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2020 (6) TMI 299 - HC - Income TaxTP Adjustment - services to its AE in respect of marketing support services provided by the assessee to its A.E. in supply of gas turbines to PWD (CGW) in supplying gas turbines to the public works department (PWD) in carrying out construction for Common Wealth Games (CWG) - Whether Tribunal was correct in holding that the assessee did not render any services to its AE in respect of marketing support services provided by the assessee? - According to the assessee, the turbines were not supplied by it but were directly purchased by the party from the AE. Assessee also claimed that it did not have any permanent establishment (PE) in India - why no service charges/ commission was not charged by the assessee from the AE when the entire licensing work for the purchase of turbines by the Indian customers from the AE was undertaken by the assessee and the contract for installation/ commissioning/ maintenance of such turbines were done by the assessee? HELD THAT:- Tribunal noted that the basis of the entire transfer pricing adjustment was the supply of gas turbines to PWD (CWG) by the AE - relevant clauses of the contract and noted that eligibility condition for participating in tender was submission of registration certificate under Delhi Value Added Tax Act, 2004, besides submission of certificate of being original equipment manufacturer of gas turbines. Admittedly, assessee was not a manufacturer of gas turbines but its AE was. However, the AE did not have VAT registration certificate. Therefore, it was not qualified to participate in the tender. On the other hand, assessee had registration certificate under the Delhi VAT Act, 2004. Therefore, for participating in the tender and for obtaining the contract the bid was submitted in assessee’s name though it was clearly understood by the contracting parties that the original equipment manufacturer of gas turbines was the AE. Tribunal found that there was nothing on record to suggest that the assessee had provided any services to its AE for sale of its gas based turbines either to PWD or to other customers in India. It was found as a matter of fact that in case of sales made by the AO to other parties in India, the assessee was in no way involved in the sales affected. The six parties had stated that they had negotiated directly with the AE for purchase of gas turbines and the assessee was in no way involved in such transactions. Tribunal also noted that for earlier assessment years too there were no transfer pricing adjustments. Thus, there was no basis for concluding that assessee had provided any market support services to the AE or received any commission from the AE for providing such marketing support services. In the absence of concrete evidence, transfer pricing adjustment could not have been made merely on presumptions and surmises. Therefore, the transfer pricing adjustment was deleted. No error or infirmity in the approach of the Tribunal which is quite reasonable and pragmatic. That apart, the finding returned by the Tribunal that the assessee did not provide any marketing support services to the AE and did not receive any commission from the AE for providing such marketing support services is a finding of fact based on appreciation of evidence and materials on record. Such a finding of fact cannot be said to be vitiated by any material irregularity or perversity. In the absence thereof, no substantial question of law arises from the impugned order of the Tribunal. - Decided against revenue
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