AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2026 (1) TMI 351
X X X X Extracts X X X X
X X X X Extracts X X X X
....er dated 27 June 2024, is bad in law and ought to be quashed. 2. On the facts and circumstances of the case and in law, the Ld. AO has erred in not passing the final assessment order dated 27 June 2024 as per the directions of the Hon'ble DRP Panel as prescribed in section 144C(13), thereby rendering the assessment order being null & void and liable to be quashed. 3. On the facts and circumstances of the case and in law, the final assessment order dated 27 June 2024 is issued beyond the time limit as prescribed u/s 153 of the Act. Consequently, the final assessment order is time barred and deserves to be quashed. 4. The Hon'ble DRP erred in confirming the action of the AO / TPO ignoring the fact that there was no intention by the Appellant to shift profits outside India. 5. The Hon'ble DRP erred in upholding/ confirming the action of Ld. TPO, in applying Other Method inappropriately and further erred by not bringing on record any comparable data as mandated by section 92C of the Act read with Rule 10B and Rule 10C of the Rules D Factual Grounds: On the facts and circumstances of the case and in contrary to law, Ld. T....
X X X X Extracts X X X X
X X X X Extracts X X X X
....13. Not appreciating that the Appellant duly withheld the taxes on payment made to the AE and that the AE has also duly filed a return of income in India offering such services to taxes, and that disallowing payments made by the Appellant would lead to double taxation. 14. Not appreciating that the said payment for intra group services of INR 5,66,05,177 has a direct nexus with the business of the appellant. Accordingly, the Ld. AO/Hon'ble DRP have erred in disallowing the said payment u/s 37 of the Act. 15. Initiating penalty proceedings under section 274 read with section 270A of the Act, without appreciating the fact that the additions made by the Ld. AO are not in accordance with the law. Without prejudice to the above grounds 16. On the facts and circumstances of the case and in law, the AO has erred in passing the impugned Assessment Order under Section 143(3) read with Section 144C (13) of the Act determining total income at Rs. 5,66,75,610 as against INR Nil income as per the return of income filed by the Appellant. 17. On the facts and in the circumstances of the case and in law, the AO has erred, in raising dermand of INR 2....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rbed depreciation. Since there being no objection from the side of ld. DR we restore the issues raised in Grounds of appeal No.18, 19 and 20 regarding claim of set off of off of brought forward business loss and unabsorbed depreciation to the file of ld. Jurisdictional Assessing Officer before whom assessee shall furnish necessary details and proof of brought forward business loss and unabsorbed depreciation along with copy of income tax return and Tax Audit Report. Ld. JAO after examining the same may allow the claim of the assessee if it is found in accordance with law. Thus, Grounds of appeal No.18, 19 and 20 are allowed for statistical purposes. 5. So far as Grounds of appeal No.4, 16 and 17 they are stated to be general in nature which need no adjudication. 6. Now the effective issues remain for our adjudication is Grounds of appeal No.5 to 15. 7. Brief facts of the case are that the assessee is a Private Limited company and is a wholly owned subsidiary (99.99%) of Semperit Aktiengesellschaft Holding (in short 'SAH'). Assessee is engaged in the business of manufacturing and export of conveyor belts which are used in various segments such as paper, sugar, steel....
X X X X Extracts X X X X
X X X X Extracts X X X X
....cifically for each activity. Ld. TPO further observed that there is also an element of duplication in the services availed and accordingly rejected the benchmark adopted by the assessee and adopting other method concluded that no Third party would pay for services which are not availed substantially and need of the same has not been proved and benefit itself remarked to be difficult to calculate. Ld. TPO calculated ALP of Intra Group Services as Nil and proposed the upward adjustment of Rs. 5,66,05,177/-. In all, ld. TPO proposed an upward adjustment of Rs. 7,01,38,672/-. 10. Based on ld. TPO's report, ld. AO made addition on account of adjustment proposed by ld. TPO at Rs. 7,01,38,672/- and along with addition on account of difference in opening and closing stock at Rs. 1,16,17,927/-, determined the total income at Rs. 8,18,27,030/-. 11. Subsequently, assessee challenged the draft assessment order and approached the Dispute Resolution Panel (DRP) and made submissions on all the issues raised regarding the adjustments proposed in the draft assessment order. Ld. DRP vide its order dated 24.05.2024 only sustained the adjustment proposed for Intra Group Services at Rs. 5,66,....
