TMI Blog2022 (12) TMI 542X X X X Extracts X X X X X X X X Extracts X X X X ..... the transactions are different and independent to each other and therefore no nexus of whatsoever between them could be established. This fact was very much brought to the notice of the TPO during the assessment proceedings by the assessee vide letter dated 25th January, 2021. The action taken by the TPO which was subsequently confirmed by the Ld. DRP is not maintainable in the given facts and circumstances. Whether the TPO was right in rejecting the comparables selected by the assessee with respect to its transactions of purchases of raw materials and components from the AE s? - In the absence of any specific defect pointed out by the authorities below with respect to comparable selected by the assessee, we are not in agreement with the decision of the authorities below for selecting the other comparable which were chosen by the assessee for its sale of finished goods of its contract manufacturing unit. In holding so, we draw support and guidance from the judgment of Frigoglass India (P.) Ltd[ 2014 (4) TMI 556 - ITAT DELHI] Admittedly the assessee has categorized its segments in four compartments which have been discussed in the preceding paragraph. The assessee further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons aggregated with the transactions in dispute is required to be made. In other words, the impugned transactions discussed above have to be treated at arm length price as applicable for the purchase of raw materials and components. As contended before us by the learned AR for the assessee that whatever adjustments needs to be made by the revenue authorities should be with respect to the international transactions with the AE which are in dispute - We find force in the argument of assessee and accordingly direct the revenue to make the adjustments with respect to the international transactions with the AE s which are in dispute. However, we are conscious to the fact that the direction at this stage will not make any difference to the assessee for the reason that the appeal has been decided in favour of the assessee. However, we have recorded this observation for the statistical purposes. Enhancing the income in relation to receipt of data management and other related service fees paid by the Appellant to its AEs by rejecting the TP documentation maintained by the Appellant and arbitrarily determining arm s length price as Nil by applying Comparable Uncontrolled Price Met ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... addition done by the assessee by incurring the cost on behalf of the AE which was subsequently reimbursed. However, such transaction falls within the definition of international transaction with the AE and therefore the same needs to be benchmarked. A non-associated party will not incur any cost without having any benefit from the party. Indeed, the assessee must have employed its resources in providing administrative services to the AE and therefore we are of the view that the assessee should have charged some amount of fees on account of such transaction. However, the assessee in the given case has not determined the ALP of the transaction in hand, therefore the same was benchmarked by the AO/TPO on reasonable basis. As such it was the onus upon the assessee to bench-mark the transactions in hand but it failed to do so. Hence, we do not find any infirmity in the order of the authorities below. Thus, the ground of appeal of the assessee is hereby dismissed. - ITA No. 64/Ahd/2022 - - - Dated:- 7-12-2022 - Shri Waseem Ahmed, Accountant Member And Shri Siddhartha Nautiyal, Judicial Member For the Assessee : Shri Rohit Tiwari, AR For the Revenue : Shri Alok Kumar, CIT-D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tional transaction of sale of finished goods . In doing so, the Ld. AO / Ld. TPO / Ld. DRP erred in not appreciating that the Appellant operates as a contract manufacturer in the sale of finished goods transaction; 3.5. not appreciating the application of Internal Transactional Net Margin Method for comparing the margin earned by the Appellant in license manufacturing AE segment visa-vis margin earned by the Appellant in license manufacturing Non-AE segment; 3.6. rejecting the fresh search furnished by the Appellant by selecting itself as the tested party on a without prejudice basis; 3.7. disregarding the updated/ corrected margin computation of the Appellant submitted before the Ld. TPO during the assessment proceedings; 3.8. disregarding various economic adjustments i.e. working capital adjustment and foreign exchange adjustment in determining the arm's length profit margin; and 3.9. without prejudice to the above grounds, the Ld. AO / Ld. TPO / Ld. DRP erred in computing TP adjustment with respect to international transaction of purchase of raw material and components on the entire cost (i.e. related party cost as well as third party cost) inst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the purpose of benchmarking. 