TaxTMI 
TaxTMI 
2025 (1) TMI 1842
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....facts and circumstances of the case and in law, Assessment Unit of the Income Tax Department ("AO") has erred in enhancing the total income of the Appellant under section 143(3) read with section 144C(13) and 144B of the Act, for the assessment year ("AY") 2021-22 by 29.36,84,752 as against the returned income of 13,03,30,000 under the normal provisions of Act. 2. That on the facts and circumstances of the case and in law, the AO has erred in not completing the assessment proceedings as per time limit prescribed u/s 153(1) read with section 153(4) of the Act, thereby making the assessment proceedings barred by limitation. 3. That on the facts and circumstances of the case and in law, the AO/DRP/TPO erred in determining NIL price for the international transaction of payment of management fee, as against the actual transaction value of INR 29,36,84,752 by the Appellant to its AE. In doing so, AO/DRP/ TΡΟ grossly erred in: a. disregarding the benchmarking approach adopted by the Assessee in its TP documentation using transactional net margin method ('TNMM') without providing any cogent reason for the same b. not appreciating the ....
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...., the counsel hereby prays to withdraw grounds on Roca upon the hearing of subject line appeal ITA 5777/Mum/2024 & SA 122/Mum/2024." Accordingly, Ground no. 2 raised by the assessee is dismissed as withdrawn. Brief facts of the case are as under: 3. The assessee is a company and file its return of income on 05/03/2022 declaring total income of Rs.13,03,30,000/-. The assessee also declared book profits under 115JB of the Act at Rs.22,20,93,482/-. The return was processed u/s. 143(1) of the Act and subsequently the case was selected for complete scrutiny Subsequently, notice u/s.143(2) of the Act was issued. In the scrutiny assessment the Ld.AO observed that the assessee had international transactions with its AE. Accordingly a reference was made to the Ld. TPO to determine ALP of international transactions entered into by assessee with its AE. 3.1. The Ld. TPO upon receipt of the reference issued notice to the assessee calling upon the assessee to furnish the details of the international transactions in FORM 3CEB. The assessee in response to the same furnished the details as called for. After considering various submissions and transfer pricing study report filed by the ....
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....owever, the DRP upheld the additions proposed by the Ld. TPO. 5. On receipt of the DRP direction, the Ld.AO passed the impugned order by making addition in the hands of the assessee. Aggrieved by the order of the Ld.AO, the assessee is in appeal before this Tribunal. 6. At the outset, the Ld.AR submitted that, for all the services that was rendered under the category of ITES segment that included the alleged management service fees, the assessee was compensated at cost plus 15% mark up. He submitted that margin of 15% declared by the assessee includes the management support services received from AE. He placed reliance on the computation submitted before the authorities below as under: Particulars Amount in INR Total Operating Revenue [A] 1,73,38,33,722/- Employee benefit expenses 97,95, 48,695/- Depreciation/ amortization on tangible/ intangible assets 2,37,12,356/- Finance Cost 18,83,000/- Management support services from AE 29,36,84,752/ Other operating expenses 20,88,52,855/ Total Operating Expenses [B] 1,50,76,81,658/- Operating Profit [C=A-B] 22,61,52,064/- Operating Profit/ Operating Cost [D=C/B*100] 15% 6.....
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....services at NIL by applying CUP, vis-a-vis, ALP determined by assessee at aggregate level by using TNMM. Ld. TPO held that assessee did not obtain any benefit out of such services and that such services provided by AE were not required, as, assessee failed to provide evidence regarding receipt of services, alleged to be rendered by AE, necessitating any payment. It is observed that, Ld. TPO thus held that, as there is no benefit from services for which payments has been made, he determined ALP of international transaction at Nil, without carrying out any FAR analysis of intra-group services. This approach of Ld. TPO is not acceptable, as once a transaction has been categorised as independent international transaction, it is necessary to determined ALP of such transaction. Ld. TPO cannot consider ALP at 'NIL' and value of transaction has to be computed as per law. 7.2. Admittedly, the Ld. TPO accepted the cost base of the transaction, wherein the intra group services rendered by the AE was included. Thereafter to the management support service fee from AE is treated to be nil would lead to erosion of the tax base and such kind of adjustment is not admissible in the eyes o....
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....roup services by Rs 100 will also result in under realisation of revenue for IT enabled service by Rs 120 (i.e. recovery of cost of Rs 100 plus profit mark up of Rs 20). In effect thus, the taxability in the hands of the assessee, in such a situation, will go up by Rs 100 as an ALP adjustment, but then income of the assessee from IT enabled service revenue, will also stand reduced by Rs 120. Section 93(2) is quite clear and clear and categorical in this regard. It states that "(t)he provisions of this section shall not apply in a case where the computation of Income under sub-section (1). has the effect of reducing the income chargeable to tax or increasing the loss, as the case may be, computed on the basis of entries made in the books of account in respect of the previous year in which the international transaction was entered into". Section 92(1), in turn, states that "any income arising from an International transaction shall be computed having regard to the arm's length price". What follows is thus that when, as a result of computation of income on the basis of arm's length price, the income of the assessee is lowered or the loss is increased, the provisions of computa....