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2021 (11) TMI 1122 - AT - Income TaxTP Adjustment - international transaction entered into by the assessee with respect to management services fees paid by the assessee to its Associated enterprises - assessee benchmarked the same under the Transactions Net Margin Method clubbing the same with other transactions - Arms’ length price of the same is determined by the ld TPO at Rs. Nil as assessee failed to satisfy Need test, benefit Test, Rendition test etc. the ld CIT(A) confirmed it - only objection of the ld TPO which is threshold of examination of any services rendered is only whether the services have been rendered or not - HELD THAT:- The details of number of test is devoid by them is also tabulated and same is multiplied by the rate of services each day. This is the supporting attached with the bills of services. Coming to the agreement which is placed at page No. 242 to 249 of the Paper Book. The clause NO. 2 shows that the rate of compensation which would be @ times spent by the service provider employeed in rendering the service. It has also given the charge out rate as per annexure B. However, as the charge out rate are attached for the period April 2002 to March 2006. No such charge out rates are available for FY 2011-12. In view of this the supporting of rendition of the service required verification along with rates for this year. It was also not known whether the services are rendered from Hong Kong or from US. This, is so because the rate of the employees are different for this region. Further, merely the annexure at page No. 252 onwards does not show evidence of the rendition of the services, it is merely a breakup of the invoice. In view of this fact, we set aside the whole issue back to the file of the ld TPO with a direction to the assessee to show the actual data, person involved, actual rate as per agreement, rate paid by the assessee as per invoices, technological competence of the persons rendering services to show that services were actually rendered and benefit derived by the assessee. The assessee is also required to show that 3rd party would pay for such services and they are not duplicative in nature. On assessee providing all these details, the ld TPO is directed to examine the same and decide the arms length price of such transaction afresh. The need and benefit test should be left to the wisdom of the assessee. In the result ground No. 1 and 2 of the appeal are allowed with above direction - Appeal of the assessee is partly allowed for statistical purposes.
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