TMI Blog2015 (12) TMI 1838X X X X Extracts X X X X X X X X Extracts X X X X ..... o Corporation (2.26%) [ 2013 (12) TMI 594 - ITAT DELHI] and Bayer Material Science (5%) [ 2011 (12) TMI 393 - ITAT MUMBAI] . In our opinion, to remove the statistical error, if any, the average of these two comparables should be considered to arrive at the appropriate rate of ALP for benchmarking the impugned transactions. Accordingly, 3.63% should be appropriate rate to be adopted by the AO for calculating the adjustments to be made. Thus, we partly allow the relevant grounds of the assessee as the case may be. Accordingly, AO is directed to adopt 3.63% as appropriate rate of ALP for benchmarking the impugned transactions. Addition u/s 40(a)(ia) - effecting TDS on the payments made, which are actually the case of reimbursement of expenses - HELD THAT:- Such expenditure by way of reimbursement of salaries to Genius company do not attract TDS provisions and therefore, the provisions of section 40(a)(ia) need not be invoked. It is nobody s case that the payments in question are not in the reimbursement of the salary of the deputed personnel by the Genius. Considering the same, we delete addition on this account and allow the Ground no.2 raised by the assessee. Addition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clients against the payments. AY 2006-07 is the first year of such operations. In the return of income, assessee offered whole of the aforesaid 2% (ie ₹ 6,22,01,426/-) as a profit. During the proceedings before the TPO, assessee submitted that the most appropriate method in the case of indenting is the CUP method. In principle, TPO accepted the same. However, considering the absence of data at the relevant point of time, TPO adopted the PSM as most appropriate one and 50% of the said profit on the transactions was considered appropriate. Although TPO quantified the ALP @ 8.78%, eventually, the TPO rounded up the same to 10% as a profit relatable to the assessee and benchmarked the transactions accordingly. TPO quantified relatable profits at ₹ 3,20,23,110/-. The net TP adjustment suggested by the TPO on this count works out to ₹ 2,48,18,488/-. TPO also quantified the TP adjustment basing on the PSM and addition suggested on this basis (8.78% ie ₹ 2,72,38,290/- is the profit relatable to the assessee) works out to ₹ 2,10,33,668/-. During the DRP proceedings, assessee submitted that the CUP method is the most appropriate one in this kind of transactions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e orders of the Revenue Authorities ie DRP / TPO / AO. 7. During the rebuttal time, Ld Counsel for the assessee filed another judgment in the case of Sumitomo Corporation India Private Limited vs. DCIT ( ITA No.5095/Del/2011) wherein, in cases of indenting services, the CUP method is approved as the most appropriate method of accounting. Further, he brought our attention to the observations of the TPO and the DRP for the AY 2006-07 as well as for the subsequent AY 2007-08 and mentioned that for want of data relating to CUP method, the Revenue Authorities resorted to PSM. Otherwise, Ld Counsel submitted that the data relating to CUP method is now available. 8. We have heard both the parties on this issue relating to the appropriate method of accounting. We find there are decisions to denounce for PSM and the choice is between the CUP and TNMM as the best appropriate method in matters of indenting international transactions. One of the decisions cited above also supports the CUP as the most appropriate method. Therefore, we are of the opinion, in principle, we agree with the Ld Counsel s argument that internal CUP is the most appropriate method in this kind of factual situation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 3 and 4 for the AY 2006-07 and Ground nos. 4 and 5 for the AY 2007-2008, mentioned that AO did not give credit to TDS properly and also has not granted interest u/s 234A after the date of issue of refund and therefore, the assessee made an application u/s 154 of the Act and the same is not adjudicated till date. In this regard, Ld Counsel for the assessee seeks directions to the AO for speedy disposal. After hearing both the parties on this issue and on going through the copy of the application made u/s 154 of the Act, we find the AO should act upon the application at the earliest possible. Accordingly, relevant grounds are allowed in principle. 12. Ground no.5 is general in nature and same is dismissed as such. 13. Ground no.2 relates to the addition u/s 40(a)(ia) of the Act for want of effecting TDS on the payments made, which are actually the case of reimbursement of expenses. In short, Ld Counsel for the assessee submitted that some employees of the company Genius were now deputed to the assessee. These employees were paid salaries after complying with the TDS provisions. These expenses were reimbursed by the assessee to Genius and TDS has not affected as they are und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no.6 is general in nature and therefore this ground is dismissed considering its general nature. 20. That leaves Ground nos. 1 and 2 for our adjudication. In this regard, Ld Counsel for the assessee submitted that the AO made addition of ₹ 2.98 Crs (rounded of) ie 10% of the cost of consumables and expenses for want of bills. Similarly, AO made addition of ₹ 50 lakhs out of operating and other expenses on ad-hoc basis. On these two additions, Ld Counsel for the assessee submitted that the same is in higher side and mentioned that it is not possible to submit all the bills for all the expenses to the satisfaction of the Revenue Authorities. 21. On the other hand, Ld DR for the Revenue relied on the order of the AO / DRP and submitted that the onus is on the assessee to demonstrate the genuineness of the expenses when a claim is made u/s 37 of the Act. 22. On hearing both the parties and considering the concession given by the Ld Counsel for the assessee, we are of the opinion that the decision of the DRP and the AO on this issue is fair and reasonable and the same does not call for any interference. Accordingly, these two grounds are dismissed. 23. In the re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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