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2023 (1) TMI 827 - AT - Income TaxTP Adjustment - Determining the arms length price of the international transaction pertaining to reimbursement of expenses by the assessee to Yanfeng China as “nil” and thereby made a downward adjustment to the transaction value of reimbursement of expenses to the AE - TPO noted that the assessee has not submitted any supporting documents in support of its contention - Whether TPO is justified in determination of arms length price act “nil” when the assessee is not able to demonstrate that the expenses so incurred have a live nexus with India? HELD THAT:- Several instances have come where the assessee has not been able to demonstrate with supporting agreement or evidences to prove that the expenses made to AE are being supported by actual rendition of services or whether these expenses are in relation to services which have any co-relation with the business of the assessee in India. We are in agreement with the Revenue that though the TPO cannot determine arms length price at “nil” by questioning the necessity of the expenses or questioning the benefits of expenditure incurred, however, at the same time, the onus is on the assessee to prove that there was actual rendition of services by the AE. In a situation the assessee is unable to prove any rendition of services or that the services had any connection with the business of the assessee in India, in our considered view, on such facts, the ld. TPO can determine the arms length price at “nil”. The onus of proving the actual rendition of services primarily lies on the assessee in respect of an international transaction. In the case of Akzonobel India Pvt. Ltd. [2022 (10) TMI 1056 - DELHI HIGH COURT] the High Court held that where assessee has failed to furnish evidence to demonstrate that administrative services were actually rendered by AE and assessee has received such services, the TPO righty determined ALP to service fee at “nil”. Since in the instant set of facts, the assessee has not been able to prove the actual rendering of services/expenditure in respect of the assessee’s business by its oversees associated enterprise either by way of producing the necessary agreement in respect of rendering of services or in the form of any other communication which could convincingly/conclusively establish such rendering of services/incurring of expenditure, we are of the view that the TPO was justified in determining the arms length price at “nil”. Accordingly, we find no infirmity in the order of ld. TPO/DRP. Appeal of the assessee is dismissed
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