Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2019 (5) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2019 (5) TMI 327 - AT - Income TaxTP adjustment - clubbing service agreement income with provision of consulting services - Re-characterising the subsidy income as income received from provision of services - HELD THAT:- As per Schedule 1 of the agreement it can be seen that the subsidy received by the appellant company is directly linked to the outcome of this agreement by which the appellant company agrees to provide all or some of the services listed in Schedule 1 hereinabove. No doubt, the assessee has shown this service charge subsidy in its profit and loss account, but the same has been shown separately without any bench marking. It is true that no third party would have paid such a subsidy to an unrelated party but the fact of the matter is that the appellant did receive this service charge subsidy which is directly related to services provided by it to its AEs. This service agreement income is part of provision of consulting services rendered by the assessee and, therefore, we do not find any error in clubbing service agreement income with provision of consulting services - This ground is accordingly dismissed. MAM selection - assessee has applied CUP as MAM for bench marking provision of consulting services - Rejection of Comparable Uncontrolled Price [CUP] method thereby applying Transactional Net Margin Method [TNMM] as the MAM - HELD THAT:- No force in the contention that the evidences are not brought on record. The invoices raised to AEs and non AEs are exhibited in the paper book. Whether the same person is providing service to both the AEs and non AEs is irrelevant, so as long as the evidences of services provided are available. The services are provided by different set of personnel, having different qualification and it would not be justifiable to ask for invoices of the same person who has provided service to AEs and also to non AEs. A proper team composition is there to take care of the nature and technical difficulties of the project. Even the OECD Guidelines of July 2010 preferred internal CUP over other methods, since it bears a more direct and closer relationship to the transaction under review. Considering invoices relating to AEs and non AEs exhibited in the paper book, we are of the considered opinion that CUP is the MAM and has been rightly adopted by the assessee to bench mark its transactions for provision of consulting services rendered. This grievance is, accordingly, allowed. Addition of unreconciled entries in the AIR information - HELD THAT:- Assessing Officer is directed to decide this issue afresh after verifying the AIR information with detailed submissions made by the assessee. The Assessing Officer is further directed to allow eligible brought forward business losses and unabsorbed depreciation as per provisions of law. These issues are treated as allowed for statistical purposes.
|