TMI Blog2022 (5) TMI 1468X X X X Extracts X X X X X X X X Extracts X X X X ..... between the receipt of intragroup services and the manufacturing activity, then each and every international transaction would require consolidation because all the transactions ultimately aim at carrying on the business activity. The aggregation can be justified in the case of closely linked transactions and not remotely linked transactions. Acceptance of the AR s argument would set at naught the judicial decisions discussed above, which have countenanced the segregation approach. We, therefore, hold that the DRP was justified in upholding the view of the TPO in segregating the international transaction of Professional Charges paid to be processed independent of other international transactions. TPO determined NIL ALP on the ground that the assessee did not furnish evidence of receipt of services and further no benefit was established by the assessee from receipt of services - Whether Intra- group service were availed? - HELD THAT:- In our opinion, the relevant consideration is the incurring of bona fide expenditure and availing the services, which may or may not lead to increase in revenue. Application of benefit test is not warranted in determining the ALP of an intern ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e next step is to determine its ALP. No details about comparables of the international transaction were either provided by the assessee or taken note of by the TPO. In these circumstances, we set aside the impugned order on this count and direct the AO/TPO to determine the ALP of the international transactions of Professional Charges paid afresh in accordance with law. It is hereby clarified that all the methods for determination of the ALP are open before the TPO, who is competent to adopt anyone of them. Similar is the position about the selection of tested party. After the advent of Virtusa Consulting Services Private Ltd. [ 2021 (2) TMI 378 - MADRAS HIGH COURT] an assessee or its AE can be taken as a Tested Party depending upon the fact that which out of the two is a least complex party to the controlled transaction and facilitates the ALP determination in a proper manner. Needless to say, the assessee will be allowed a reasonable opportunity of hearing in such fresh determination of the ALP of the international transaction. Assessee appeal is allowed for statistical purposes. - ITA No. 1592/PUN/2019 - - - Dated:- 20-5-2022 - SHRI R.S. SYAL, VICE PRESIDENT AND SHRI PA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Agreement with Faurecia, France and Rs.4.04 crore under Cost Sharing Agreement with Faurecia, France. Under the Service Agreement, the assessee was provided various services. Since the assessee could not produce evidence of availment of services to the satisfaction of TPO and further as no benefit was found by him to have been received by the assessee from such services, the TPO held that no services were received and determined Nil ALP of the international transaction by applying the CUP method. The assessee remained unsuccessful before the DRP, which led it to approach the Tribunal. 5. We have heard the rival submissions and perused the relevant material on record. The issue under consideration is the ALP determination of the international transaction of `Professional charges paid for availing intra-group services, which the assessee had aggregated with other international transactions under the TNMM, but the TPO segregated it and determined Nil ALP under the CUP method. As such, we need to answer if the TPO was justified in (i) segregating the international transaction under consideration; (ii) concluding that no services were availed by the assessee; and determining the Ni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6.3. In one sense, closely linked transactions mean similar or alike transactions of purchase or sale etc. of goods or services. To put it simply, if there are several transactions of, say, purchase of similar goods or goods with minor variations, then instead of finding the ALP of each such transaction individually, it satisfies the prescription of closely linked transactions if these are combined and benchmarked in an aggregate manner. The Hon ble Punjab Haryana High Court in Knorr-Bremse India P. Ltd. VS. ACIT (2016)380 ITR 307 (P H) has dealt with three circumstances in which the aggregation is permissible. First, in case of a package deal where each item is not separately valued but all are given a composite price, these are to be taken as one international transaction. Two, where a number of transactions are priced differently but on the understanding that the pricing was dependent upon the assessee accepting all of them together (i.e. either take all or leave all), then also they should be viewed as one transaction. But it will be on the assessee to prove that although each is priced separately, but they were provided under one composite agreement. Three, where each com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ependent of other international transactions. II. WHETHER INTRA-GROUP SERVICES WERE AVAILED? 7.1. The TPO determined NIL ALP on the ground that the assessee did not furnish evidence of receipt of services and further no benefit was established by the assessee from receipt of services. In our opinion, the relevant consideration is the incurring of bona fide expenditure and availing the services, which may or may not lead to increase in revenue. Application of benefit test is not warranted in determining the ALP of an international transaction of payment for intra-group services. 7.2. The TPO as also the DRP have held that the assessee did not avail any services. In this regard, we turn to the Services Agreement under which the assessee availed the services. This Agreement came into force from 01-01-2010. Exhibit-1 lists the nature of services as General Management, Communication; Sales and Marketing; Program management; Accounting, Control and Tax; Legal, Insurance and Real Estate; General Management of Information; Systems organization and Information System. The assessee has distinctly provided the description of services under each such head. Summary of the receipt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... details about the group s strategies, guiding principles and tools that will enable Faurecia to attract and appoint talent with necessary skills and qualifications. There are other e-mails containing document providing detailed description of career interview process. There is an e-mail dated 23-07-2010 from Andre Pierre to the assessee s employee in India providing job description for the position HSE Engineer. Similarly, there are series of e-mails under the heading `Production Purchasing, Manufacturing delving into Plant Manager training Programme, Logistics, Welding Time plan, Control plan, Engineering functional milestone checklist etc. Similarly, there are e-mails under the heading `Quality , which talk about Health, Safety and Environment Review Document, Quality Specifications, Quality self-assessment and Environment diligence assessment report. 7.3. Turning to the Cost Sharing Agreement, there are e-mails about Presentation- Design, Change proposal to solve S/R issue on Suzuki YN recliner assembly Latch modification. There are e-mails from pages 1206 to 1219 concerning change in Design recliner and latch lock for all Faurecia customers; details of changes made in the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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