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TMI Blog2022 (4) TMI 275X X X X Extracts X X X X X X X X Extracts X X X X ..... ing grounds, taken singly or cumulatively and therefore, the addition made by the Ld. AO/TPO/Hon'ble DRP should be deleted. II. Payment for management service and unit charges (MSU) availed from BG International Limited ('BGIL'): 1. The Ld. TPO/AO/DRP has erred in making an adjustment (partially) in respect of payment of MSU of INR 50,28,83,179 to BGIL 2. The Ld. TPO/AO/DRP has erred in law and facts in disallowing the payments made by the Appellant to BGIL on account of various services availed for its business operations. 3. The Ld. TPO/AO/DRP erred in not appreciating the fact that the payment made towards services in the nature of intra-group services are intrinsically and closely linked to Appellant's main business operations of prospecting, exploration and production of crude oil and natural gas; and erred in analyzing the said transactions separately for determination of arm's length price (ALP) 4. The Ld. TPO/AO/DRP has erred in law and facts in ignoring that the Appellant had, in adherence with Rule 10C(1) of the Income-tax Rules, 1962 and in light of the facts and circumstances of the case, adopted the Transactional Net Margin Method ('TN ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5. 13. The Ld. TPO/AO/DRP has erred in law and facts in not giving due consideration to the project specific Skill Supply Agreements ('SSAs')/other evidences furnished by the Appellant in relation to receipt of technical and other services from BGIL. Payments made on account of technology recharges to BGIL (forming part of Total MSU charges) 14. The Ld. TPO/AO/DRP has erred in law and facts in disallowing the payments made by the Appellant to BGIL on account of technology recharges amounting to INR 9,79,28,872, while at the same time stating that the Appellant may have enjoyed certain benefits from services covered under such payments. 15. The Ld. TPO/AO/DRP has erred in law and facts in not giving due consideration to the evidences furnished by the Appellant in relation to receipt of technical services from BGIL. Payments made on account of management and service unit charges to BGIL (forming part of Total MSU charges) 16. The Ld. TPO/AO/DRP has erred in law and facts in disallowing the payments made by the Appellant to BGIL on account of management service and unit charges amounting to INR 31,93,12,904. The aforesaid cost recharges include: - Information man ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by BGIL as the same is beyond the purview of the powers of the Ld. AO/TPO/DRP. 24. The Ld. TPO/AO/DRP has erred in law and facts in not giving due consideration to the project specific SSAs furnished by the Appellant in relation to receipt of specific call out technical services from BGIL. 25. The Ld. TPO/AO/DRP has erred in law and facts in disallowing expenses reimbursed by the Appellant to BGIL on account of party charges incurred by BGIL amounting to INR 1,51,54,714. IV. Payments made on account of reimbursement of expenses to BGIL 26. The Ld. TPO/AO/DRP has erred in law and facts in disallowing expenses reimbursed by the Appellant to BGIL amounting to INR 2,92,51,111 on account of receipt of specific call out technical services incurred by BGIL. 27. The Ld. TPO/AO/DRP erred in not appreciating the fact that the payment made towards services in the nature of intra-group services are intrinsically and closely linked to Appellant's main business operations of prospecting, exploration and production of crude oil and natural gas; and erred in analyzing the said transactions separately for determination of arm's length price (ALP). 28. The Ld. TPO/AO/DRP has erre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s pertaining to payments made to BGIPL for services availed and that the Appellant had earned an operating margin of 66.64% on gross revenues vis-à-vis an arithmetic mean margin of 32.16% earned by the comparable companies. 35. The Ld. TPO/AO/DRP has erred in law and facts in holding that CUP is the most appropriate method for benchmarking payments made by the Appellant for availing proprietary services from BGIPL. 36. The Ld. TPO/AO/DRP has erred in law and in facts in treating only that portion of Appellant's expenditure which is approved by the JOB under the PSC as a CUP for the services received from its AE in utter disregard of Rule 10B of the Rules. 