TMI Blog2016 (12) TMI 1588X X X X Extracts X X X X X X X X Extracts X X X X ..... rly, in relation to invoice for MIS, the same had been pertained to the year under consideration and assessee failed to substantiate its claim of service were actually received or that services are not in nature of stewardship services. Further, DRP observed that the TPO had discussed in detail the nature of various services, claimed to have been received the assessee from its A.E. Hence, the DRP directed the AO for disallowance of ₹ 78,57,058/-. In our opinion, if the assessee produces the particulars of actual expenditure for availing these services, then it is to be allowed. With this observation, we remit the issue to the file of AO for fresh consideration. - I.T.A.No.2575/Mds./2016 - - - Dated:- 16-12-2016 - SHRI CHANDRA POOJA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been dealt in detail by the TPO in his order wherein he have duly examined the objections raised by the assessee and he has given reasons for not accepting the same. TPO has taken guidance from OECD guidelines in para 1.42 which require that ALP should be applied on a transaction by transaction basis for arriving at the most precise approximation of fair market value. According to DRP, it is very clear from the TPO s order that the services were either in nature of stewardship services or the assessee failed to substantiate its claim that there services were actually received by it. Further, the assessee s contention is that there was not any motive to shift profits outside India. DRP observed that the transfer pricing rules shall apply ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the payment made for the same were at arm s length e.g. the assessee has incurred an expenditure of 49,26,678/- as legal and professional charges to various independent parties but at the same time it is paying to AE for similar purposes without bringing anything on record to show as to how, when and for what purpose the same were rendered. Another example of the same is that the invoices submitted by the assessee pertain to fees country with hardly anything to show as to how the assessee benefitted from the same in his consideration. During proceedings before this Panel too, assessee failed to substantiate its claim that such services were actually received or that the services were not in the nature of stewardship services The claim o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he stepped into the bench marked the management services fee by applying the CUP method overwhelming that TNMM is not mot appropriate method. According to him, the TPO is not an Assessing Officer and he is concerned with only in respect of T.P adjustments and he cannot have jurisdiction to decide allowability of expenditure u/s.37 of the Act. Further, he relied on the judgement of Hyderabad Tribunal in the case of DCIT Vs. M/s. Air Liquid Engineering in ITANo.1040/Hyd./2011 others vide order dated 13.02.2014 wherein held that:- 20. Furthermore, we are of the opinion that once TNMM has been applied to the assessee company s transaction, it covers under its ambit the Royalty transactions in question too and hence separate analaysis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rrect in employing an overall TNMM for examining the royalty. The TPO worked out the difference in the PU of the outside party (the assessee) at 4.09% and the comparables at 7.05%. This has not been shown to fall outside the permissible range. 34. The decision of the Tribunal in Ekla Appliances , 2012-TH-01-HCDe1- TP , has been sought to be distinguished by the TPO, observing that the facts in that case are not in pan matena with those of the assessee s case. However, therein also, the benefit test had been applied by the TPO, as in the present case. The matter was carried in appeal before the Hon ble High Court. The Hon ble Delhi High Court has held that the so-called benefit test cannot be applied to determine the ALP of royalty pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ground of the benefit test, is unsustainable in law. 36. Keeping in view all the above factors, the disallowance made on account of royalty is found to be totally uncalled for and it is deleted as such. ... . 21. Hence, following the ratio of the Hon ble Delhi High Court in CIT vs. EKL Appliances (supra) and various other decisions as noted above and given the facts and circumstances of the instant case, we hold that the addition made by the TPO and upheld by the DRP is unsustainable and is to be deleted. Hence Ground No. 2 is held in favour of the assessee. Hence, the appeal of the Revenue ITA.No.1040/Hyd/2011 is dismissed and Assessee s appeal in ITA.No.1159/Hyd/2011 is allowed. 5. Further, he drew our attention t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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