2025 (10) TMI 572

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....ement Charges (GAM). The learned counsel for the assessee submitted that the impugned downward adjustment made by the ld.TPO has been erroneously confirmed by the Ld.DRP, arbitrarily and without any basis. 3.0 At this stage we deem it appropriate to briefly examine the brief factual matrix of this case. The assessee company is a subsidiary of Haworth Inc, USA and is engaged in manufacture and sale of office furniture and modular workspaces. The Ld.TPO accepted assessee's adoption of TNMM method as the most appropriate method for determination of the ALP. All the international transactions were accepted as at arm's length save the payment of GAM. The TPO separately benchmarked the payment of GAM holding other method as the most appropriate method. The learned counsel for the assessee informed that out of the total management charges of Rs. 8,01,57,656, the Ld.TPO disallowed only the payment of GAM. In response to queries of Ld.TPO, as to why the ALP for the impugned management charges service charges be not treated as Nil, the appellant had provided detailed submissions along with evidences deemed necessary for the purpose. However, the Ld.TPO rejected the assessee's contentions ....

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....not paid any marketing commission separately in relation to these support services. The Ld AR argued that even if the assessee had engaged the services of a third party, they would have paid a minimum commission of 5% which translates to Rs. 5.67 crores when compared with the total revenue but instead the assessee has paid only Rs. 5.08 crores which is lesser. 3.2 The Counsel for the appellant assessee placed reliance on the Judicial Precedents including those of this tribunal in the case of AVO Carbon India Private Limited (IT(TP)A No.82/Chny/2024), Bonfigioli Transmissions Private Limited ITA No.2977 / Chny / 2017 to argue that the GAM charges are justified payments to its AEs. 4.0 Per contra, the Ld.DR submitted that the Appellant has not undertaken consistent approach as they have used search under ORBIS database for Ay 2016-17 & 2017-18 and for AY 2020-21 they undertaken aggregation method. It was argued that there was lack of consistency in the approach of the assessee. Further, the Ld DR relied on the jurisdictional Tribunal decision in the case of AB Mauri India Pvt Ltd in IT(TP)A.No.84 to 86 of 2018 and International Flavours and Fragrance Pvt Ltd in IT(TP)A.No.58 of....

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.... derived by demonstrating that around 50% of its total revenue was derived from the support received from the AE. Further, the mark up of 5% placed by assessee and its group companies also appears to be more or less reasonable and in fact the TPO in AY 2016-17 has undertaken a benchmarking analysis and concluded that the mark-up of 5% is at arms length. It has also been noted that the assessee has not paid any commission separately. It appears that the Assessee instead of paying marketing commission it is paying GAM Charges. We note that the substance over form of the transaction merits consideration. The very fact that the revenue has allowed the charges in the past, their disallowance and that too on identical facts would not be a fair exercise 6.0 This tribunal in the case of AVO Carbon India Private Limited (IT(TP)A No.82/Chny/2024),had held that " ... We have noted that rival parties have concurred that there has been no distinguishment of facts of the present case viz a viz those available in AY 2012-13 and AY 2015-16 for which this Tribunal has accorded relief to the assessee. Accordingly, in adherence to the principles of consistency as well as in respectful com....

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....Management support for manufacturing/trading, the said transaction is inextricably connected with core business operation and as such it cannot be segregated and benchmarked independently. We have noted the decision of this Tribunal in the case of Siemens Gamesa Renewable Power (P.) Ltd v. DCIT 155 taxmann.com 406 holding as under: "Admittedly the business of the assessee is a consolidated one. The services referred under 'Corporate Services" are intrinsically linked to its manufacturing and sales activity. These two services cannot be separately demarcated. Corporate services are the services rendered, which has helped the assessee in generating the business in respect of marketing and trading. This being so, in view of the decision of Hon'ble Delhi High Court in the case of CIT vs. EKL Appliances Ltd., referred to supra, the ld. Assessing Officer is directed to allow the assessee's claim of the Corporate Services expenditure incurred by assessee" 9.0 Again, we have noted that in the case of Magneti Marelli Powertrain India Pvt. Ltd. Vs. DCIT, Delhi High court for AY 2008-09 - [ITA No. 350/2014] the Hon'ble Delhi High Court had held that "Here this court concu....