TMI Blog2018 (1) TMI 726X X X X Extracts X X X X X X X X Extracts X X X X ..... ment fee of US$ 4,27,000 with administration charges of US$ 14000 and markup of 5%, at the exchange value as on the date of 31-03-2008, can be considered as 'service charges' for the intra group services rendered. This can be taken as ALP. Therefore, modifying the order of TPO, we determine the Management Consultancy Fee as detailed above and AO is directed to modify the order accordingly. Computation of exemption u/s 10AA - Held that:- We direct the AO to exclude the insurance and travelling and conveyance expenses both from the export turnover as well as the total turnover for the purpose of computation of exemption u/s 10AA of the Act. - ITA No.441/Hyd/2017 - - - Dated:- 12-1-2018 - Smt. P. Madhavi Devi, Judicial Member And Shri B. Ramakotaiah, Accountant Member For The Assessee : Shri P. V. S. S. Prasad For The Revenue : Shri J. Siri Kumar, DR ORDER Per Smt. P. Madhavi Devi, J.M. This is assessee s appeal for the A.Y 2012-13. In this appeal, the assessee is aggrieved by the order of the AO, dated 9.1.2017 passed u/s 143(3) r.w.s. 144C of the I.T. Act. The assessee has raised the following grounds of appeal: 1 . The Ld Dispute Resolution ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n and Film Production Companies from its inhouse animation studio facilities in Hyderabad, filed its return of income for the A.Y 2012-13 on 29.11.2011 admitting total income of ₹ 72,39,133. During the assessment proceedings u/s 143(3) of the Act, the AO observed that the assessee has entered into international transaction with its AE. Therefore, the case was referred to the TPO for determination of the Arms Length Price. 3. The TPO passed an order u/s 92CA(3) of the Act on 30.01.2015 and in accordance with the same, the draft assessment order was passed by the AO. The assessee preferred its objection before the DRP and consequent to the DRP order, the final assessment order dated 9.1.2017 was passed and the assessee is in further appeal before us against the T.P. adjustment made (i) on account of profit attributable and (ii) on payment of management consultancy charges. The assessee is also in appeal against the computation of deduction u/s 10A of the Act. 4. At the time of hearing, the learned Counsel for the assessee submitted that the issue in grounds of appeal No.2 3 had arisen in the earlier A.Y as well and the Coordinate Bench of this Tribunal for the A.Y 2010 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... andi to claim any benefit neither the revenue. 15.2 The revenue has grievances on the arrangement and existences of group companies. There is no doubt, there exists tax planning. There can be tax planning within the four corners of the taxation laws. There is enough mechanism in the existing Act and also there is DTAA - arrangement with Ireland, which will take care of the situations of tax avoidance. The revenue has not brought any cogent evidence to prove that there exists any tax avoidance. In our considered view, the action of the TPO is not justified and accordingly, the grounds raised by assessee are allowed . 7. Since the facts and circumstances of the case for the A.Y before us are similar, respectfully following the decision of the Coordinate Bench, we allow the assessee s ground of appeal and hold that there is no international transaction during the relevant financial year. Grounds of appeal 2 3 are accordingly allowed. 8. As regards Ground of appeal No.4 relating to Management Consultancy Fee, the learned Counsel for the assessee submitted that this issue is also covered in favour of the assessee by the decision of the Coordinate Bench of the Tribunal in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the DQE Mauritius to assessee which should be on it's own account. To the extent of the above amount, we are in agreement with the observation of the TPO in para 8.3 of his letter dt. 08- 11-2012, that foreign exchange loss does not pertain to any management and consultancy services. To that extent his order has to be approved. 6.3. What the TPO has missed is with reference the amounts other than foreign exchange loss. In the absence of any comparable figures and in the absence of any further enquiry and having the fact that services have been rendered to assessee as accepted by DRP also, TPO cannot take the amount of ALP at NIL, ignoring the payment by assessee of US$ 4,27,000. As per the agreement, all the costs incurred by the DQE Mauritius with 5% markup had to be charged to assessee. Therefore, as per the details furnished by assessee before the TPO, the actual management fee of US$ 4,27,000 with administration charges of US$ 14000 and markup of 5%, at the exchange value as on the date of 31-03-2008, can be considered as 'service charges' for the intra group services rendered. This can be taken as ALP. Therefore, modifying the order of TPO, we determine the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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