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2023 (4) TMI 1041 - ITAT MUMBAIUpward transfer pricing adjustment - TPO did not accept the approach adopted by the Appellant in respect of payment towards Distribution Rights, Marketing Consultancy Fee for Marketing Consultancy & Support Services, and payment towards IT Consulting & Support Services - According to the TPO, no reply was received from the Appellant, thus he determined the ALP of the aforesaid three transactions as 'Nil' holding that the Appellant has failed to satisfy the need/benefit of the intra-group services, and rendition thereof - TPO has rejected the method adopted by the Appellant without assigning any reason and without granting sufficient opportunity to the Appellant - HELD THAT:- We find merit in the contentions advanced by Appellant that neither the Assessing Officer nor the DRP has provided any reasoning for rejecting the TNMM which has been followed by the Appellant consistently and has been accepted for earlier years. No reasoning is given by the TPO and/or DRP while rejecting TNMM method and concluding that CUP Method is the most appropriate method. While rejecting objection raised by the Appellant, the DRP had concluded that the Appellant has failed to establish, both, the rendition of all the intra-group services the as well as the benefit derived by the Appellant from the same. Thus, there is disconnect in the reason given by the TPO for determining ALP of Intra-Group Services at 'Nil' and the reasons given by the DRP for rejecting the objections. TPO opposed admission of the additional evidence filed by the Appellant before DRP - While rejecting objection raised by the Appellant, the DRP had concluded that the Appellant has failed to establish, both, the rendition of all the intra-group services the as well as the benefit derived by the Appellant from the same. Thus, there is disconnect in the reason given by the TPO for determining ALP of Intra-Group Services at 'Nil' and the reasons given by the DRP for rejecting the objections As regards, the payment towards distribution rights, the Appellant has place on record the Agreement for Grant of Distribution Rights. The aforesaid agreement entitled the Appellant to receive commission from AEs in respect direct sales made by such AEs in India. Appellant had also placed on record details of commission income earned in respect of products sold by third parties in India which has been offered to tax by the Appellant. The Commission received by the Appellant has also been accepted to be at arm's length by the TPO. These aspects have not been considered by the TPO/DRP. DRP has also observed that the Appellant had failed to provide the details of cost incurred in relation to the service and allocation of the same to the Appellant. DRP has failed to consider the certificate from statutory auditors submitted along with the Note on IT Consulting & Support Services as well as the summary of actual cost incurred filed along with the Note on Marketing Consultancy and Support Services. We hold that the DRP has failed to consider and/or appreciate the material on record. In the facts and circumstances of the present case, we deem it appropriate and in the interest of justice to remand the issue back to Assessing Officer/TPO for determination of ALP afresh. Ground No. 1 raised by the Appellant is allowed for statistical purposes
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