X X X X Extracts X X X X
X X X X Extracts X X X X
....l Order Appeal set 9 - 17 Services Availed and Documents submitted Assessee has submitted robust documents to satisfy need benefit test and rendition of service, including the following: * Inter-company agreement * AE invoices * Third-party invoices * Cost allocation keys (specifically excluding cost of shareholder activities) * Cost allocation workings * Case studies, email, presentation, min, etc. Brief Summary of the Services and Need Evidence Benefit Test Sr. No. Nature of services Description of nature of services Page Number and Volume Whether duplicative in nature? Services 1 Information Technology * The AE has the dedicated IT team to provide support services such as IT maintenance, helpdesk support, cyber security, etc. * The AE also supports the Assessee on the ERP, Data warehouse/MIS, IT Governance, etc. Pg No. 727 to 743 (Vol 2) No 2 Procurement * The AE assist in preparing guidelines and evaluate on pre- qualification of suppliers, procurement forecasts, etc. * Assist with providing key inputs on sourcing strategies which helps t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Control matrix specifying the risks and control measures of each business activity, etc. Pg No. 1192 to 1219 (Vol 2) No Segment 1 Segment and Team * Technical assistance by AE in terms of production of new product, raw material to be used, quality check of products prior to dispatch * Identification of defects in products manufactured by SIPL and providing solutions for the same Pg No. 1220 to 2028 (Vol 3 and 4) No 2 Technical and operations * The AE has undertaken a pre-evaluation initiative for critical projects * Assistance on local capacity planning and coordination for respective markets 3 Commercial * Assistance and intervention on specific customer issues * Technical support for customers and sales team * Process standardization and optimization for compound production 4 Compounding and team * Assist with providing technical inputs on capacity planning - and related coordination * Assist the Assessee in the process evaluation for compound production The Assessee submits the following judgement by Hon'ble Mumbai Income Tax Appellate Tribunal in the case of CLSA India (P.) Ltd .: CLSA India....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ollowing one of the methods prescribed under the issue of determination of ALP to the TPO by following one of the methods prescribed under Section 92C of the Act. Thus, the question as formulated for our consideration even if answered in favour of the Revenue would become academic in the present facts. Thus, we see no reason to entertain this appeal. However, we make it clear that the issues of law which has been raised in the present appeal are left open for consideration in an appropriate case." In view of the judgment of the High Court, the issue could not be restored to the file of the TPO to determine the arm's length price by applying most appropriate method out of the prescribed methods under the provisions of law." Copy of the judgment is attached as Annexure 1. 14. Further, ld. Counsel for the assessee referring to the decision of Coordinate Bench, Mumbai in the case of CLSA India (P) Ltd. VS. DCIT (2019) 101 taxmann.com 388 (Mumbai Trib.) stated that the TPO is bound to determine ALP by following one of the method prescribed u/s.92C(1) however where TPO has not followed any prescribed method and adhoc determination of ALP by TPO dehors section 92C....
X X X X Extracts X X X X
X X X X Extracts X X X X
....and on a scientific basis the expenses have been apportioned. The assessee in the Transfer Pricing Study Report (TPSR) as well as in Audit Report on Form No.3CEB has calculated the ALP of the Intra Group Services based on Transactional Net Margin method (in short TNMM) in order to prove that the alleged expenditure claimed in the profit and loss account towards Intra Group Services is at ALP. Ld. TPO before moving to check the correctness of the calculation of ALP by TNMM adopted by the assessee, first went on to analyse as to whether the assessee has actually received the services. Ld. TPO observed that assessee has to prove that the services are rendered and received and the second aspect of Intra Group Services is the quantification of such services in terms of actual expenditure, incurred and commensurate benefits derived therefrom. The third aspect is ALP of such services, if the same requires payments of Arms Length. The observations of ld. TPO on this aspect as to whether Intra Group Services have been rendered or not reads as under : "4.2.4.2 Determining whether intra-group services have been rendered 4.2.4.3 Under the arm's length principle, the quest....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... the allocation key makes sense under the circumstances), contain safeguards against manipulation and follow sound accounting principles, and be capable of producing charges or allocations of costs that are commensurate with the actual or reasonably expected benefits to the recipient of the service. The allocation might be based on turnover, or staff employed, or some other basis. Whether the allocation method is appropriate may depend on the nature and uSAHe of the service. i. The OECD guidelines provide that in an intra-group service there are two issues which need to be analysed, one, whether intro group services have in fact been provided. Second what is the charge for such services? ii. Along with the facts as narrated supra, I would like to also place on record judicial precedence and a culled-out summary of OECD views on the subject of intra group services. These, briefly, are as under. Judicial precedence The decision of Bangalore ITAT in the case of Ws Gemplus India Private Limited in ITA number 352/ Bang/ 2009 wherein at para 20 the following has been held: i. "20. We heard both sides in detail and also perused the records of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Bangalore Bench of the Tribunal in Gemplus India Pvt. Ltd. (supra), held that the assessee has to establish before the TPO that the payments made were commensurate to the volume and quality service and that such costs are comparable. When commensurate benefit against the payment of services is not derived, then the TPO is justified in making an adjustment under ALP. 40. In the case on hand, the TPO has determined the ALP at "nil" keeping in view the factual position as to whether in a comparable case, similar payments would have been made or not in terms of the agreements. This is a case where the assessee has not determined the ALP. The burden is initially on the assessee to determine the ALP. Thus, the argument of the assessee that the TPO has exceeded his jurisdiction by disallowing certain expenditure, is against the facts. The TPO has not disallowed any expenditure, Only the ALP was determined. It was the Assessing Officer who computed the income by adopting the ALP decided by the TPO at "nil". 45. .... In our view, under similar circumstances a uncontrolled comparable company would not incur such expenditure. Hence, the ALP is rightly determined at "nil", As....
