TaxTMI 
TaxTMI 
2025 (6) TMI 1317
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....by the assessee are in the nature of duplicate services or incidental benefits which are in nature of share holder services and hence not chargeable to the assessee?" 2. "Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in not considering the decision of Supreme Court in M. M. Ipoh & Ors. vs Commissioner of Income-Tax (1968 AIR 317, 1968 SCR (1) 65) which laid out that principle of res-judicata doesn't apply to income tax proceedings and in holding that since no addition is made on the issue of payment of management support services in subsequent years hence the addition in the relevant year should also be deleted. 3. "Whether on the facts and circumstances of the case and in law, Ld. CIT(A) erred in deleting the adjustment in respect of payment of Global Corporate Client Services without considering the findings of the Ld. TPO based on the fact and evidences produced before her which states that 50% of the services are of nature which are not chargeable?" 4. "Whether on the facts and circumstances of the case and in law, Ld. CIT(A) erred in deleting the disallowance made by the AO u/s 14A disregarding the fact t....
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....g a total loss of Rs. 12,13,63,549/- under normal provisions of the Act and declared a book profit of Rs. 30,38,58,872/- under section 115JB of the Act. During the year under consideration, the assessee entered into international transactions, inter alia, pertaining to the payment of Management Service Fees and payment of Global Client Management Fees with its AE, i.e., ISS World Services A/S, Denmark. As per the Transfer Pricing Study Report, under the international transaction pertaining to payment of Management Service Fees, ISS World Services A/S, Denmark, on need basis provided the assessee the management advice and assistance in various fields of operations such as training, human resource management, legal matters, risk management, marketing and communication, mergers and acquisitions treasury, procurement, financial matters and strategic planning. By applying the Transactional Net Margin Method ("TNMM") as the most appropriate method, the assessee benchmarked the aforesaid two international transactions by considering its AE, i.e., ISS World Services A/S, Denmark, as a tested party. The assessee selected the comparable companies operating in the European Region providing Ma....
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...., the TPO, after considering the documents furnished by the assessee, held that these documents/evidence do reveal that the central team has indeed provided the service and training program for local manpower with reference to the expectation of the global clients. The TPO further held that these services have benefited the assessee in rendering quality services to the key clients and meeting their expectations. Accordingly, 50% of the amount paid by the assessee towards Global Client Management Fees was accepted, and the balance 50% was proposed to be disallowed. Accordingly, in respect of the international transactions pertaining to the payment of Management Service Fees and payment of Global Client Management Fees, the TPO proposed the total transfer pricing adjustment of Rs. 7,01,46,908/-. The AO passed the assessment order on 31.01.2018 under section 143(3) r.w. section 144C(3) of the Act, inter alia, in conformity with the arm's length price so determined by the TPO. 8. The learned CIT(A), vide impugned order, after noting the fact that similar international transaction pertaining to the payment of Management Service Fees undertaken by the assessee with similar AE in subse....
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....aining to the payment of Management Service Fees and treated the arm's length price of the international transaction to be Rs. Nil by applying "rendition test" and "benefit test". 12. As per the assessee, ISS World Services A/S, Denmark, has best practices such as training modules, sponsor templates, etc., developed over a period of time, process knowledge, trained manpower and relevant infrastructure, which is used by the assessee to support its business operation and increase customer satisfaction. In order to prove the receipt of services from AE and the benefit derived from these services, the assessee furnished copy of various correspondences, slide desk, etc. During the hearing, in order to substantiate the aforesaid aspect, specific reference was made by the learned AR to the following summary of evidence, which forms part of the paper book from pages 985-991: - Sr. No. Evidences submitted Discussion in the Email Benefits derived by the Appellant 1. Operational, Risk Management and Procurement 1. Emergency Response Plan This Emergency Response Plan ensures that the Appellant has systems and processes in place to manage incidents in an effective man....
