TMI Blog2019 (8) TMI 176X X X X Extracts X X X X X X X X Extracts X X X X ..... 68 - ITAT PUNE] restore this issue to the file of AO/TPO for a limited purpose of verification as to whether the margin of the tested party is at arm s length to the margins of the comparable companies. Needless to say, that the authorities shall give a reasonable opportunity of being heard to the assessee while deciding the said issue - ITA No. 5996/Mum/2018, ITA No. 4972/Mum/2017 - - - Dated:- 25-7-2019 - Shri G. S. Pannu, Vice-President And Shri Pawan Singh, Judicial Member For the Appellant : Shri Mukesh Butani with Shri Shreyash Shah (AR) For the Respondent : Shri Anand Mohan (DR) ORDER UNDER SECTION 254(1)OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER; 1. These two appeals by assessee are directed against the assessment order passed by Assessing Officer under section 143(3) r.w.s 144C(13) passed in pursuance of direction of ld. Dispute Resolution Panel-1(WZ), [the ld. DRP], Mumbai dated 12.05.2017 and 06.08.2018 for Assessment Year 2013-14 2014-15 respectively. The assessee has raised certain common grounds of appeal, therefore, both the appeals were clubbed, he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y I wisdom of the Appellant for incurring of expenditure in respect of receipt of technical assistance and placing reliance on the ruling of Deloitte Consulting India Pvt. Ltd. (22 taxmann.com 107) 4.6 Not acknowledging the fact that the services were actually received by the Appellant 4.7 Disregarding the documentary evidence submitted by the Appellant in the nature of cost allocation, details of allocation keys and bifurcation of the cost for each category of services received 4.8 Arbitrarily relying on the DRP directions of AY 2011-12 in Appellant's own case, without proper examination of the facts and circumstances of A Y 2014-15 and concluding that the material placed on the record by the Appellant in the instant A Y is similar to the documentary evidences submitted in the previous AY without proper examination Other grounds: 5. That the learned AO has erred on the facts and circumstances of the case and in law, in levying the interest under section 234B of the Act mechanically and without recording any satisfactory reasons for the same 6. That AO/DRP has grossly erred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he DRP followed the order of DRP for AY 2012-13 and in AY 2014-15 followed the order of DRP for AY 2011-12. The ld. AR for the assessee submits that in appeal for AY 201-12 and 2012-13 the issue was restored for limited purpose only, therefore for the year under consideration the same order may be followed. 4. On the other hand, the ld. Departmental Representative (DR) for the revenue supported the order of the authorities below. The ld. DR further submits that in AY 2011-12 and 2012-13 the contention of the assessee was that the allocation key applied by the AE to allocate cost of services provided by the AE is one of the accepted methods and same cannot be rejected without rebuttal. This assessee has not taken such plea for the years under consideration. 5. We have considered the rival submissions of the parties and have gone through the orders of authorities below. Grounds No. 1 to 3 are general and needs no specific adjudication. Ground No. 4 relates to transfer pricing adjustment. We have noted that for AY 2011-12 and 2012-13 the assessee has raised identical grounds of appeal as raised in the appeals under consideration. The ld. DRP while con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... comparable companies, the assessee has benchmarked the transaction as arm s length. The Ld. counsel further pointed out that the assessee has established the genuineness of the expenditure and its allocation among various group entities by furnishing CPA certificate duly issued by the competent person. The Ld. counsel further argued that the analysis of the TPO is not based on evidence on record and in accordance with the provisions of the Act. The Ld. TPO has wrongly computed the arm s length price of the international transaction at Nil. In the present case, since the Ld. TPO has wrongly applied CUP method the Ld. DRP ought to have set aside the order passed by the Ld. TPO. The Ld. counsel for the assessee relying on the decision of the Pune Bench of the Tribunal in the case of Emerson Climate Technologies (India) Ltd. vs. DCIT 2018 90 taxman.com 125 submitted that in the present case the CUP method cannot be applied as most appropriate methods because the transaction is intra group i.e. between the AEs. The Ld TPO has not brought on record any comparable for applying CUP methods for benchmarking the transaction. The Ld. counsel further pointed out that the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s N V. Post exit of AFL, there was need to provide operational strategic and advisory support to the assessee company to ensure that the assessee is benefitted by the processes followed by CWT group of company worldwide. The said services were provided by the AEs for which the asseseee entered into agreement with its AE CWT, Singapore. The aim of providing services to the assessee was to achieve the objective of development of its business in the Indian market, implementation of cost effective process, improvement of financial performance, establishing robust control, establishing best in class HR practices, develop strong global customer business and established its identity in the Indian market. 