and the Hon'ble Apex Court in letter and spirit and has merely tried to distinguish the same without any basis. For the sake of repetitiveness, it may again be highlighted that the sum and substance of the order of the Appellate Authorities, i.e. ITAT, High Court and Supreme Court is that; (a) it is a composite contract under which the services were being rendered and the same cannot be dissected and accepting part services and determining the ALP for other part as Nil; (b) the services were being rendered right from AY 2007-08 and therefore, in the present year the different view may not be taken stati....