6. That on facts and circumstances of the case and in law, the Ld. TPO /Ld. DRP have erred in enhancing the income by ITMR 150,838,054 in relation to payment of trademark fees . In doing so, the Ld. TPO/ Ld. DRP have grossly erred in: 6.1. Alleging that the Appellant has incurred double expenses by paying trademark fees and being involved in the activities of advertisement, marketing and promotion, which contribute to the brand name of' Schneider'; 6.2. Benchmarking the international transaction of payment of trademark fees by aggregating the same with international transaction of purchase of raw materials . Accordingly., the Ld. TPO/ Ld. DRP have grossly erred in rejecting the economic analysis carried out by the Appellant in its TP documentation wherein the transactions were separately benchmarked using comparable uncontrolled price method ; and 6.3. Not computing the TP adjustment proportionately to only related party cost of the impugned transaction pertaining to payment of trademark fees while aggregating the same with license manufacturing segment for the purpose of benchmarking. 7. That on facts and circumsta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The assessee during the year under consideration has reported the international transactions entered with its various AEs amounting to Rs. 271,54,67,221/- in Form 3CEB report. The details of the international transactions entered by the assessee are available on pages 2 to 9 of AO/TPO order. The International transactions with the AE s, in dispute, are detailed as under: Regarding Imports of Raw Materials and Components; 6.1 The assessee has imported the raw materials and components from its AEs amounting to Rs. 157,51,70,571/- only. The assessee has classified/shown the purchases of raw materials and components under the segment of License Manufacturing for the reason that such purchases were directly connected to license manufacturing segment. In other words such purchases were not associated with respect to Contract Manufacturing. As such, the assessee was under the obligation/risk for the sale of finished goods, marketing etc. out of such raw materials and components. 6.2 The assessee has used the TNMM method as most appropriate method to benchmark the transactions entered for the purchase of raw materials and components amounting to Rs. 157,51,70,571/- from its AE ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as under: 6.7 Based on the above, the assessee has submitted that the mark-up of 5% earned by the AE on its total cost which is the cost of raw materials and components in the hands of the assessee is within the range of 35th and 65thpercentile. Therefore, the transactions entered with AEs for purchase of raw materials and components was based on ALP as per the provisions of rule 10CA of Income Tax Rules and thus no adjustment whatsoever is required. 6.8 However, the AO/TPO rejected the ALP determined by the assessee by observing as under: a- That the assessee in its TPSR mentioned that 5% mark-up charged on cost of raw material by AEs is the group policy. But the assessee has not furnished the Group Transfer Pricing Policy during the course of assessment proceedings as well as the presentation in the form of picture submitted was not even containing the name of the assessee to substantiate the statement/claim. b- That the assessee has purchased the raw materials and components from 24 entities spread all over the world whereas to determine the ALP, only two tested parties were selected (i.e. Germany and France) from where the assessee was procuring the raw materials a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and also paid the trademark fees to the AEs which cannot be possible in case of contract manufacturing segment. l- That the assessee has not maintained the requisite documents as specified in section 92D read with rule 10DA of the Income Tax Rules. 