TaxTMI 
TaxTMI 
2025 (8) TMI 436
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....6.2022. During the course of assessment proceedings, the case was referred to the Transfer Pricing Officer (TPO) to determine the arm's length price of international transaction undertaken by the assessee with its AE. The TPO passed an order u/s. 92CA of the Act on 23.10.2023 wherein, he proposed downward adjustment of Rs. 1,42,01,590/- being the arm's length price of the salary paid to global sales personnel. The reasoning of the TPO was that no evidence was produced by the assessee with regard to what are the actual services rendered by the global service personnel which demands salary paid separately. On receipt of the TPO's order, the AO framed the draft assessment order u/s. 143C(1) of the Act on 29.12.2023 incorporating the TP adjustment proposed by the TPO. Against the draft assessment order, assessee filed objections before the DRP. The DRP rejected the objection vide its order dated 09.09.2024 passed u/s. 144C(5) of the Act. The DRP reiterated the findings of the TPO that no reliable documentary evidence has been provided with regard to the actual services rendered by the global service personnel. In other words, the DRP was of the view that assessee has not been able to d....
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.... 213 (Delhi); SLP filed by Department dismissed by SC (15244 of 2017) ii. Bostik India (P.) Ltd. [2022] 140 taxmann.com 153 (Bangalore - Trib) 5. Alternatively, it was submitted that the TPO/DRP is not justified in determining the ALP of cross charge as nil. In support of the alternative submission, the Ld.AR relied on the following case laws: i. EKL Appliances Ltd., 209 Taxman 200/345 ITR 241(Delhi) ii. Fosroc Chemicals India (P.) Ltd [2016] 69 taxmann.com 43 (Karnataka) iii. Tudor India (P.) Ltd., [2019] 111 taxmann.com 450 (Gujarat) 6. The other alternative contention raised by the Ld.AR was that the TPO/DRP has considered the salary cross charge both paid as well as received by the assessee company without netting off and same is evident from the documents such as the financial statements at page 50 and TP study at page 235 of the paper- book. 7. On the other hand, the Ld.DR supported the finding of TPO/DRP that assessee has not been able to provide any evidence as regards the actual services rendered by global service personnels, which demanded salary payment separately. 8. We have heard rival submissions and perused the material....
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....directions dated 09.09.2024) wherein it was specifically submitted that assessee had an operating margin from provision for software products sales and services which was held to be at arm's length price by the TPO even after including this salary cost allocation. Therefore, adjustment on the amount inclusive of the cost sharing invoice raised by the assessee is bad in law. The DRP in its directions has not specifically dealt with the above objections raised by the assessee. The Hon'ble Delhi High Court in the case of Magneti Marelli Powertrain India (P) Ltd., vs. DCIT reported in 368 ITR 469 (Delhi) had held that when assessee had used TNMM method to benchmark all its international transaction, it is not open to TPO to select only one element therein to an entirely different method namely CUP method in that case. The relevant findings of the Hon'ble Delhi High Court read as follows:- "17. As far as the second question is concerned, the TPO accepted TNMM applied by the assessee, as the most appropriate method in respect of all the international transactions including payment of royalty. The TPO, however, disputed application of TNMM as the most appropriate method for the p....
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....ce made in intimation u/s. 143(1) of the Act. 12. Following adjustment / disallowance has been made in the intimation issued u/s. 143(1) of the Act:- a) Non grant of tax credit of the amalgamating company available to the appellant upon merger - Rs. 6,34,72,859 b) Additional Tax Credit to the current PAN - Rs. 5,53,960 c) Disallowance u/s 43B in relation to Leave encashment - Rs. 56,65,000 d) Professional tax collected and paid - Rs. 11,78,360 e) GST - Rs. 1,99,69,850 f) Kerala Food Cess - Rs. 20,000 g) Disallowance u/s 41 - Rs. 52,06,712 13. The Ld.AR submitted that assessee had filed a detailed rectification application dated 12.01.2022 against intimation issued u/s. 143(1) of the Act and the same is yet to be disposed off. It was submitted that non-consideration of returned income in determining the assessed income ought to have been adjudicated by the DRP. In support of his contention, the Ld.AR relied on the following case laws:- i. Aditya Birla Housing Finance Limited, ITA No.4609.4610/Bang/2024 ii. Weir Minerals India Private Limited, IT(TP)A No.1786/Bang/2024 iii. Ariba Technolog....
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....t Rs. 23,29,62,420/- solely relying on the adjustment made by the AO/CPC in the intimation made under section 143(1) of the Act. In the impugned Assessment Order passed under section 143(3) of the Act, there is no independent discussion as regards the income assessed at Rs. 23,29,62,420/-. The relevant portion of the assessment completed under section 143(3) of the Act dated 12.02.2021 reads as follows: "4. In response to the notice, the assessee responded via e- proceedings and submitted the details called for. Details filed are examined and the income is assessed at Rs. 23,29,62,420/ as per 143(1)(a) of the Act." 8. Section 246A specifically provides for an appeal as against intimation issued under section 143(1) of the Act. In the instant case, total income has been assessed at Rs. 23,29,62,420/- as per the intimation passed under section 143(1) of the Act. Therefore, the cause of action for the assessee arises from the intimation issued under section 143(1) of the Act and appeal ought to have been filed as against the same. The assessment completed under section 143(3) of the Act merely adopts the assessed figures in the intimation order passed under sec....