15. In order to demonstrate the justification of benefits derived by the assessee from the services rendered by its AE, the assessee has placed on record, the details of the services availed, details of benefit derived and the functions performed by the assessee. As per the details furnished by the assessee, the assessee placed on record the copies of e-mail, correspondences, templates and presentation to establish that by availing the services from the AEs the assessee c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stinguishable on the facts. Hence, in the light of the aforesaid discussion, we do not find merit in the contention of the Ld. DR. 17. In the case of AWB India Pvt. Ltd. (2014) 50 taxman.com 323 (Del), the Delhi Tribunal of ITAT has held that in the absence of prerequisites for application of CUP method it is not open for the TPO to reject the TNMM adopted by the assessee. The relevant paras of the order read as under:- 15. One of the very basic pre condition for use of CUP method is availability of the price of the same product and service in uncontrolled conditions. It is on this basis that ALP of the product or service can be ascertained. It cannot be a hypothetical or imaginary value but a real value on which similar transactions have taken place. Coming to the facts of this case, the application of CUP is dependent on the market value of the arrangements under which the present payments have been made. Unless the TPO can identify a comparable uncontrolled case in which such services, howsoever token or irrelevant services as he may consider these services to be, are rendered and find out consideration for the same, the CUP method cannot have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ication of CUP method being absent in the present case, it was not open to the TPO to disregard the TNMM employed by the assessee. No defects have been pointed out in application or relevance of TNMM in this case. Under these circumstances, the TPO's impugned action cannot meet our judicial approval. 18. The assessee has submitted the copies of the agreements entered with CWT, Singapore. The allocation key applied by the AE to allocate cost of services provided by the AE is one of the accepted methods and the same cannot be rejected without rebutting the same. The assessee has taken CWT, Singapore (AE) as tested party and pointed out that the cost of services is at arm s length price determined by adopting TNMM. The assessee has further taken the comparables keeping in view the similar business models. 19. In the case of Emerson Climate Technology India Ltd. vs. DCIT (2018) 90 taxman.com 125 (Pune Tribunal), the Pune Bench of the Tribunal has restored the issue to the file of AO/TPO for a limited purpose of verifying that whether the margin shown by the tested party is at arm s length to the margin of the comparables selected b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... party. Thus, the international transactions of payment of fees for technical assistance services is to be benchmarked by comparing the margins of the CWT, Singapore (tested party) with the margins of seven entities selected by the assessee as comparables. The Ld. counsel has further pointed out that the comparable companies are engaged in the similar kind of services. 20. Hence, we find substance in the contention of the Ld. counsel for the assessee, however, since the TPO has not verified the margins shown by the assessee vis- -vis the companies selected by the assessee as comparables, we respectfully following the decision of the Pune Bench of the Tribunal in the case of Emerson Climate Technologies (India) Ltd (supra), restore this issue to the file of AO/TPO for a limited purpose of verification as to whether the margin of the tested party is at arm s length to the margins of the comparable companies. Needless to say, that the authorities shall give a reasonable opportunity of being heard to the assessee while deciding the said issue. 6. We have further seen that in appeal for AY 2011-12 in ITA No. 1484/Mum/2016, the coordinated bench of Tribu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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