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2018 (9) TMI 1880 - AT - Income TaxTP adjustment - arm’s length price adjustments in respect of management fees - HELD THAT:- Expenditure to the extent of 60% was held to be capitalized on the ground that during that year the expenses of Asia Pacific headquarters were also aimed at increasing the installed capacity from 6 lakhs units p.a. to 10 lakhs units p.a. That aspect of the matter, however, is no longer relevant, and that is not even revenue’s case before us. There is no dispute about the rendition of services, but, as in the last year, the dispute is about the services being in the nature of shareholder services. That plea, in our considered view, is wholly unsustainable in law. A core management support service, under a cost contribution arrangement, is inherently outside the limited scope of shareholder services. These services are required for effective administration and management of the assessee company on day-to-day basis. Whether assessee needs these services or not or whether assessee derives “substantial benefit” from these services or not is not really relevant. That should be best left to the commercial wisdom of the assessee. What is material is whether the services were rendered or not, and whether or not the cost allocation was on a fair and reasonable, even if not wholly precise and accurate, basis and both of these tests are clearly satisfied on the facts of this case. It is also not a case in which benefits are so trivial or illusory that it can be said that the assessee did not derive any benefit from these services at all. The emails, correspondence and other corroborative details clearly show rendition of services, and the allocation being on approximate time basis show reasonableness in allocation of costs. As for the fact that the date of agreement is a date subsequent to commencement of work under the agreement, nothing really turns on it inasmuch as the existence of a formal agreement is not even a sine qua non for a cost contribution arrangement. It is not the case of the revenue that the agreement is not a sham agreement. The agreement may have been formally entered into on a later date but it covers the entire period and there is no dispute about rendition of services. In our considered view, in the light of these discussions and respectfully following the co-ordinate bench decision in assessee’s own case for the assessment year 2008-09, we are unable to see any legally sustainable merits in the impugned arm’s length price adjustments in respect of management fees Arm’s length price adjustment in respect of insurance premium share - HELD THAT:- We find that this issue is also covered by the co-ordinate bench decision in assessee’s own case for the assessment year 2008-09 wherein held there was no error on the part of assessee claim the allocation of insurance cost and further there was no duplication of insurance expenditure because they were meant to cover up two types of insurances namely public liability insurance and product liability insurance.
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