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2013 (2) TMI 351 - AT - Income TaxDetermination of ALP as NIL - SAP services - applying Comparable Uncontrollable Price ("CUP") method - addition to the total income on account of the international transactions entered by the appellant with its associated enterprises - assessee contested against the additions stating it to be transaction merely a means to siphon off profits from India - Held that:- TPO has to work out the ALP of the international transaction by applying the methods recognized under the Act. He is not competent to hold that the expenditure in question has not been incurred by the assessee or that the assessee has not derived any benefits for the payment made by the assessee and therefore he cannot consider the ALP as NIL. TP study done by the assessee in support of the ALP does not give out any comparable instances of similar transactions between the unrelated parties. As far as the determination of ALP under the Act is concerned, the provisions lay down that the assessee has to adopt one of the methods laid down in section 92C(1). The assessee has to substantiate the price that is paid to its AE as at Arm's Length within one of the methods so prescribed. As already noticed, the TP study of the assessee is not in tune with the provisions of section 92C. As in the course of hearing, it was suggested that the cost of providing SAP charges by Festo, Germany to all entities of the Festo group worldwide and the basis of allocation of cost by Festo, Germany to various group entities across the world should be submitted by the assessee with a view to enable the TPO to ascertain as to whether there has in fact been any profit element involved or was it a case of mere reimbursement of actual cost incurred for the Assessee by the parent company. The stand of the assessee has been that the payment was merely reimbursement of cost and in this regard attention was drawn to invoices raised by Festo, Germany on other group entities in other parts of the world. The assessee has also sought to file a chart regarding the benefits that the assessee received by paying the SAP charges and also that the payment was reimbursement of cost. Thus these submissions require a fresh consideration by the TPO in the light of the observations made above - remand the question of determination of ALP to the TPO for fresh consideration - in favour of assessee for statistical purposes.
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