X X X X Extracts X X X X
X X X X Extracts X X X X
....intained by the assessee. Rule 10D(1) of the IT. Rules, 1962 also mandates the maintainability of record of uncontrolled transactions to be taken into account in nalyzing the comparability of the international functions entered into by the assessee. It, therefore, is obligatory on part of the appellant to maintain such record and produce the same before the TPO to show that it has benchmarked the international transaction at ALP. This obligation, however, has not been discharged by the assessee. 9.3. The appellant in the present case is also not shown to be willing to pay any amount for such services, if it were, so provided by an independent enterprise or if the same would have been performed in house. The DRP is found to have considered these services as non-beneficial for the recipient and did not take it as chargeable services. The perusal of e-mails and other contemporaneous record only goes to reveal that incidental and passive association benefit has been provided by the associate enterprise. In this view of the matter there could neither be any cost contribution or cost reimbursement nor payment for such services to the AE. The TPO, therefore, has rightly adopted N....
X X X X Extracts X X X X
X X X X Extracts X X X X
....6. These concern intra-group services (i.e. services provided by one member of a group to another, such as the case presently), and factors relevant to determine whether such a service exists. The Court notes, first, that the 2009 OECD Guidelines are not binding, and further, that paragraph 7.4. of the Guidelines itself recognizes that each case depends on its facts and circumstances. Whilst the factors enumerated in paragraph 7.6 are relevant, strict adherence to the OECD guidelines, bordering on rigidity, is antithetical. 35. The TPO's Report is, subsequent to the Finance Act, 2007, binding on the AO. Thus, it becomes all the more important to clarify the extent of the TPO's authority in this case, which is to determining the ALP for international transactions referred to him or her by the AO, rather than determining whether such services exist or benefits have accrued. That exercise of factual verification is retained by the AO under Section 37 in this case. Indeed, this is not to say that the TPO cannot - after a consideration of the facts state that the ALP given that an independent entity in a comparable transaction would not pay any amount. However, this is ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....mpany (eg. consolidation of financial reports, maintenance of shareholder records, filings of prospectuses and income tax returns). This includes expenses for compliance with regulations or policies imposed by the foreign government upon the member rendering the services; * Costs incurred by a parent company to raise funds for acquisition of a new company in its own right. This includes the interest expense on indebtedness not incurred specifically for the benefit of another member of the group: * Costs of managerial and control (monitoring) activities related to the management and protection of the investment as such in participations, * Costs of visits and reviewing subsidiary performance on a regular basis; and * Costs of financing or refinancing the parent's ownership participation in the subsidiary. II. Duplicate services: Duplicative services are those that a group member offers to any other member which can be regarded as duplicate (ie, the service is already performed by the recipient or by an arm's length party on its behalf). In that case, no intra-group services should be regarded as being rendered by the group member.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s generally requires the existence of a support group of some sort and an understanding between the group members about the nature of the assistance being provided in any field of operation whenever required, and on an on-call basis. For example, a parent company or a group service centre may be available to provide assistance with regard to legal, finance, technical or tax issues at any time. The aspect that merits consideration here is whether the availability of that service in itself is regarded as a separate service (for chargeable purpose) over and above the service fee compensation for the actual service rendered. The justification provided in the OECD Guidelines for considering such availability as a separate service rendered is that it is common knowledge that independent enterprises incur so- called stand-by charges to ensure availability of those services when the need for them arises. An example of that service is the appointment of a legal, technical or financial service provider on a retainer basis. These services are not necessarily a normal requirement and may vary in terms of frequency and importance from year to year. Therefore, one must ascertain the pot....
