TaxTMI 
TaxTMI 
TaxTMI 
2025 (10) TMI 646
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....e French Group Schneider Electric announced its takeover of the Invensys Group globally. The takeover was completed in January 2014. Pursuant to the same, in February 2016, the name of the Assessee was changed from 'Invensys India Private Limited' to 'Schneider Electric Systems Private Limited'. The assessee is primarily engaged in the business of execution of contracts for the manufacture and supply of Distribution Control Systems (DCS), Emergency Shutdown Systems (ESS) & related equipments (including temperature control and process control equipment). Further, it is also engaged in assembly and sale of panels for DCS. The division under which these activities are undertaken is commonly nomenclated as Invensys Process Systems (IPS) division and operates out of Chennai and Mumbai. In the IPS segment, the assessee also provides Engineering Estimation Services to its AE as a captive unit. The assessee filed its return of income ('ROI') for the above Assessment Years ('AY'), which was processed u/s.143(1) of the Act and was selected for scrutiny assessment. 3. During the scrutiny assessment proceedings, the Transfer Pricing Officer ('TPO') and the Assessing Officer ('AO') made cert....
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....f Support services and contended that "other method" with hypothetical CUP cannot be considered as most appropriate method to benchmark the transaction. The Ld. AR relied on multiple decisions to support his contention that for benchmarking Support Services which if established that it is closely connected with core business operations the same should be aggregated with other international transactions and benchmarked under TNMM. 7. The ld. DR opposed request of the assessee for consideration of the additional evidence. However, he submitted that in case it is allowed the matter should be set aside to the file of the TPO / AO with this specific direction that while entertaining these additional evidence on the issue of transfer pricing adjustment. 8. The Tribunal accedes to assessee's plea for accepting these additional evidence and remanding the matter to the authorities below for fresh adjudication. We find that in the present case the assessee has also collated additional evidence to corroborate the benefit received in adherence to the principles and contentions made before the authorities below. We thus in the interest of justice set aside the matter to the file of the AO....
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....been created by the Assessee is liable to be rejected. Accordingly, this Ground of the Assessee is dismissed." In the present facts and circumstances of the case, by respectfully following the above order, we uphold the disallowance of provision for contract losses. Accordingly, this ground of appeal is dismissed. Departmental Appeals Transfer Pricing - Adjustment to margin in IPS division ITA No.2958/Chny/2024 - Ground No.2 10. The Assessee is engaged in the business of execution of contracts for manufacturer, supply and erection of distributed control systems, emergency shutdown systems and related equipment for the subject assessment year. The Assessee has benchmarked the international transaction with its AE by adopting Transaction Net Margin Method and adopting a PLI of OP/Sales. The Assessee has considered 5 comparable companies with average margin of 4.05% and working capital adjusted margins of -0.22% vis a vis Assessee's margin of 6.45%. The TPO tweaked the margin of the Assessee and has brought it down to 4.37% as against 6.45% reported in the TP documentation. Further, the TPO rejected search conducted by the Assessee and undertook a fresh search and finally ....
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....Transfer Pricing - Slump sale - Ground No.3 14. The Assessee had acquired Appliance Control Division ('ACD') from Voltas Limited in 1998. The ACD segment is engaged in the manufacture of components for use in refrigeration and air conditioning units by various OEMs. As part of the global acquisition of the ACD division, Invensys PLC entered into a Stock and Asset Purchase Agreement ('SAPA') with FOX Holdings S.A.R.L ('Fox Group') for transfer of certain assets and liabilities corresponding to ACD unit. Pursuant to the SAPA, during the year under consideration, the Assessee entered into a Business Sale Agreement ('BSA') with Fox Appliance Manufacturers Private Limited ('Fox India') for the sale of ACD unit of SESIPL for a consideration of Rs.22.30 crores. 15. The Ld. AR submitted that though the sale was part of a global acquisition, the pricing and terms of the sale in India was determined independently, with due consideration to the fair value of assets, ascertained using the Discounted Cash Flow ('DCF') value. 16. The TPO made an adjustment to the transaction of sale of ACD segment by itemizing assets for determination of arm's length price. Further, the TPO seem to have....
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....he arm's length price in accordance with the provisions of Section 92C(3) and cannot be extended to the other sections of the Act. 21. The Ld. AR placed reliance in the case of M/s. Topcon Singapore Positioning (P.) Ltd in ITA No. 2&5030/Del/2017, wherein it was held as follows Para 6. In our considered view, as the scheme of Section 92CA is, all that is required to be done by the Transfer Pricing Officer is to determine the arm's length price, which essentially refers to the consideration for which, on a conceptual note, a set of independent enterprise should have entered into similar of transaction as the international transaction, of the international transaction referred to him or of such other international transaction as may come to his notice during the course of proceedings before him. .... The role of the TPO must remain confined within these parameters. It is not open to the TPO to go beyond this role of determining the ALP and intrude in the exclusive domain of the Assessing Officer to determine the income taxable in the hands of the Assessee." 22. The TPO thus failed to follow the principles laid under and exceeded the jurisdiction in followi....
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....imbursements and there is no service element involved and it is only a facilitation which has been done by the Assessee for its AE and therefore it does not entail or require a separate mark-up on top of the cost of purse reimbursement received. The ld.CIT(A) has accepted the contention of the Assessee and has held that these expenses are incidental expenses for which mark-up cannot be charged. Further the ld.CIT(A) has also held that assessee is not a travel company and therefore attribution of mark-up by considering certain travel companies is unwarranted. Accordingly, the adjustment was deleted by the ld.CIT(A). 27. The Ld.DR contended that the magnitude of the expenses is very high and it is higher than the combined payments towards technical fees and support services and therefore the Ld.DR stressed on the point that these expenses rather the facilitation has resulted in an active service for which a mark-up should have been earned by the Assessee and therefore the TPO has rightly attributed the mark-up and prayed for restoration of the mark-up attributed by the TPO. 28. The Ld.AR contended that these are not active service which was performed by the Assessee to its AE. ....