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....roviders ("Suppliers") have to follow with respect to responsible social, environmental and ethical practices while providing the services / products. And the self-assessment tool helps the supplier to track whether they have complied with the said guidelines or not. ISS Supplier code of conduct along with Supplier self- assessment tool containing key principles and requirements which the suppliers have to follow while providing the services/products. The self-assessment tool helps the Appellant evaluate the vendors and in improving the vendor selection process, (page 478 to 480 of the paper-book) 5 ISS Sponsorship Guidelines These guidelines lists down the definition of sponsorship, types of sponsorship, eligibility of sponsorship to ISS, things to be considered before entering into sponsorship, choosing the right sponsorship, activating and branding the sponsorship. ISS Sponsorship Guidelines providing guidance on selection of sponsors. This helps the Appellant reduce marketing efforts and choose the right sponsorship. Further, it also helps to keep sponsorships in line with ISS Group's business platform, brand strategy and marketing efforts, (page 481 to 498 o....
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.... facilitates the appellant in establishing common minimum requirements for use of and access to ISS information resources in a secure way thereby reducing the risk of operational IT failure. The said policy also strengthen confidentiality, integrity and availability of data and systems. Access to highly experience and technical IT resources without having to invest in an in-house dedicated IT team. Thus, reduction in downtime and idle time cost, (page 534 to 592 of the paperbook) 3. Human Resources 10 Apple Awards ISS awards its employees on monthly basis for performing exceptionally well in their respective areas. The nomenclature used by ISS for such award is Apple awards. The publication issued by ISS which specifies the criteria for nominating an employee for such awards is attached herewith. Further, the certificates issued to employees on sample basis are also attached herewith. The Apple Award Programme entail the following: * Employees learn how the services they perform create value for their customers * Ongoing recognition cards given by customer, manager or colleagues to ISS employees * Monthly awards in each business unit and yearly awards at ....
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....data flow from NAV to HFM, ways to use rolling budgets in the reports etc. (page 726 to 763 of the paperbook) 15 Email from Seren Thimmer - PM Spend Visibility Project - Group Procurement This email is in relation to sharing the minutes of the meeting held with respect to spend visibility information session. The purpose of the business validation is to ensure that the data available with the ISS World in their respective software (Sievo) matches with the data ISS Facility has in local ERP The said matching exercise will be carried out as part of the project and will define how ISS Facility's data is handled by the group's software moving forward. Further, for appellant, the said process will make the validation task easier and more focused, (page 764 to 765 of the paperbook) 16 1SS Tax Strategy and Policy This policy helps ISS to comply with applicable rules and regulations in the countries where ISS operates. Group Tax is responsible for the overall tax position of the ISS Group, and Group Tax must understand relevant tax rules (including EC Law) in countries where ISS operates. Group Tax continuously and proactively reviews existing and planned operations to....
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....e appellant needs to comply with on a day-to-day basis. Further, it also facilitates checking of documents required to be maintained by the Appellant and thereby saves lot of time and cost involved in doing this research, (page 805 to 824 of the paperbook) 20 ISS Acquisition manual The purpose of the said is to systematise the acquisition process, the methods and the reporting used in ISS. This guideline provides proper foundation for acquisition purpose. Further, the said manual provides a step wise procedure to execute an acquisition process. The ISS Group has gained comprehensive experience in acquisitions and integration of acquired companies into the ISS organisation. It is important that this knowledge and experience can be distributed, shared and utilized through-out the group, (page 825 to 832 of the paperbook) 21 ISS Competition policy The said policy provides - * The prohibitions against anti-competitive agreements and abuse of a dominant position which also contains a list of the basic Do's and Don'ts. * The Merger/Acquisition Control rules, which govern mergers and acquisitions that have to be notified to the competition authorities and app....
