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2017 (5) TMI 1615

TPA - ALP adjustment - admission of additional evidence - absence of proof of actual rendition of services - Held that:- It is not discernible that the appellant made any attempt to furnish the proof of receipt of the services. The appellant also filed an application for admission of this additional evidence, in terms of provisions of Rule 29 of the ITAT Rules. No doubt the parties to the appeal are entitled to produce the additional evidence either on suo motto direction of the Tribunal on its .....

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conclusively prove that the services were actually rendered by the AE - Referring to case of Volvo India (P.) Ltd. v. CIT [2016 (12) TMI 1589 - ITAT BANGALORE] we hold that in the absence of proof of actual rendition of services on record, TPO was justified in making the ALP adjustment. - As regards the other contention of the AR that the transaction of management support fee should be aggregated with other transaction and be bench marked by adopting TNMM cannot be accepted for the simp .....

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tax (Transfer Pricing) - II ('TPO'), to the extent prejudicial to the Appellant, is bad in law and liable to be quashed. 2. That the learned AO and the learned Dispute Resolution Panel ('Panel) erred in upholding the rejection of the analysis undertaken by the Appellant in it's Transfer Pricing (TPJ documentation, by the learned TPO, and thereby erred in not appreciating that the Appellant had prepared the TP documentation bona fide and in good faith. 3. That the learned AO and t .....

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under Section 234C and 234D has arisen as a result of the order of the learned AO making an addition as discussed above, leading to an enhanced tax liability. The interest liability would consequentially abate in consideration of our request to set aside the order of the learned AO." 3. Briefly the facts of the case are the appellant is a company incorporated under the Companies Act, 1956. It is engaged in the business of manufacturing, trading and marketing. The return of income for the a .....

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#39;s length. The learned AO referred the matter to the TPO for the purpose of bench marking the above international transactions. The TPO accepted that all other transactions expect the transaction of management fee are at arm's length. As regards the payment of management fee is concerned, it was considered as a separate class of transaction by the TPO. The submission of the appellant that the transaction is closely connected with the manufacturing and same should be aggregated and TNMM sh .....

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ggested the TP adjustment of ₹ 2,21,64,344/-. The AO passed the draft assessment order dated 18.11.2009 incorporating the above TP adjustment. After receipt of the draft assessment order, the appellant filed an objection before the Hon'ble DRP contending interalia that TPO was not justified to treat the transaction of payment of management fee as a separate class of transaction without rejecting the TP study report submitted by the appellant. It was further contended that the TPO was n .....

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reliance in this regard was placed on the decision of Hon'ble Delhi High Court in the case of CIT v. EKL Appliances Ltd. [2012] 345 ITR 241/209 Taxman 200/24 taxmann.com 199 and the Coordinate Bench decision cited supra. The learned AR further contended that the learned TPO is not justified in rejecting the TNMM at entity level without demonstrating as to how some other method will be more appropriate for the purpose of bench marking the ALP. He also filed some additional evidence vide an ap .....

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ified in making ALP adjustment at Nil by holding that there was no necessity of incurring such expenditure and no benefit was derived and there was no proof of actual rendition of services. The TPO treated the transaction of payment of management fee on stand alone basis. No doubt the law is quite settled now. It is beyond the powers of AO/TPO to question the necessity of incurring expenditure or deny the deduction on the ground that no benefit out of such expenditure was incurred. The TPO/AO ca .....

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v. Dy. CIT [2011] 9 taxmann.com 27 (Delhi) vi. McCann Erickson India (P.) Ltd. v. Addl. CIT [2012] 24 taxmann.com 21 (Delhi) vii. DSM Anti-Infectives India Ltd. v. Addl. CIT [2014] 50 taxmann.com 239 (Chd. - Trib.) viii. TNS India (P.) Ltd. v. Asstt. CIT [2014] 48 taxmann.com 128/[2015] 152 ITD 123 (Hyd. - Trib.) ix. Atotech India Ltd. v. Asstt. CIT [2014] 148 ITD 670/42 taxmann.com 468 (Delhi - Trib.) x. Nippon Leakless Talbros v. ACIT [IT Appeal No. 5931 (Delhi) of 2012] xi. Nippon Leakless Ta .....

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the hands of the recipient of the services. But in the present case, it is not discernible that the appellant made any attempt to furnish the proof of receipt of the services. The appellant also filed an application for admission of this additional evidence, in terms of provisions of Rule 29 of the ITAT Rules. No doubt the parties to the appeal are entitled to produce the additional evidence either on suo motto direction of the Tribunal on its own in terms of Rule 29 of ITAT Rules, 1964. Where .....

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services were actually rendered by the AE. The coordinate bench of this Tribunal in the case of Volvo India (P.) Ltd. v. CIT (Appeals) [2017] 77 taxmann.com 207 of which the Hon'ble AM is the author, held as follows:- "12. Thus in the light of the above legal position, the ALP of services of AE cannot be determined at Nil by questioning the necessity of benefits of expenditure incurred. But the matter does not end there. The onus lies on the assessee to prove that the services are actu .....

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mentioned that the assessee had failed to prove that the services are actually rendered by AE. Furthermore the finding of the TPO that the invoice was raised much after the closure of the accounting year and the payment of management fee in nothing but siphoning of the profits from India with the intention of avoiding tax are serious enough to doubt the genuineness of transactions. The appellant had made no effort to controvert the findings of the TPO. Therefore, in our considered opinion the TP .....

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