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2015 (7) TMI 1110 - AT - Income TaxIntra group services rendered by the AE to the assessee - whether the activities are at arm’s length? - mark-up charged by the AE on the cost - Held that:- The CIT(A) has already disallowed the mark-up and determined the ALP at cost of the group services which has been contributed by the assessee. We further note the CIT(A) has noted that the fact for assessment year 2008-09, the payment of intra group services was accepted y the TPO at arm’s length under the TNMM where the percentage of profit on cost of assessee at entity level was only 16.31% in comparison to the current years margin at 33.31%. For the assessment year 2008-09, the TPO has accepted the payment made for intra group services wherein held that the payment is made towards ‘cost contribution’ and the taxpayer has also submitted the payment is in nature of ‘reimbursement of allocated costs’ which amounts to 6.99% of the local allocation made the Filtrona UK Limited to all the AEs at a mark-up of 5.8%. As it is evident from the facts and submissions, the payment is clearly for the ‘cost contribution’ and therefore, there should not be any mark-up on such allocations made by the Parent Company. Hence, for the same reason, the mark-up of 5.8% paid towards ‘cost contribution’ is not at arm’s length and the ALP for the markup is treated as nil. No error or illegality in the order of the CIT(A) qua this issue - Decided against revenue
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