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2022 (9) TMI 1453 - AT - Income TaxTP Adjustment - payment of shared IT service cost to its AEs - international transaction involving payment made by the assessee to its associate enterprise under a cost contribution arrangement made by virtue of an agreement, namely, ‘I.T. Cost Pooling Agreement’ entered into by all the group companies - sole allegation of the TPO was that the intra-group activities under the ‘IT Cost Pooling Agreement’ were in the nature of stewardship services and hence, he determined the arm’s length price of the international transaction under consideration at Nil value. HELD THAT:- In the instant case, the AO, while examining the evidences of receipt of IT services, did not make any adverse comment under section 37 but he only adopted the ALP adjustment directed by the TPO because the order of the TPO was binding on him. TPO, in the instant case, determined the arm’s length price of the international transaction at Nil value without applying any of the methods prescribed under subsections (1) and (2) of section 92C - AO, in the instant case, had not disallowed the expenditure under section 37 of the I.T. Act but only adopted the ALP determined by the TPO in his order. We find that the principle enunciated by the Hon’ble High Court of Bombay [2017 (2) TMI 120 - BOMBAY HIGH COURT] is squarely applicable on the facts of the present case. Hence, we find that the aforesaid action of the TPO (that is, the determination of the ALP of the international transaction under consideration at nil value) is without jurisdiction and it goes against the basic tenet of the Indian Transfer Pricing Regulation. We have noted that the term ‘stewardship activity’ has not been defined by the I.T. Act. As respectfully following the above binding precedent, uphold the order of the CIT(A) for the assessment year 2014-15 [2022 (10) TMI 836 - ITAT KOLKATA] and the contention of the assessee and we delete the ALP adjustment made by the AO/TPO. ALP adjustment in respect of the international transaction involving sale of finished goods by the assessee to associated enterprise - assessee applied the CUP Method in order to substantiate the arm’s length nature of the international transaction involving sale of PCBs by the assessee to AT&S AG in Europe - HELD THAT:- As in assessee’s own case for the assessment year 2013-14 [2018 (10) TMI 1994 - ITAT KOLKATA] wherein this Tribunal, on the same facts and circumstances of the case, accepted the arm’s length nature of the international transaction involving sale of finished goods by the assessee to AT&S AG under the CUP Method and accordingly, directed to delete the ALP adjustment made by the AO/DRP in respect of the aforesaid international transaction. Foreign benchmarking analysis under the TNMM - We have noted that this Tribunal, on the same facts, for the immediately preceding assessment years 2011-12, 2012-13 and 2013-14, accepted that the international transaction under consideration was at arm’s length under the CUP Method. We have further noted that there is no change in facts and law for the assessment year under consideration. We therefore see no reason to take any view of the matter other than the view taken by the Division Bench of this Tribunal in assessee’s own case for the assessment years 2011-12, 2012-13 and 2013-14. Therefore, in our considered view, Ground which deals with an alternative method (that is, foreign benchmarking analysis under the TNMM) in relation to the international transaction under consideration, does not require separate adjudication and it will be merely an academic exercise.
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