TMI Blog2012 (11) TMI 455X X X X Extracts X X X X X X X X Extracts X X X X ..... availing of intra-group services by the Appellant from its associated enterprises. 2. the TPO/A.O. has erred by not accepting the economic analysis undertaken by the Appellant in accordance with the provisions of the Act read with the Income Tax Rules, 1962 ('the Rules') 3. the Transfer Pricing Officer ('TPO')/A.O. has erred in rejecting the combined transaction approach undertaken by the Appellant and in the process wrongly segregated the international transaction pertaining to the availing of intra-group services from the international transaction pertaining to distribution of software products. 4. the TPO/A.O. has erred, in law and in fact, in determining the Comparable Uncontrolled Price method as the most appropriate method to benchmark the international transaction pertaining to availing of intra-group services. 5. the TPO/A.O. has erred by assuming that 'no benefit' has been conferred on the Appellant from availing of intra-group services from its associated enterprises." 2. Addressing ground Nos. 4 and 5 first, the ld. counsel for the assessee has contended that apropos the assessee's objection against the action of the TPO in determining the Comparabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vices from its AE were also duly provided by the assessee before the TPO; and that therefore, the ALP of the international transaction involving availing of management services should not be considered as 'nil', based simply on an assumption that an independent person would not be making such a payment in uncontrolled services. 6. The data provided by the assessee to the TPO, it is seen, is as per the assessee's written submissions dated 27.04.2010 [copy at pages 241-243 of the assessee's paper book ('APB' for short)] and the assessee's written submissions dated 13.05.2010 (copy at 'APB' 244-247), filed before the TPO, is as follows:- "27 April 2010 Office of the Additional Commissioner of Income tax Transfer Pricing Officer - I(1) Room No. 315, 3rd Floor Drum Shaped Building Indraprastha Estate, New Delhi - 110001 For the attention of Mr. Ajit Kumar Jain Dear Sir, Re: Bentley Systems India Private Limited ("Bentley India" or "the Assessee") Notice u/s 92CA(2) of the Income Tax Act, 1961 ("Act") Assessment Year ("AY") 2007-08 We refer to our previous hearing and discussion held on 16 March 2010 in connection with the ongoing transfer pricing assessment for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... raining records certifications; personnel file maintenance; engaging of sub-contractors; compensation benefits management; service award administration; relocations, etc. Legal The legal services provided to Bentley India include assistance in litigation and dispute resolution management including disputes with customers, resellers, and employees; negotiation of commercial sales and project services contracts with customers; assistance on company secretarial and compliance matters; negotiation of reseller agreements and other partner and vertical relationship contracts; creation of standard default sales and services contracts; work on anti-piracy matters; advice on export control regulations and other regulatory and policy issues; and assisting with trademark or other intellectual property registrations or challenges. Accounting/Finance Bentley India receives accounting support on an ongoing basis in all matters relating to day to day procedures including, when necessary, the posting of journal entries into SAP. Further, specific accounting assistance was also received by Bentley India in the determination requirements for reporting of taxes on sales invoices in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owing broad heads: Corporate marketing; Management; Human resources ("HR"); Legal; and Accounting/Finance. These services benefit Bentley India and the same has been explained in the submission dated 27 April 2010 submitted with your office. Kindly note that the transaction pertaining to availing of corporate services is closely linked and complementary to the distribution of software products activity of Bentley India. All international transactions related to distribution of software products are benchmarked using the Transactional Net Margin Method ("TNMM") and the same amply demonstrates the arm's length nature of Bentley India's international transaction pertaining to availing of corporate services. Further, corporate service charges have been allocated to Bentley India based on revenue earned by Bentley India and the global revenue of the Bentley group and is done based on the arm's length criteria and principle. During FY 2006-07, Bentley India has paid USD 826,299.86 as corporate service charge to its AE. In this regard, please find attached as Annexure 1, a letter from Bentley Systems Inc. evidencing computation of the cost a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Amount in USD 1 Revenues Actual 401,313,000 6,382,430 2 Allocation percentage (A) India revenue/Global revenue 1.59% 3. Waiver of charges keeping in mind the arm's length principle (Borne by Bentley Systems Inc.) (B) 0.66% 4. Total Corporate service cost (C) Actual 88,405,480.76 5 Corporate service charge allocated to Bentley India (A-B)*C" 7. A perusal of the above contents of the written submissions filed by the assessee before the TPO shows that the data was provided by the assessee before the TPO concerning the international transaction pertaining to availing of intra group services by the assessee from its associate enterprises. As to how this data is inadequate, has not been made clear by the ld. DRP and it has merely been observed that considering the facts and circumstances of the case the position put forth by the TPO was being accepted in the absence of adequate data. The assessee's objections in this regard were, as such, rejected without passing a speaking order. 8. In the aforementio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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