37. The Ld. AO/TPO/DRP has erred in law and facts in questioning whether any services have been rendered to the Appellant by BGIPL as the same is beyond the purview of the powers of the Ld. AO/TPO/DRP. 38. The Ld. TPO/AO/DRP has erred in law and facts in questioning the commercial rationale of the Appellant in making payments to BGIPL for services availed by the Appellant. 39. The Ld. TPO/AO/DRP has erred in law and facts in not giving due consideration to the evidences furnished by the Appellant (relevant agr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the assessee submits that ground no. (I) is general in nature. No adjudication is required. 4. Ground nos. (II) to (VI) relates to Transfer Pricing Adjustment on account of intra-group services. The Ld. Counsel submits that identical issue on similar facts has been decided in favour of the assessee by the Tribunal for the assessment years 2009-10 to 2016-17 and the orders of the Tribunal are placed in the compilation. The Ld. Counsel for the assessee further submits that the recent order of the Tribunal is for the AY 2016-17 dated 14.12.2021 in ITA No. 07/DDN/2021. Referring to this order the Ld. Counsel submits that the Tribunal following its order for the assessment years 2013-14 and 2014-15 deleted the transfer pricing adjustment made on account of intra-group services provided by the assessee to its AE. 5. On the other hand, the Ld. DR strongly placed reliance on the orders of the authorities below. However, he fairly submits that the issue in appeal regarding the transfer pricing adjustment on account of intra-group services has been decided in favour of the assessee by the Tribunal in subsequent assessment years. 6. We have heard rival submissions perused the orders of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... further litigation as the matter become final." 15. Further, it is observed that for AY 2011-12 (ITA No. 1478/Del/2017) and AY 2012-13 (ITA No. 6791/Del/2017) following the above ruling. 16. From the above, it is clear that Revenue intends to keep issues alive, however, could not controvert view taken in respect of these issues as there has been no contrary observation/material evidences brought out on record by the Ld. CIT DR. It has been admitted by him that facts and circumstances of the services received by assessee for the year under consideration are same vis-à-vis AY 2010-11, and other preceding assessment years. We are, therefore, inclined to follow the same view. Respectfully, following view taken by this Tribunal in AY 2010-11 reproduced hereinabove and other preceding assessment years, orders of which are placed at pages 530-915 of paper book, addition made by Assessing Officer stands deleted." 6. To maintain the rule of consistency, we follow the earlier order of Tribunal and decide the issue in favour of the assessee and the addition made being TP adjustment on account of intra group services provided by the assessee to its AE is deleted." 7. Respectfully ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w various decisions on the issue. Thus, we restore this ground to the file of the Assessing Officer to decide afresh in accordance with law. 11. Ground no. (IX) relates to initiation of penalty proceedings u/s. 271(1)(c) of the Act. This ground is premature and, therefore, the same is dismissed. AY 2008-09 (ITA No. 30/DDN/2020): The assessee has raised the following grounds in this appeal: I. Ground No. 1: General Grounds On the facts and circumstances of the case and in law, the Ld. AO erred in determining the assessed income of INR 13,35,55,57,072 under the head Income from Business and Profession as against returned income of INR 12,60,58,34,942. The adjustments and disallowances made by the Ld. AO are bad in law, illegal and unsustainable on the basis of, amongst other, following grounds, taken singly or cumulatively and therefore, the addition made by the Ld. AO/TPO/Hon'ble DRP should be deleted. II. Payment for management service and unit charges (MSU) availed from BG International Limited ('BGIL'): 1. The Ld. TPO/AO/DRP has erred in making an adjustment (partially) in respect of payment of MSU of INR 60,27,55,894 to BGIL, and thereby determining the ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ost only" recharge by BGIL was also certified by statutory auditor of BGIL as well as an independent external consultant and that all costs allocated to the Appellant were in accordance with the Global Cost Allocation Policy of the BG Group. 