X X X X Extracts X X X X
X X X X Extracts X X X X
....payment. Further, nothing has been placed on record by the assessee to demonstrate any benefit received by it from the services rendered for which the payment is claimed. Further, even if for argument sake, it is taken that these documents show that some services have been rendered, whether these had some value and if yes, the cost incurred for that and the benefit for which such cost was incurred, has not been proved by the assessee. The assessee has also not demonstrated that the price paid was such that an independent entity would have paid for such services for the benefits (if any) received by it. The notes given by the assessee do not demonstrate the benefits received for which such payment was made. Further, it has not been demonstrated that the cost allocated is commensurate with the benefits derived by the assessee, so as to justify the payment on arm's length basis. 4.2.4.10 Assessee has incurred 14 percentage of employee benefit expenses in relation to turnover. Hence, assessee submission that SIPL is thinly staffed company has no substantial basis. 4.2.4.11 Component of cost effectiveness and economy of scale cannot be need of the company as stated....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the finding of ld. DRP reads as under : "9. Findings of the Panel: (i) The "Intra Group Services Fees are separate set of transactions which required to be benchmarked on own. The entity level approach is not relevant to the Intra Group Services fees since the Transfer Pricing Officer has made a categorical finding that the payments have not been commensurate to the services claimed to have been rendered. Hence, the payments are not regular international transactions and cannot be subsumed into broad- based comparison methods. (ii) The "Other Method" is the MAM in this peculiar case. (iii) There is a case of base erosion, and the sums are moving out of India without proper basis and devoid of Arm's length pricing. 9.10. Directions of the DRP: Thus, the claimed documents / evidence do not provide relevant and admissible details for "rendition of services" by the Associated Enterprise, cost/value of the services, nor establish the "receipt of services" by the Applicant assessee from Associated Enterprises. The Applicant has not been able to establish that it has received service from the Associated Enterprise, Semperit Managem....
X X X X Extracts X X X X
X X X X Extracts X X X X
....addition/ disallowance of Rs. 5,66,05,177/-, but the Assessing Officer will provide the additional supporting argument that the sums have not only "Nil" ALP as determined by the Ld. TPO; but also are not eligible for deduction under s. 37(1) of the I.T. Act. This is an additional ground raised by the Panel. The Assessing Officer is directed to comply with the additional ground and incorporate the same. 10.6 Direction of the DRP: The Assessing Officer is directed to make disallowance of Rs. 5,66,05,177/- claimed as Intra Group Services payment to Associated Enterprise Semperit Management AG ('SAH') on account of lacking in establishment of "receipt" of services, absence of business nexus and no case of Intra Group Services rendition. The claim of deduction does not pass the factual/ legal tests of sub- section 37(1). This is to be taken as a supporting and alternate ground to Ld. TPO's action of setting the ALP of the claims services at "Nil". It is directed that the Assessing Officer is to discuss the above ground in assessment order, and no double addition / disallowance is to be conducted." 20. Before us, during the course of hearing, ld.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t with paper book reference have been filed and we have perused the same and the details of various services received by the assessee from its AE reads as under : Name of the Appellant: Sempertrans India Private Limited ITA No. 1778/PUN/2024 PAN: AAECS9279E Assessment Year: 2020-21 Chronology of events Particulars Page No. of Paper Book TPO's Order Appeal Paper-book 208 - 237 AO's Draft Assessment Order Appeal Paper-book 201- 207 Objections filed before DRP Appeal Paper-book 191 - 200 Remand Report from TPO to DRP Factual Paper-book 2309-2324 DRP Directions Appeal Paper-book 18 - 190 AO Final Order Appeal Paper-book 9 - 17 Services Availed and Documents submitted Assessee has submitted 1500 + pages to satisfy need benefit test and rendition of service. * Inter-company agreement * AE invoices * Third-party invoices * Cost allocation workings * Case studies, email, presentation, min, etc. Descriptions of services * Page No. 707 to 726 of PB - Volume 2 * Separate excel attached Summary of docum....
