TaxTMI 
TaxTMI 
2026 (9) TMI 760
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....al filed by the learned assessing officer, the learned it CIT DR stated that she has asked the learned assessing officer to submit the grounds of appeal on 15 December 2025 but still it has not been received however she referred to the order of the learned that CIT - AN stated that the revenue is aggrieved with the order of the learned CIT - A wherein at paragraph No. 5.1 despite assessing officer determining the arm's-length price of the selling commission paid to its associated enterprises at rupees Nil, has directed to verify the selling commission in the same manner and thus he has deleted the addition. He submitted that this would be the grievance of the assessing officer has other than that nothing else is decided. 3. The only dispute in this appeal concerns the selling commission expenditure of Rs.2,34,35,294 incurred by the assessee. The assessee treated this amount as part of the cost base while benchmarking its software development services under the Transactional Net Margin Method, which it adopted as the most appropriate method. Accordingly, the selling commission paid to its associated enterprises was included in computing the assessee's margin. However, while accep....
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....h its software development, IT consultancy, IT-enabled services of Rs.94,485,406, and reimbursement of expenses of Rs.18,702,933 at the entity level. The learned TPO, however, treated the selling commission as an intra-group service and proposed to benchmark it separately by applying the CUP method. The assessee explained that the commission was paid to its associated enterprises for marketing assistance in securing contracts for offshore services subcontracted to the assessee. Under the master service agreement, the associated enterprises subcontracted the offshore portion of statements of work or work orders issued by customers to the assessee, and the assessee assumed the corresponding rights and obligations. The assessee was responsible for delivering the software development services, while the associated enterprises undertook marketing and business-development activities and performed on-site services for third-party contracts. The assessee submitted that the commission was paid to Mphasis Corporation, Mphasis UK Limited, and Mphasis Consulting Limited, aggregating to Rs.34,35,294, and was debited to the profit and loss account as selling commission. On examining the invoices....
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.... is outdated and unrevised, and shows a lack of awareness of the current procedure for filing appeals before the coordinate bench, despite the order of the Hon'ble Supreme Court. It continues to direct the learned Assessing Officer to file the appeal in triplicate, although only e-filing is now available to the Assessing Officer. The document described as objections filed before the DRP under section 144C(2) is, in fact, the order under section 92CA of the Act dated 29 January 2013. Thus, the appeal has been filed before the coordinate bench in a careless manner and is liable to be dismissed on this ground alone. The record also shows that, on 15 October 2025, the ITAT sent an email to the Revenue authorities, including the learned Assessing Officer, pointing out that the grounds of appeal had not been uploaded. Neither the learned Assessing Officer nor the Revenue authorities responded to that defect notice. Further, on 15 December 2025, the Departmental Representative sought an adjournment, stating that he did not have the grounds of appeal and that the same had been requested from the Assessing Officer but had not yet been received. This reflects the state of affairs in the appe....
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....lopment services transaction as being at arm's length. However, while benchmarking the payment of selling commission, he treated it as a separate transaction, determined its arm's-length price at nil, and made the adjustment. The record shows that, in the group case of Mphasis Limited for assessment year 2009-10, the Tribunal held that where selling commission and other related expenses form part of the operating cost and the Transactional Net Margin Method is applied as the most appropriate method, no separate adjustment is warranted. It was also shown to us that Revenue has not challenged that decision before a higher forum. Therefore, once selling commission is treated as part of operating cost for computing the operating margin under the Transactional Net Margin Method, it is not warranted to isolate the selling commission as a separate international transaction and determine its arm's-length price at nil. 14. The learned CIT(A) dealt with the matter holding that in the group company cases of emphasis Ltd wherein it was held that the selling operating were forming part of the operating expenses and hence determination of the arm's-length price at rupees Nil was rejected of t....