TMI Blog2017 (12) TMI 1636X X X X Extracts X X X X X X X X Extracts X X X X ..... We, therefore, restore the entire issue to the file of the Assessing Officer/TPO with a direction to decide the issue afresh in accordance with law after giving due opportunity of being heard to the assessee. We hold and directly accordingly. The grounds raised by the assessee are accordingly allowed for statistical purposes. Assessee appeal allowed for statistical purposes. - ITA No.123/Del/2017 - - - Dated:- 4-12-2017 - SHRI R. K. PANDA, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER For the Appellant: Shri Tarun Gulati, Adv. For the Respondent : Shri H. K. Choudhary, CIT-DR ORDER PER R. K. PANDA, AM : This appeal filed by the assessee is directed against the order dated 09.12.2016 passed by the ACIT, Central Circle- 20, New Delhi u/s 143(3) r.w.s. 144C(1) of the I.T. Act for the assessment year 2012-13. 2. Facts of the case, in brief, are that the assessee is a company incorporated under the Indian Companies Act, 1956 and is engaged in the business of distribution of mobile handset and accessories. It is a subsidiary of M/s Brightpoint Netherlands which, in turn, is a wholly owned subsidiary of M/s Brightpoint Inc. M/s Brightpoint Netherl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... parable was put on record and arm's length price was taken as Nil and accordingly the TPO made an upward adjustment of ₹ 4,49,25,556/-. The Assessing Officer passed the draft assessment order. The assessee approached the DRP, who upheld the adjustment made by the TPO. Accordingly, the Assessing Officer completed the assessment by enhancing the income of the assessee by ₹ 4,49,25,556/- and determined the total income of ₹ 8,00,64,090/-. 4. Aggrieved with such order of the Assessing Officer/TPO, the assessee is in appeal before the Tribunal by raising the following grounds :- Appeal under Section 253(1) of the Income Tax Act, 1961 ( Act ) against the order dated 09 December 2016 (received on 16 December 2016) passed under Section 143(3) read with section 144C of the Act ( impugned order ), by the ld. Assistant Commissioner of Income Central Circle - 20, New Delhi ( AO ). Following grounds are without prejudice to each other: GROUNDS OF APPEAL 1. That on the facts and circumstances of the case and in law, Assessing Officer ( Ld. AO ) erred in assessing the income of the Appellant at INR. 8,00,64,090/- as against the returned income of INR. 3,51,38 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9. The Ld. TPO/ Hon'ble DRP have erred in upholding the adoption of CUP method as the most appropriate method for determining the arm's length price in respect of the impugned international transaction without identifying any comparable uncontrolled transaction(s) for the computation of the ALP as prescribed in Section 92F(ii) of the Act. 10. That the basis to disallow the payments made for management services by considering CUP as Nil is based purely on surmises and conjectures and has no basis in facts and in law. 11. The Ld. TPO/ Hon'ble DRP erred in passing an order that is perverse in law by ignoring the relevant submissions, information and documents provided by the Appellant including but not limited to email exchanges, cost allocation documents, service agreement, invoices etc. to substantiate the receipt of business services, and based on a preoccupied mind reached at an inappropriate conclusion that the arm's length value of the impugned transactions should be Nil. 12. The Ld. TPO/Hon'ble DRP erred in arriving at various unwarranted and erroneous conclusions unsupported by any material and have also failed to consider, specifically rebut t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the case, the Ld. AO erred in initiating penalty proceedings under section 271(1)(c) of the Act. 20. The Appellant craves to leave to add, withdraw, alter, modify, amend or vary the above grounds of appeal before or at the time of hearing. 21. The Appellant has preferred a rectification application u/s 154 in connection to the inadvertent mistakes by the Ld. AO. The Appellant craves leave to add to, alter or amend the above Grounds of Appeal as and when advised. 5. Grounds of appeal nos .1 and 2 being general in nature were not pressed by the ld. counsel for the assessee for which ld. DR has no objection. Accordingly, these grounds are dismissed as not pressed. 