9911796707
TMI Blog2019 (12) TMI 1238X X X X Extracts X X X X X X X X Extracts X X X X ..... the 'Act'). 2. Briefly stated, the facts of the case are that the assessee filed its return of income for the assessment year (AY) 2012-13 on 08.11.2012 declaring total income of Rs. 28,91,46,998/-. A reference u/s 92CA(1) was made by the AO to the Transfer Pricing Officer (TPO) for determination of Arm's Length Price (ALP) with reference to all the transactions referred in Form 3CEB filed by the assessee. The assessee is a part of Brink's Global Services (BGS) which provides global risk management and secure logistics for valuables including diamonds, jewellery, precious metals, securities, currency, high-tech devices etc. The services provided by BGS covers the services related to pick-up and delivery of valuable and time sensitive ship ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt in terms of personnel and technology. * The Cost allocation is as per the annual study. It doesn't maintain timesheet, allocation of time for various category of services. * Services provided are bifurcated into regional services and global services. * The allocation key is based on turnover where the total global and regional cost has been allocated. However, the TPO was not convinced with the above explanation of the assessee and observed that the assessee has not benchmarked the transaction separately and relied on global report and agreement and therefore, the same is not acceptable, as under the TP provisions, each international transaction is to be benchmarked separately. Thus the TPO held that as management fees constitute ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resent case, the TPO estimated the salary for such an employee at Rs. 3,000/- per hour. Further, he estimated the number of man hours rendered by the employees towards rendering of these services to the assessee at 750 hours. Applying the man hour rate of Rs. 3000/- per hour, he arrived at the arm's length compensation of the services rendered by the AO to the assessee at Rs. 22,50,000/- by applying CUP method. Accordingly, he made an adjustment of Rs. 3,83,75,622/- (Rs. 4,06,25,622/- minus Rs. 22,50,000/-) to the international transaction on account of corporate cost allocation charges paid. 2.1 The TPO passed an order u/s 92CA(3) of the Act and made an adjustment of Rs. 3,83,75,622/-. Thereafter, the AO incorporated the TPO's order and i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e AE and break up of cost of different services. The Ld. counsel argues that the assessee had also submitted that in case the TPO requires any further detail, information or clarification, it would be glad to submit the same on knowing about the requirement. The Ld. counsel states that the TPO has wrongly made adjustment to the ALP of management fees by holding that the CUP method as the most appropriate method, without doing any benchmarking or comparison with comparable uncontrolled transactions and doing an ad-hoc unilateral pricing of management fees, disregarding the facts and circumstances of the case and thus erred in rejecting the ALP determined by the assessee without appreciating that it is not permitted under the law. Finally, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enefit received by the assessee from the services rendered for which payment is claimed. Elaborating further, the Ld. DR submits that the assessee has not submitted any details and evidence of costs actually incurred by the AE, specifically for providing the services to the assessee; it has also not been able to give separate details of costs paid for each service stated to have been availed; all that is stated is that costs incurred by AE have been reimbursed on allocation basis, however, no details of such costs incurred by AE and actual evidence thereof were furnished. On the basis of the above arguments, the Ld. DR supports the order passed by the AO. 5. We have heard the rival submissions and perused the relevant materials on record. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t fees, disregarding the facts and circumstances of the case. In the case of Kellogg India Pvt. Ltd. (supra), the Tribunal has rightly held that : "Even assuming that the benchmarking done by the assessee was not correct, the Transfer Pricing Officer should have benchmarked the royalty payment by applying any of the prescribed methods. However, without applying any prescribed method he has simply determined the arm's length price of royalty payment at Nil. The aforesaid approach of the Transfer Pricing Officer is not in accordance with statutory provisions, hence, unsustainable." Similar view has been taken by the Tribunal in M/s CLSA India Pvt. Ltd. (supra) and Firmenich Aromatics India P. Ltd. (supra). 5.1 To sum up, in the instant c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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