Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2018 (3) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2018 (3) TMI 2014 - AT - Income TaxTP Adjustment - disallowing assessee’s payment for intragroup services by TPO and DRP as assessee has not been able to substantiate from the documents, the need of services rendered and benefit derived from the services provided by AE - what's benefit derived by assessee from the services rendered by AE? - case of the assessee is that assessee has paid cost for sharing intra-group services, provided by the parent company , which in-turn provided various services which inter alia includes marketing, recruitment and technical support etc. to the group companies in Asia-Australia region - HELD THAT:- TPO has admitted that documentary evidence has been submitted by the assessee. TPO time & again has questioned justification of the payment with reference to benefit received. We are of considered view that questioning the need of having such services from any outside agency by the assessee is beyond purview of Revenue Authorities. In so far as benefit derived from services is concerned, the Authorities below without appreciating the documents furnished by assessee has formed opinion that the assessee has not benefited from services provided by Rehau Pte. Ltd. Singapore. As decided in EKL Appliances Ltd [2012 (4) TMI 346 - DELHI HIGH COURT] it is not necessary for the assessee to show that any legitimate expenditure incurred by him was also incurred out of necessity. It is also not necessary for the assessee to show that any expenditure incurred by him for the purpose of business carried on by him has actually resulted in profit or income either in the same year or in any of the subsequent years. The only condition is that the expenditure should have been incurred “wholly and exclusively” for the purpose of business and nothing more. It is this principle that inter alia finds expression in the OECD guidelines. So long as the expenditure or payment has been demonstrated to have been incurred or laid out for the purposes of business, it is no concern of the TPO to disallow the same on any extraneous reasoning. As provided in the OECD guidelines, he is expected to examine the international transaction as he actually finds the same and then make suitable adjustment but a wholesale disallowance of the expenditure, particularly on the grounds which have been given by the TPO is not contemplated or authorized. Thus Authorities below have erred in determining cost of Intra Group Services as ‘Nil’ and making adjustment in respect of international transactions pertaining to intra group services provided by AE to the assessee. Decided in favour of assessee.
|