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....therefrom. 14. Further, from the perusal of the orders passed by the TPO for assessment years 2015-16 to 2021-23, forming part of the paper book from pages 191-353, we find that similar international transaction pertaining to payment of Management Service Fees undertaken by the assessee with its AE was accepted by the TPO and no adjustment was made. We also find that in immediately preceding assessment year, i.e., 2013-14, the coordinate bench of the Tribunal in assessee's own case in ISS Facility India Private Limited vs. ACIT, in ITA No.411/Mum/2018, vide order dated 01.04.2022, deleted the similar transfer pricing adjustment in respect of international transaction pertaining to payment of Management Service Fees. Thus, once availing of various services from the AE and its benefit has been duly substantiated with documentary evidence by the assessee, we do not find any infirmity in the findings of the learned CIT(A) in deleting the Transfer Pricing Adjustment on account of payment of Management Service Fees. Accordingly, the findings of the learned CIT(A) on this issue are upheld. 15. In the present case, it is an undisputed fact that ISS World Service A/S, Denmark, has cer....
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....ent assessment years has partially accepted the assessee's submission of rendition of service by AE and made ad-hoc adjustment without applying any prescribed method under section 92C(1) of the Act. Further, it is also unrebutted that receipt of service from AE has resulted in growth of assessee's business as the revenue and profitability has increased over the years. The Revenue could not controvert any of the facts nor could place any material on record to the contrary to suggest that Revenue is aggrieved by part relief granted by the DRP. We are s in agreement with the findings of co-ordinate bench of the Tribunal in case of M/s Lintas India Pvt. Ltd. (supra), which in turn has followed the decision of Hon'ble Jurisdictional High Court in the case of CIT v. Johnson & Johnson Ltd. in ITA No. 1030 of 2014. The relevant extract of the order in the case of M/s. Lintas India Pvt. Ltd. reads as under: "8. We have heard the rival submissions and perused the materials available on record. It would be pertinent to address the preliminary issue raised by the Id. AR before us that the Id. TPO had failed to apply any method while determining the ALP at nil for GIS servi....
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....alia held that restricting the royalty paid on account of technical know how to 1% was arbitrary and adhoc. Inasmuch as, there were no reasons justifying the restriction of the technical know how royalty paid by the respondent assessee to its AE at 1%. Moreover, it also records the fact that the TPO did not determine the ALP of the technical know how royalty by adopting any of the methods prescribed under Section 92C of the Act. (c) Being aggrieved, the Revenue carried the issue in appeal to the Tribunal. By the impugned order dated 20th August, 2013 the Tribunal dismissed the Revenue's appeal inter alia upholding the order of the CIT(A). d) We find that the impugned order of the Tribunal upholding the order of the CIT(A) in the present facts cannot be found fault with. The TPO is mandated by law to determine the ALP by following one of the methods prescribed in Section 92C of the Act read with Rule 10B of the Income Tax Rules. However, the aforesaid exercise of determining the ALP in respect of the royalty payable for technical know how has not been carried out as required under the Act. Further, as held by the CIT(A) and upheld by the impugned order....
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....f Rs. 54,26,384/- from its investments in mutual funds. While filing its return of income for the assessment year, the assessee offered to tax the aforesaid dividend income. However, despite the aforesaid facts, the AO vide assessment order computed the disallowance of Rs. 50,38,950/- under section 14A r.w. Rule 8D of the Rules. In its appeal before the learned CIT(A), the assessee raised a ground claiming exemption of the aforesaid dividend income earned from the investment in mutual funds. However, the learned CIT(A), vide impugned order, dismissed the ground raised by the assessee by placing reliance upon the decision of the Hon'ble Supreme Court in Goetze India Ltd. vs. CIT, reported in (2006) 284 ITR 323 (SC), and held that since the assessee has not claimed the exemption by filing the return of income, the fresh plea of the assessee cannot be accepted. Further, since the assessee had already offered the dividend income to tax while filing its return of income and no exemption was claimed by the assessee, the learned CIT(A), vide impugned order, deleted the addition made by the AO under section 14A read with rule 8D of the Rules, by following various judicial pronouncements. B....