6.9. The AO/TPO, thus, in the absence of data and other details of AEs, proposes to treat the assessee itself as tested party and required the assessee accordingly to benchmark the transactions to determine the ALP. 6.10 The assessee, therefore, during the assessment proceedings has submitted the fresh search process by treating itself as tested party. The assessee has worked out its margin as 2.24% after making certain adjustments with respect to provision for doubtful debts and unascertained liabilities, adjustments of working capital and advances as well as adjustment of forex exchange. The assessee to benchmark the transactions of purchase of raw materials and components from its AEs, has extracted 11 comparable Indian companies from the database Prowess IQ and Capitaline Plus which are as detailed under: 6.11 Based on the above, the assessee has submitted that the margin of 2.24% worked out is within the range of 35th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le on pages 56 and 57 of TPO order. Regarding Purchase of Fixed and Intangible Assets: 6.15 The assessee in the year under consideration has made payments amounting to Rs. 11,79,85,539/- and Rs. 5,16,54,482/- towards the purchase of tangible fixed assets and intangible assets respectively from the AE. The details of the assets purchased are as under: Purchase of Fixed Asset Name of AE Description of transaction Amount paid/payable (in INR) Schneider Electric Industries SAS Purchase of fixed asset 115,938,006 Schneider Electric Protection et Controle SAS Purchase of fixed asset 1,992,792 Schneider Electric Sachsenwerk GmbH Purchase of fixed asset 54,741 Total 117,985,539 Purchase of Fixed Asset Name of AE Description of transaction Amount paid/payable (in INR) Schneider Elect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provisions of rule 10CA of Income Tax Rules. 6.21 The assessee in addition to trademark fees also claimed that the expenses incurred for advertisement, marketing and promotion have been shown in its profit and loss account. 6.22 The assessee during the assessment proceedings submits that the trademark fees were paid to the AE to use the brand name of the Group whereas the AMP expenses were incurred to promote the business such as presentation to various customers in relation to products manufactured, participating in trade shows, distributing handouts and pamphlets etc. 6.23 The AO/TPO, on the other hand, noted that the assessee has claimed the double deduction in its profit and loss account on account of trade mark fees paid to its AE and another on account of expenses incurred towards advertisement, marketing and promotion. Thus the AO/TPO was also of the view that the both the payments i.e. payment of trademark as well as AMP expenses incurred by the assessee were for building the brand name of Schneider. The AO/TPO also noted that the assessee itself categorized for sale of finished goods as contract manufacturer. Therefore, the situation for the payment of trade mark ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proviso to section 92C(2) of the Act. 6.29 The assessee also submitted that the proposed adjustments made by the TPO in TP order for purchase of raw materials and components, purchase of fixed assets, purchase of intangible assets and payment for trade mark fees are factually incorrect as the adjustment should be made only the cost attributable to license manufacturing segment alone. 6.30 However, the Ld. DRP after considering the order of the AO/TPO rejects the contention of the assessee by observing as under: 7. We have perused the draft assessment order/ TPO's order, We have considered the written and oral submissions of the assessee. Briefly stated the facts relating to objection no. 2 are that the assessee entered into multiple international transactions with AEs. The objection no. 2 pertains to purchase of raw material and components from AEs amounting to Rs. 157,51,70,571/-. The assessee adopted TNMM to benchmark the transaction with the foreign AEs as tested parties. The TPO observed that as per the TPSR, the AEs charged 5% markup on the cost of raw material components based on 'claimed' 'global transfer pricing policy . The TPO stated that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ark the transactions for purchase of fixed and intangible assets has aggregated with transaction pertaining to purchase of raw material and components. 6.32 The assessee further submitted that the value assigned by the custom authorities on import of goods are not arbitrary as they use scientifically formulated methods. 6.33 However, the Ld. DRP after considering the order of the AO/TPO rejects the contention of the assessee by observing as under: 13. We have perused the draft assessment order /TPO s order and also considered the written and oral submissions of the assessee in this regard. Briefly stated the facts of the issue are that the assessee had purchased fixed assets amounting to Rs.11,79,85,539/- and intangible assets amounting to Rs.5,16,54,482/-. The TPO observed that the assessee had used different method i.e. other method for benchmarking the transaction, whereas the transactions of purchase of raw material and components was benchmarked using markup of 5% on cost. The TPO observed that the assessee had purchased the machineries from loss making licensed manufacturing AEs with claim of corresponding depreciation showing losses. The TPO observed that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... own expenses on brand value enhancement. The TPO observed that the assessee had shown OP/ OR at (-) 12.73% instead of 5.70% shown in benchmarking of the transactions of purchase of raw material and components. On the other hand, the assessee defended its case before the TPO as well as the DRP. The TPO did not agree with the arguments of the assessee. We have considered all the material on record. The TPO has dealt with the matter in detail in para 9 (para 9.3 to 9.7) and 10 of the TPO's order. We find no merit in the objection of the assessee. Therefore, the ground of objection no. 5 is dismissed. 