11. The Ld. TPO/AO/DRP has erred in law and facts in contending that no service has been received by the Appellant and concluding that the additional documentation/supporting does not convey and specific evidence of services received by the Appellant. Payments made on account of federal green recharges to BGIL (forming part of Total MSU charges) 12. The Ld. TPO/AO/DRP has erred in law and facts in disallowing the payments made by the Appellant to BGIL on account of federal green recharges amounting to INR 11,74,80,113. 13. The Ld. TPO/AO/DRP has erred in law and facts in not giving due consideration to the project specific Skill Supply Agreements ('SSAs')/other evidences furnished by the Appellant in relation to receipt of technical and other services from BGIL. 14. Without prejudice, the Ld. TPO/AO/DRP ought to have allowed deduction for the taxes deposited by Appellant with the tax authorities on account of services received ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in law and facts in disallowing the payments made by the Appellant to BGIL on account of general and administrative charges amounting to INR 8,18,44,590. 25. The Ld. TPO/AO/DRP erred in not appreciating the fact that the payment made towards services in the nature of intra-group services are intrinsically and closely linked to Appellant's main business operations of prospecting, exploration and production of crude oil and natural gas; and erred in analyzing the said transactions separately for determination of arm's length price (ALP). 26. The Ld. TPO/AO/DRP has erred in law and facts in ignoring that the Appellant had, in adherence with Rule 10C(1) of the Income-tax Rules, 1962 and in light of the facts and circumstances of the case, adopted the Transactional Net Margin Method ('TNMM') as the most appropriate method in its transfer pricing study to benchmark the international transactions pertaining to payments made to BGIL for services availed. 27. The Ld. TPO/AO/DRP has erred in law and facts in holding that the Comparable Uncontrolled Price Method ('CUP') is the most appropriate method for benchmarking payments made by the Appellant for availing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rvices received from its AE in utter disregard of Rule 10B of the Rules. 37. The Ld. AO/TPO/DRP has erred in law and facts in questioning whether any services have been rendered to the Appellant by BGIPL as the same is beyond the purview of the powers of the Ld. AO/TPO/DRP and thereby determining the arm's length price of such payments as 'Nil'. 38. Without prejudice, the Ld. AO/TPO/DRP ought to have allowed deduction for the taxes deposited by Appellant with the tax authorities on account of services received from BGIL. V. Payments made on account of business auxiliary services to BG Gas India Pvt. Ltd. ('BGIL') 39. The Ld. TPO/AO/DRP has erred in law and facts in disallowing the payments totaling to INR 18,79,80,857, made by the Appellant to BGIPL on account of receipt of business auxiliary services. The aforesaid services include: - Legal services - Assistance incorporate and strategic affairs - Business development - Other assistance 40. The Ld. TPO/AO/DRP erred in not appreciating the fact that the payment made towards services in the nature of intra-group services are intrinsically and closely linked to Appellant's main business opera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tax Appellate Tribunal ('ITAT') in the Appellant's own case for the subsequent years. i. The Ld. TPO/AO/DRP erred in passing the transfer pricing order completely disregarding the directions issued by the office of the Hon'ble DRP in the Appellant's own case for the subsequent years i.e. AY 2009-10 and AY 2010-11. ii. The TPO/AO/DRP erred in passing the transfer pricing order completely disregarding the ruling of the Hon'ble Delhi ITAT in the Appellant's own case for the subsequent years i.e. AY 2009-10 to AY 2012-13. VII. Deduction in respect of education cess paid On the facts and circumstances of the case and in law, the Appellant prays that the Assessing Officer be directed to allow deduction in respect of education cess paid by the Appellant on income-tax, being an allowable expenditure for computing total income as per the provisions of the Act. VIII. Other grounds i. The Ld. AO erred in considering refund of INR 21,32,02,080 as already been granted to the Appellant on 24 March 2010 whereas the Appellant has not received this refund. ii. The Ld. AO erred in law and in fact, in initiating penalty proceedings under section 271(1)(c) of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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