X X X X Extracts X X X X
X X X X Extracts X X X X
....for risk assessment / Safety Audit report (Report in foreign language) Actions taken against external audit findings Renewal of mixing line - Requirements from insurance SIPL's export promotions SIPL Exports - Feasibility analysis for potential expansion of 8000 tons capacity and making new product available from India 1220 1287 3 Identification of defects in products manufactured by SIPL and providing solutions for the same Analysis of monthly export capacity to assist SIPL plan its future export sales and capacity planning Exports margin level analysis Assistance in pricing guidelines and offerings in respect of export Assistance in pricing of defective products 1288 1290 3 Technical assistance by SAG Technical inputs on production of new product i.e. a new version of auto stable belt 1291 1308 3 Raw materials to be used for production Quality check of products prior to di....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... SIPL and a quality check process for the same * Analysis of India's market potential, market share and competition * Workshops and activities for upskilling employees 1372 1444 3 AE personnel visit to India for Group Internal ISO Audit: (Approval of expenses incurred during CEO visit to India for Group Internal ISO audit, ISO certificates, Invoice regarding travel and accommodation of AE personnel to India ) 1445 1455 3 Training of Working Capital, Incoterms and Payment terms Meeting invite and presentation deck on training on working capital, incoterms and payment terms 1456 1487 3 Ageing analysis Analysis of ageing list and long outstanding debtors of customers 1495 1497 3 Discussion about order booking and capacity status of SIPL 1498 1500 3 Aging analysis done by SAG team for outstanding receivables of SIPL and identifying deficiency while following credit insurance proce....
X X X X Extracts X X X X
X X X X Extracts X X X X
....p; Request by SIPL team to SAG for preparation of Business Interruption claim working for insurance settlement (loss due to fire at mixing line) 1813 1813 3 Debtors list for a month and discussion on long outstanding debtors 1814 1815 3 New reporting tool announced by Group for standardization and tracking of KPIs 1818 1821 3 SAG's overview on status of SIPL's outstanding receivables 1822 1823 3 Visit from SAG team to SIPL for a factory tour, resolving issued relating to: * Sales and financial review (working capital, provision for receivables, etc) * Operational / technical issues (SHE Red-Flag List, investment for refurbishing mixing line, R&D projects, etc.) 1837 1849 3 Discussion regarding access to SIPL to Boost software (software for managing ex....
X X X X Extracts X X X X
X X X X Extracts X X X X
....strial hoses, conveyor belts, escalator handrails, construction profiles, cable car rings, and products for railway * superstructures. The group has 14 manufacturing facilities worldwide and numerous sales offices in Europe, Asia, America and Australia. With the aim of achieving operational efficiencies and also to benefit from the best practices followed by various group entities, it was thought prudent to have a centralized set-up which would cater to the various service needs of the group entities. This approach of collaborating and sharing reflects the view that resources that are coordinated across the world are more effective and more efficient i.e. they produce better results for lower costs. Considering the above, the Assessee has availed support services from its AE, SAG which resulted in operational efficiencies. The Assessee had made the payments in FY 2019-20 to its AE towards these following services: Table 1 : Summary of support services rendered by its AE Services Category Nature of services The AE renders departmental services which comprise of following services 1: Information Technology AE provides the following IT-service....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sis, benchmarking and business improvement; Maintenance and provision of up-to-date financial information on the corporate intranet portal; Development and implementation of group harmonized accounting standards and systems Central Procurement Preparation, coordination and implementation of guidelines in connection to procurement activities such as evaluation and pre- qualification of suppliers, procurement forecasts, etc .; Development of sourcing strategies, performance of negotiations within the sourcing process for raw materials, packaging services and goods; Development, coordination, implementation and permanent revision of IPN (International Procurement Network); Assistance in identification of suppliers, supporting activities for further development and optimization of local procurement; Organization of procurement processes in order to maximize the overall success (e.g., bundling of orders, exchange of information on suppliers, claims, etc.); Providing structured procurement market research, planning and management of all activities involved in sourcing and procurement Group Tax In-house adviser for sales (consignment stock, agent agreement....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ng external quality audits by notified bodies; Advices and participates in the decision process of selection of quality managers and on capacity issues for quality tasks Legal Affairs and Insurance Monitors and co-ordinates all corporate and compliance matters under applicable laws for the affiliates, co-ordinate restructuring projects within the group; Lead, supervise and advise entity to manages for adherence to corporate governance; Assistance in management of compliance management systems, advise in drafting regulations and resolutions; Provide necessary trainings to employees, advise for issues with major impact; Direct Business Partner Due Diligence Investigations; Maintenance of Compliance Intranet Page; Assure a master cover for public liabilities, property, transport and other insurances, advise in insurance matters, install and monitor the group broker network; Assures professional legal services for group and tools and standards built will be used in company; Selection, build and provide functional guidance of in-house counsels; Selection and guidance of external lawyers; develop and register standard agreements and model contracts; ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he respective segment; Integration management of acquired entities to the respective segment; Lead support for big scale business projects; Measures and activities for improving market position and information gathering on competitors or market trends Services rendered by Head of technical and operations and team Pre-evaluation of necessary investment projects in the segment of companies; Assistance in product development / research per segment, local capacity planning and coordination for respective market; Standard product calculation and product design for respective market; Process standardization and optimization, setting up standards for market regulations and certifications Services rendered by Head of commercial and team Assistance in key accounting related to customer care, assistance and intervention on specific customer service issues; Assistance in analyzing market specifications, which are relevant to product specification; Local market observation and alignment of product portfolio, technical support for customers and the sales team Services rendered by Head of compounding and team Assistance and advice for local compound prod....