7. Being aggrieved by the order of the learned DRP, the assessee is in appeal before us. 8. The learned AR before us filed three paper books (volume I, II III) running from pages 1 to 508, 509 to 1045 1046-1490 besides the written submission running into 30 pages and contended that the foreign associated enterprises are least complex therefore the same should be considered as the tested party. It was also pointed out by the learned AR that there are certain unascertained liabilities in the nature of provision for doubtful debts/litigation expenses which ought to have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... note that the selection of the tested party is a matter of dispute since beginning of the introduction of transfer pricing under the Act. It is for the reason that the Act does not define the concept of Tested Party . 10.2 However, OECD has defined in detail the concept of tested party in its guidelines for Multinational Enterprises and Tax Administration. Further the same has also been defined in UN Manual. 10.3 The OECD Guidelines defines tested party as the one to which a transfer pricing method can be applied in the most reliable manner and for which the most reliable comparable can be found, i.e. it will most often be the one that has the less complex functional analysis. UN Manual defines tested party in the similar manner. A Tested party should have the following attributes: 1- Available of reliable and accurate data for comparison 2- Least Complex (amongst the parties to the transaction) 3- Data available can be used with minimal adjustments. 10.4 In the light of the aforesaid discussion, we analyze the facts of the present case and note that the assessee has carried the detailed economic analysis while benchmarking the transactions entered with its A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that tested party should be the least complex entity for which reliable data in respect of itself and in respect of comparables is available. The Tribunal accepted that tested party could be the local entity or a foreign associate enterprise (AE). Thus, once the foreign AE s have been rejected to be treated as the tested party, the assessee should be treated as the tested party to determine the ALP of the transactions representing the import of raw material and components from the associated enterprises. The assessee accordingly has worked out its PLI at 2.29% after making the adjustment of the following items: a- Provision for doubtful debts and the litigation expenses b- Provision for the forex losses c- Adjustment of working capital. 10.6 The assessee PLI was compared with the PLI of comparables which was selected by the assessee as elaborated in the preceding paragraph. The PLI of the assessee was falling within the range of 35th and 65th percentile (i.e. -0.23% and 4.76%) of the comparables thus it was alleged by the assessee that the difference between the PLI of the assessee viz a viz of the comparables as discussed above is within the range as prescribed under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the Assessee has been performing the functions of a licenced manufacturer with respect to raw material and components procured from its AEs. In lights of the above, the Assessee humbly submits that the benchmarking analysis of both the transaction cannot be similar and separate and distinct benchmarking analysis ought to be performed for benchmarking international transaction of purchase of raw materials, in order to substantiate the said argument, the Assessee would now like to detail difference in functional, asset and risk profile of a contract manufacturer vis-a-vis licensed manufacturer thereby justifying the fact that separate and distinct benchmarking analysis ought to be performed. Licensed manufacturer A licensed manufacturer produces goods under a licence agreement, using manufacturing intangibles owned by the licensor, such as patents, product designs, manufacturing process and know-how. The licenced manufacturer pays royalties for the use of the licenced intangibles, typically buys raw materials and semi-finished goods on its own account and holds inventories of the raw materials and finished