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2016 (7) TMI 245 - AT - Income TaxDetermination payment of royalty - whether the issue as to the payment on account of other group charges made by the assessee to its associated enterprise for services rendered was to be determined by the Transfer Pricing Officer/Dispute Resolution Panel or it was to be determined by the Assessing Officer under section 37(1) of the Act ? - Held that:- The instant case is squarely covered by the judgment in CIT v. Cushman and Wakefield (India) Pvt. Ltd. [2014 (5) TMI 897 - DELHI HIGH COURT] because in the instant case the Transfer Pricing Officer has exceeded his power by determining that the assessee has not received services from its associated enterprise, thus failed the benefit test and further held that the assessee had not furnished any evidence to any visit of the employee of its associated enterprise in connection with the services rendered entailing payment of group charges by the assessee. We are of the considered view that since the payment made by the assessee to its associated enterprise for services rendered was basically an expenditure incurred for the purposes of business, the same are to be determined under section 37(1) of the Act, if allowable or not and this issue is in the exclusive domain of the Assessing Officer to be determined. Now, adverting to the assessment order passed by the Assessing Officer which is in consonance with the direction issued by the Transfer Pricing Officer/Dispute Resolution Panel, vide which group charges to the tune of ₹ 1,89,53,444 have been treated as adjustment in the arm's length price. The Assessing Officer has neither examined nor returned any findings whatsoever if the payment to the tune of ₹ 1,89,53,444 made to the associated enterprise for availing of services from its associated enterprise is an expenditure incurred for the purposes of business under section 37(1) of the Act rather passed the assessment order in a mechanical manner in consonance with the directions issued by the Transfer Pricing Officer/ Dispute Resolution Panel. Moreover, when the Transfer Pricing Officer has not disputed that the services were availed of by the assessee from its associated enterprise, the question of determining the arm's length price of group charges to the tune of ₹ 1,89,53,444 does not arise because it was to be done by the Assessing Officer only.
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