X X X X Extracts X X X X
X X X X Extracts X X X X
....as enjoyed by the Assessee by way of various services: Vide the captioned notice, your goodself has alleged that no need-benefit documentation has been submitted by the Assessee. We would like to submit that this is the first occurrence wherein your office has made a request to file necessary information. The Assessee submits that the evidences regarding availing such services and the benefits received can be best demonstrated by narrations and descriptions (along with certain commercial circumstances warranting such services) and not merely by way of documentary evidences. Further, it is submitted that given the high degree of cross-functional interdependency it is very difficult to quantify the benefit delivered to the Assessee by any one singular function. However, by way of specific evidence of functional activities, the Assessee submits documentary evidences in the form of emails, presentations, technical notes, etc. which demonstrate actual receipt of services by the Assessee from its AE. In this regard, we hereby submit documents as under: Inter-company Group Service and Group Segment agreement for availing of support services (original al....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... should be structured. It should again be noted that the mere fact that the transaction may not be seen between independent parties does not mean that it does not have characteristics of an arm's length arrangement." Under the arm's length principle, the question whether an intragroup service has been rendered when an activity is performed for one or more group members by another group member should depend on whether the activity provides a respective group member with economic or commercial value to enhance or maintain its business position. This can be determined by considering whether an independent enterprise in comparable circumstances would have been willing to pay for the activity if performed for it by an independent enterprise or would have performed the activity in house for itself. If the activity is not one for which the independent enterprise would have been willing to pay or perform for itself, the activity ordinarily should not be considered as an intra-group service under the arm's length principle. The analysis described above quite clearly depends on the actual facts and circumstances, and it is not possible in the abstract to set for....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y) and made available to the group (or multiple members thereof). The activities that are centralised depend on the kind of business and on the organisational structure of the group, but in general they may include administrative services such as planning, coordination, budgetary control, financial advice, accounting, auditing, legal, factoring, computer services; financial services such as supervision of cash flows and solvency, capital increases, loan contracts, management of interest and exchange rate risks, and refinancing; assistance in the fields of production, buying, distribution and marketing; and services in staff matters such as recruitment and training. Group service centres also often carry out research and development or administer and protect intangible property for all or part of the MNE group. These types of activities ordinarily will be considered intra-group services because they are the type of activities that independent enterprises would have been willing to pay for or to perform for themselves." Your good self would observe that the Assessee received the similar nature of services as mentioned in the OECD guidelines. The guidelines also spec....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e details of services claimed to have been received by the assessee, we notice that all such services are linked to day to day business activity starting from procurement of Raw material, Manufacturing of goods, effecting of sales, guidelines for quality check, Internal audit procedures, Information Technology, Human Resources, Central procurement, Finance transformation, Operation excellence, Legal Affairs, Group Treasury, Risk Management, Internal Audit etc. It has been an admitted fact that for carrying out the business activity of the level of assessee in appeal before us, the task is not only to procure goods, manufacture and sale but there are many minute workings which are required to be done by the companies adopting the international standards and other requirement for Export of Goods. For each of the business activity including the incurring of cost, acquiring of companies assets, export sales, employees and the responsibilities, financial aspects, quality checks, accounting of the transaction of SAH based software and also of getting the regular report about each sphere of the business activity, assessee is required to take the services which can be either from third par....