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TMI Blog2017 (7) TMI 1002X X X X Extracts X X X X X X X X Extracts X X X X ..... r no services? 2. Whether the Ld. CIT(A) has erred on facts and in law in deleting the addition made by AO, as the TPO in his report has clearly pointed out that the appellant had failed to establish that the employee was indeed assigned or deputed to the assessee company for the year under consideration and on the issue of e-learning software charges and interest collection etc. also the TPO has stated that there are duplication of these services as appellant has separately booked the expenses in its P&L account under these heads? 2. Briefly stated facts of this case are : the assessee company is a wholly owned subsidiary of Cushman & Wakefield Mauritius Holding Inc., engaged in the business of rendering services qua acquisition, sales and lease of real estate property and other services, such as, advisory and research, facilities management, project management, etc. in the real estate sector. Assessee company has more than 11,000 employees operating from 49 countries. Cushman & Wakefield and Healey & Baker, which merged into Cushman & Wakefield in 1998, provides a wide range of real estate services across North and South America, Europe, the Middle East, Africa and the Asia- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ost sharing arrangement of Rs. 33,00,459/- paid to Cushman Hongkong; (b) Reimbursement of company share of salary for Common Manpower Resource, per cost sharing arrangement of Rs. 40,57,820/- paid to Cushman Singapore. 9. After rejecting the contentions raised by assessee company, TPO came to the conclusion that assessee has made payment of Rs. 40,50,153/- and Rs. 33,00459/- (totaling to Rs. 73,50,612/-) to CWS and CWHK respectively for no services which may be said to be in the nature of intra group services. 10. However, during the appellate proceedings before ld. CIT (A), assessee company filed application for additional evidence, on which remand report was called, vide which the TPO stated that since from the duplication of these services as assessee has separately booked the profit in its profit & loss account under these heads, the additional evidence does not serve any purpose. CIT (A) after considering the facts and circumstances of the case, and the fact that this issue was subject matter of the litigation in the earlier year also and as such, adjustments were deleted by the Tribunal, came to the following conclusion :- "4.9. I have gone through the order of the TP ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rice of the services to be nil on application of CUP method as no uncontrolled enterprise would have paid any amount for services which do not tantamount to intra group services with demonstrate-able benefits. However, CIT (A) in appeal held that the assessee established that the services have been rendered by the third party entities which were routed through AE. The expenses incurred like internet charges, Blackberry license fee, conference expenses, travel cost and other software expenses are allowable deduction sin the hands of the assessee if it were directly billed to the assessee and as such, cannot be concluded that there were duplicity of the expenses or there were superfluous in nature and they were part of the transaction within group which is reimbursed by the assessee at cost. 12. However, the ld. AR for the assessee contended that the identical issue has already been decided by Hon'ble jurisdictional High Court in assessee's own case in ITA No.475 / 2012 dated 23.05.2014 by remanding the case to AO, for ALP assessment by TPO followed by the AO's order in accordance with law which has not been controverted by the ld. DR. 13. We have perused the aforesaid judgment of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uncontrolled transaction would involve an additional element of profit, thus leading to a greater claim for reimbursement. If true, this would no doubt place this transaction within Section 92(3). However this cannot be the case. Undoubtedly certain amounts were charged by the AEs as reimbursement for actual costs incurred. Nevertheless, whether a third party - in an uncontrolled transaction with the assessee would have charged amounts lower, equal to or greater than the amounts claimed by the AEs, CWS and CWHK has to perforce be tested under the various methods prescribed in Section 92C of the Act. The question thus required to be addressed - and determined, is whether an independent entity - for the same liaisoning and client interaction services as were provided by CWS and CWHK - charges an amount less than or equal to or more than SGD 74,330/- and SGD 281,265/-. An independent entity would quite possibly include a mark-up over and above the cost, and thus, exceed the value charged by the AEs in this case. The sequitur cannot be that the cost incurred by those entities would be the same as the AEs in this case. It may be greater (in which case Section 92(3) would clearly apply), ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... group entities within Asian Region. 17. After examining the detail of services received by the assessee, TPO came to the conclusion that the assessee has made payment of Rs. 73,50,612/- to CWS and CWHK for no services rendered by them. 18. In the judgment in assessee's own case (supra), the Hon'ble High Court observed that the authority of the TPO is to conduct the transfer pricing analysis to determine the ALP and not to determine whether there is a service or not from which the assessee benefits. This aspect of the exercise is left to the AO. Hon'ble High Court further held that in this case, the issue is, "whether an independent entity would have paid for such services". Importantly in reaching this conclusion, neither the Revenue, nor this court, must question the commercial wisdom of the assessee, or replace its own assessment of the commercial viability of the transaction. The services rendered by CWS and CWHK in this case concern liaising and client interaction with IBM on behalf of the assessee - interaction with IMB's regional offices in Singapore and US was necessary. It is further held by Hon'ble High Court whether it is commercially prudent or not to employ outsider ..... X X X X Extracts X X X X X X X X Extracts X X X X
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