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2022 (9) TMI 146 - AT - Income TaxTP Adjustment - ALP determination - intra-group services availed by the Appellant from Associated Enterprises - India related services rendered or not? - services rendered by the overseas Head Office/Regional Office - whether factually it can be concluded that the assessee has availed India related services from its global/regional headquarters? - HELD THAT:- TPO has taken a rather restrictive view while coming to the conclusion that no India related services have been rendered in the instant set of facts. Assessee took us through various e-mails exchanged between the assessee and its overseas offices. The services received in the form of e-mails have been classified under various heads viz. Treasury functions, Controlling functions, Information Technology, Finance support, Information Technology support, CFO functions etc. On perusal of the Summarized Chart furnished to us (along-with copies of emails), we observe that India specific support has been provided via GHO/RHO Services to the assessee and it would be incorrect to conclude entirely that no India related services have been provided/no benefit has been received at the India level. It would be incorrect to brush aside all evidences and conclude that all services are general in nature and do not relate to Indian entity. Assessee submitted before us voluminous Paper-Books and took us through the services rendered which are aimed at giving India specific benefit. On numerous occasions, we see the overseas staff had meetings with the assessee to provide Regional Management support/Business management Support to provide support at the India level. While we agree that a perusal of Agreement suggests that some information/support may be of general nature aimed at providing general guidance to the Ineos Group as a whole/or may not have been availed during the year under consideration, but that cannot lead to the conclusion that no India specific services have been availed by the assessee in India TPO as well as DRP have not fully appreciated the substantial evidence placed on record to come to the conclusion the assessee has not been able to substantiate that no services have rendered by the overseas Head Office/Regional Office or that the assessee has not been able to discharge the onus of receipt of India specific services, thereby making it impossible to compute arm's length price for the aforesaid services. Whether Ld. TPO is correct is computing ALP of the services at "Nil" on the basis that no services have been rendered for which any third independent party would pay and/or whether the Ld. TPO is under a legal requirement to compute ALP based at least one of the methodologies provided for under the Income Tax Act, 1961 read with I.T. Rules? - The judicial opinion on this issue is unanimous that where TPO does not resort to any transfer pricing exercise as per any of methods prescribed in section 92C(1) and determines ALP at Nil, transfer pricing adjustment with respect to such services received by assessee from its foreign AE is not sustainable. In the case of Henkel Chembond Surface Technologies Ltd. [2021 (2) TMI 773 - ITAT MUMBAI] held that where TPO did not resort to any transfer pricing exercise as per any of methods prescribed in section 92C(1) and determined ALP of regional management services at nil, transfer pricing adjustment with respect to regional management services received by assessee from its foreign AE be deleted. In the present case, no search was conducted to find out the independent entity in a comparable transaction and the arm's length price of the international transaction was treated to be NIL. In the present case, no doubts about payments made by the assessee have been raised by the Assessing Officer under section 37 of the Act. Further, accrual of benefit to assessee or the commercial expediency of any expenditure incurred by the assessee cannot be the basis for disallowing the same, as held by Hon'ble Delhi High Court in the case of EKL Appliances Ltd. [2012 (4) TMI 346 - DELHI HIGH COURT] Assessee has been able to demonstrate, with substantial supporting material that it availed India specific services from its Head Office/Regional Office. TPO in view has taken a rather restrictive view in coming to the conclusion that no services were rendered for which any independent third party would pay and hence it was not possible to determine arm's length price in the instant set of facts. TPO cannot stand in judgment on what benefits the assessee has derived from the services and assessee's obligation lies to the extent of demonstrating receipt of services. Once, the assessee has been able to demonstrate receipt of services, in our view, Transfer Pricing adjustment without applying any prescribed benchmarking method is unsustainable and Ld. TPO cannot determine ALP at "Nil" and has to determine ALP under any one of the methods prescribed under the Income Tax Act read with the IT Rules. Accordingly, in our view, Ld. TPO has erred in facts and in law in treating the value of the transactions at "Nil'. Assessee appeal allowed.
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