6. So far as ground nos .3 and 4 are concerned, it is grievance of the assessee that the benchmarking of transaction through the combined transaction approach by applying of TNMM was wrongly rejected. 7. Ld. counsel for the assessee submitted that the TPO disregarded the combined transaction approach on the ground that the transaction are separate in nature as according to him export commission, royalty and model fee are separate in nature. He submitted that there is no specific findings by the DRP on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lculated by him by applying CUP method as Nil, which has been upheld by the DRP. He submitted that the TPO/DRP have incorrectly applied the CUP method without bringing out any comparable on record and, therefore, approach of the TPO/DRP is contrary to Rule 10B(2) of the I.T. Rules, 1962 and the judicial precedents. For the above proposition, he relied on the following decisions :- a. AWB India (P.) Ltd. v. Dy. CIT [2014] 50 taxmann.com 323/[2015] 152 ITD 770 (Delhi - Trib.) b. Frigoglas India (P.) Ltd. v. Dy. CIT [2016] 68 taxmann.com 370 (Delhi - Trib.). c. Mitsui Prime Advanced Composites India (P.) Ltd. v. Dy. CIT [2016] 70 taxmann.com 123 (Delhi - Trib.). d. Knorr Bremse India (P.) Ltd. v. Asstt. CIT [2017] 77 taxmann.com 101 (Delhi - Trib.) 10. He accordingly submitted that the above grounds should be allowed. 11. So far as ground nos. 5, 16 and 17 are concerned, the same relate to the failure of the TPO/DRP to appreciate that benefit has been received by the assessee. 12. Ld. counsel for the assessee referring to the above grounds submitted that as per the TPO, no documentary evidences were produced to establish that the Intra Group Services were needed b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le Communications India (P.) Ltd. v. CIT [2015] 55 taxmann.com 240/231 Taxman 113/374 ITR 118 (Delhi). d. CIT v. Cushman Wakefield (India) (P.) Ltd. [2014] 46 taxmann.com 317/367 ITR 730 (Delhi). e. Dresser Rand India (P) Ltd. v. Addl. CIT [2011] 13 taxmann.com 82/[2012] 53 SOT 173 (Mum.) 13. Referring to the decision of the Hon'ble Punjab Haryana High Court in the case of CIT v. Max India Ltd. [2016] 75 taxmann.com 268, he submitted that the receipt of service is established on balance of probabilities and the agreement for services may be oral or written. He accordingly submitted that the above grounds raised by the assessee should be allowed. 14. So far as ground nos. 14 and 15 are concerned, the same relate to action of the TPO/DRP in questioning the commercial expediency of the transactions entered into by the assessee. 15. Ld. counsel for the assessee referring to the decision in the case of CIT v. EKL Appliances Ltd. [2012] 24 taxmann.com 199/209 Taxman 200/345 ITR 241 (Delhi) submitted that it is well-established principle that the Department cannot question the commercial expediency of a transaction. 16. So far as ground no.13 is concerned, the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is also his submission that the term 'transaction' itself is defined in Rule 10A(d) of the I.T. Rules, 1962 to include a number of 'closely linked transactions'. It is also his argument that the finding of the Assessing Officer/TPO that the basis of separate analysis is 'export commission, royalty and model fee' is completely perverse since the assessee has not received any export commission, royalty or model fee. It is also his argument that the TNMM has been adopted for five transactions using the combined transaction approach as these activities are closely linked to the main business activity i.e. sale and distribution of handsets. It is also his submission that the Assessing Officer/TPO has not rebutted the basis adopted in the TP report for adopting TNMM and they failed to indicate the reasons for rejecting the TNMM as the most appropriate method. Further, they have been incorrectly applied the CUP method without bringing out any comparable on record. It is contrary to Rule 10B(2) of the I.T. Rules, 1962. Similarly, it is also his arguments that the assessee had filed voluminous documents to establish that the IGS were needed by the assessee and are ..... X X X X Extracts X X X X X X X X Extracts X X X X
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