TMI Blog2018 (5) TMI 1972X X X X Extracts X X X X X X X X Extracts X X X X ..... nsfer Pricing rules do not permit the Revenue authorities to step into the shoes of the assessee and decide whether or not a transaction should have been entered. It is for the assessee to take commercial decisions and decide how to conduct and carry on its business. It is incorrect to say that the assessee has not provided appropriate/logical allocation of cost to ATK affiliates for management support and cost allocated to ATK India. Allegation relating to the payment for duplicate services is concerned, it appears that lower authorities have confused ATKBO with another group entity ATK India Pvt. Ltd which is a separate entity whose financial/TP study are placed on our record for the year under consideration. Detailed cost allocation sheets showing different personnel involved for each service has been placed on record separately. We find that the revenue authorities have simply rubbished the email evidences brought on record without examining and pointing out defects in the evidences. It is not proper for the lower authorities to disregard such direct evidences. Payment relating to management services provided by ATK Australia is concerned, we find that the same has be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Income-tax Act, 1961 [hereinafter referred to as 'the Act' for short] pertaining to assessment year 2008-09. 2. The sum and substance of the grievance of the assessee is that the DRP/TPO/Assessing Officer grossly erred in making a transfer pricing addition of ₹ 6,05,36,749/- while computing the income of the assessee. 3. The representatives of both the sides were heard at length, the case records carefully perused and with the assistance of the ld. Counsel/DR, we have considered the relevant documentary evidences brought on record in the form of Paper Book in light of Rule 18(6) of ITAT Rules. Judicial decisions relied upon were duly considered. 4. Briefly stated, the facts of the case are that the assessee [ATKBO] is an independent branch office of ATK Ltd which was set up in 1997 for providing management consultancy services to Indian and foreign clients. ATKBO has two offices in India, namely, New Delhi and Mumbai. International transactions entered into by the assessee are tabulated as under: Nature of transaction Method selected PLI Total value of transaction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ces from ATK Australia [₹ 13,454,768/-] Services provided by Ms. Sharon Bennet Services provided by John Yoshimura [₹ 11,077,616/-] Meeting cost charge by ATK Holdings the UK [₹ 1,166,403/-] 9. After analyzing the assessee s TP approach relating to payment of management fees and after considering the OECD guidelines on the facts in issue, the TPO came to the conclusion that the cost allocation of expenses related to the use of international research and I.T. support services are similar to KNet Services, Human Resource Services and Knowledge services. It was further observed that payment for I.T. support function has been made to US while both are duplicate services. Same view was taken for global financial services. Moreover, it was observed that the cost related to global human resource is part of share holder activity. Similarly, CEO expenses are share holder activity. Payments in respect of legal services are again duplicate since legal and professional charges are being paid. Office, service and administrative expenses are again duplicate payment for the same set of activities. In so far as management services paid to ATK Australia, the same were o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nces 344 ITR 241. 13. In the same judgment, the Hon'ble High Court observed that The character of transaction may derive from relationship between the parties rather than be determined by normal commercial conditions as may have been structured by the tax payer to avoid or minimize tax. The significance of the aforesaid guidelines lies in the fact that they recognise that barring exceptional cases, the tax administration should not disregard the actual transaction or substitute other transactions for them and the examination of a controlled transaction should ordinarily be based on the transaction as it has been actually undertaken and structured by the associated enterprises. It is of further significance that the guidelines discourage re-structuring of legitimate business transactions. 14. It has been held by various courts that it is not for the revenue authorities to dictate to the assessee as to how he should conduct his business and it is not for them to tell the assessee as to what expenditure the assessee can incur. The question whether decision was commercially sound or not is not relevant. The Hon'ble High Court in the judgment cited as EKL Appliance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... himura in India are exhibited at pages 1417, 1419 and 1420 of the paper book. 20. Considering the cost allocation chart exhibited elsewhere supported by evidences placed as exhibits in the paper book, we do not find any merit in the transfer pricing adjustments made by DRP/TP/Assessing Officer on this count and the same is directed to be deleted. 21. The next issue relates to the adjustment made on the interest received from 8.46% to 17.26% which was reduced by the DRP to 13.38%. 22. This relates to the interest received by the assessee from ATK Finance Ltd on which the assessee received interest @ 8.46%. 23. The assessee has bench marked receipt of interest using internal CUP by pointing out that the loan received by ATK Group from unrelated party i.e. the bank. This was dismissed by DRP which was of the opinion that the lender has negotiated rate of interest to be charged not on credit rate of ATK Finance alone but conjointly with parent company ATK UK. DRP further observed that the credit rating of ATK Finance cannot be sole guiding factor. DRP was of the view that the interest rate equal to prime lending rate of RBI during the year under consideration should be appl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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