TaxTMI 
TaxTMI 
2025 (5) TMI 493
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....einafter referred to as the Ld. AO) for AY 2020-21. 2. Heard and perused the record. The Appellant is mainly engaged in the business of designing, fabricating, manufacturing and supply of equipment plants & machinery for cement manufacturing companies. During FY 2019-20, the Appellant entered into various international transactions with its associated enterprises ('AEs'). All other international transactions of the Appellant have been accepted to be at arm's length and no adverse inference has been drawn by the TPO, except for the two and for which the tax authorities below have disregarded the economic analysis carried out by the Appellant in relation to the following two transactions and made the following adjustment: 2.1 Availing o....
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....ain quality management services in the nature of global quality management, global sales support, global IT CAD etc. 2.3 As per the inter-company arrangement for providing central services, the AE incurs such costs for all Group companies and subsequently allocates them to the respective service recipients including HW India. The amount paid/ payable by HW India in respect of these services represents the proportionate share of HW India in the total cost incurred by the AE in providing these services plus 5% profit mark-up applied on internal cost while third party costs are charged on cost to cost basis. The transaction value was Rs 155,728,455/-. Analysis carried out in the TP documentation was Method: Cost Plus Method ('CPM')Tested Pa....
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.... by Ld. TPO Allowed by the Hon'ble 2015-16 Not picked up for scrutiny 2016-17 Allowed by Ld. TPO Allowed by the Hon'ble ITAT 2017-18 2018-19 2019-20 Not picked up for scrutiny 5. Then, in the Assessee's own case for AY 2014-15, AY 2016-17.2017-18 and 2018-19 the co-ordinate benches have considered the issue of mark and have held that the mark-up charged by the AE for the services provided should be allowed and deleted the entire adjustment made on this account. The relevant part of the decision in AY 2014-15, paras 5 to 8, are reproduced below:- "5. The markup of 4% and 5% has been disallowed by the TPO and accordingly enhanced the income of the assessee based on the ....
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....antum of payment for the services, it is seen that from the total cost of services, cost of stewardship activity services/duplicate services is first removed. The remaining cost is allocated to different organizations of the group. The assessee pays the cost of services allocated to it plus ore-agreed mark up. In the course of hearing, the assessee was asked to justify the mark up. However, no detailed justification was provided in this regard. It was only stated that since the AE was providing the services, it was entitled to earn some margin on the same. However, as discussed earlier, while the primary beneficiary of the services is the assessed, there are also some incidental benefits accruing to the group. The parent company gets benefi....