Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2022 (11) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2022 (11) TMI 242 - AT - Income TaxTP Adjustment - international transaction of payment of ‘Group fees’ having two constituents, viz.,under the ‘Service Agreement with Faurecia, France; and under Cost Sharing Agreement with Faurecia, France - HELD THAT:- The assessee aggregated the overall transaction with other international transactions, which the TPO did not approve. The first question is whether the TPO was justified in segregating the international transaction of payment of ‘Group fees’ from others. It is seen that similar stand was taken by the assessee as well as the TPO on this issue in earlier years. Tribunal, vide its order [2022 (5) TMI 1468 - ITAT PUNE] has countenanced the action of the authorities below on this score for the A.Y. 2011-12. Similar view has been followed by the Tribunal for the next year as well, that is, A.Y. 2012-13 holding that such a transaction needs to be separately benchmarked. The facts and circumstances for the year under consideration are admittedly similar. Following the view taken by the Tribunal for the immediately preceding two years, we uphold the segregation of the international transaction of payment of ‘Group fees’ from the other international transactions. Services received by the assessee against which the payment in question was made - HELD THAT:- An owner of an asset cannot be called upon to pay for its use. The ld. AR did not have any idea about the outcome of the huge R&D costs shared by the assessee over the period. There can be another possibility that R&D cost sharing is for a subject different from the use of Technology and Know-how against which the assessee paid Royalty. If both the payments are for two different air-tight things, without any overlapping, then there can be no embargo on allowing the deduction for both, after the ALP determination of the R&D Cost sharing. However, the ld. AR did not have any record to show the nature of benefit received for payment of royalty and R&D cost sharing. While evaluating the consideration for the R&D Cost sharing payment, the AO will look into the above discussed factors also. Having discussed about the examination of the availment of actual services by the assessee, the next step is to determine the ALP of the international transaction of payment of ‘Group fees’ - TPO invoked the CUP method and determined Nil ALP on the ground that no evidence of receipt of services was provided. Once, on a fresh examination of the evidence to be filed by the assessee, if the TPO comes to the conclusion that the services were actually availed, then he will proceed to determine the ALP of the international transaction afresh. It is made clear that all the methods for determination of the ALP are open before the TPO, who, depending upon the facts and circumstances, would be competent to adopt any one of them as the most appropriate method. In the ultimate analysis, we set-aside the impugned order and remit the matter of transfer pricing addition of Rs.10.34 core to the AO/TPO for a fresh determination in the hue of discussion made above. Needless to say, the assessee will be allowed reasonable opportunity of hearing.
|