goods. Therefore, it bears the risks associated with both hol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Contract Manufacturer Produces goods for a manufacturing principal. Principal bears demand and final customer pricing risk. Earns an arm's-length mark-up on iota! costs. Bears limited risks associated with holding finished goods and selling them. SEIL manufactures products for its AEs only. Sales are made to AEs at inter-Company prices, which are generally based on cost plus mark-up on a per unit basis. The AEs sells its products in the open market and bears the competitive pricing pressures and risks. The Assessee would further like to place reliance on Sulzer Pumps India Ltd, Mumbai V. Addl CIT 10(3), Mumbtii [ITA 1453/MUM/2014], wherein the Mumbai ITAT upheld the distinction between a contract manufacturer and a licensed manufacturer. 9. We heard the parties and perused the record. We notice that the tax authorities have considered the assessee as a Contract Manufacturer and accordingly disallowed the Royalty and Technical know how expenses. In the written submissions, the assessee has demonstrated llmt the purpose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s selected by the assessee with respect to its transactions of purchases of raw materials and components from the AE s. In this connection we note that the assessee has given the necessary details during the assessment proceedings. This fact be verified from the pages 66 to 89 of the order of the ld. DRP. In the absence of any specific defect pointed out by the authorities below with respect to comparable selected by the assessee, we are not in agreement with the decision of the authorities below for selecting the other comparable which were chosen by the assessee for its sale of finished goods of its contract manufacturing unit. In holding so, we draw support and guidance from the judgment of Hon ble Delhi ITAT in the case of Frigoglass India (P.) Ltd.vs.Deputy Commissioner of Income-tax reported in 45 taxmann.com 101 where it was held as under: Once assessee has given a methodology for working of ALP on selection of a particular method supported by appropriate comparables, the working can be dislodged by TPO on the basis of cogent reasons and objective findings. In this case except theoretical assertions and generalized observations, no objective findings have been give ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot have foreclosed the assessee from canvassing the issue that the subsidiaries are least complex entities which should be taken note of. 10.13 Applying the above principle in the case on hand, we note that, the assessee before the Ld. DRP has taken internal TNMM method and compared the margin of AE segment with non-AE segment under license manufacturing. The assessee regarding this has placed the reliance on Rule 10B(1)(e) of the Rules. The relevant submission of the assessee before the DRP is extracted on pages 59 to 66 in the order. 10.14 However, we note that the Ld. DRP without considering the selection of internal TNMM by the assessee and without pointing out any defect therein has upheld the order of the TPO. Therefore, first we need to understand whether selection of internal TNMM by the assessee is in accordance to the provisions of rule 10B of the rules. 10.15 Before going to the particular issue, we feel to refer the provisions of rule 10B(1)(e) of the rules which reads as under: 10B . (1) For the purposes of sub-section (2) of section 92C, the arm's length price in relation to an international transaction [or a specified domestic transaction] shall be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rnal comparables are to be preferred:- a. Abhishek Auto Industries Ltd. v. Dy. CIT [2011] 9 taxmann.com 27 (Delhi) - held that internal CPM is better than external TNMM b. Asstt. CIT v. Schlafhorst Marketing Co. Ltd. [2011] 13 taxmann.com 104/47 SOT 120 (Mum.)(URO) - held that internal TNMM to be adopted c. Asstt. CIT v Birla Soft Ltd. [2011] 12 taxmann.com 31/46 SOT 437 (Delhi) - internal TNMM accepted d. Destination of the World (Subcontinent) (P.) Ltd. v Asstt. CIT [2011] 12 taxmann.com 310/47 SOT 1 (Delhi) - held that preference should be given to internal comparison. 10.17 In the latest order of the Mumbai Tribunal in the case of Tecnimont ICB (P.) Ltd. v. Addl. CIT [2012] 138 ITD 23/24 taxmann.com 28 (Mum.)(TM), the Hon'ble Third Member was considering the following issue on a difference of opinion:- Whether in the facts and circumstances of the case, the net margin realized from a transaction with an Associated Enterprise (AE) found and accepted at Arm's Length Price (ALP) can be taken as a comparable being an internal comparable for computation of (sicarm) ALP of an international transaction with another AE? 10.18 The Hon'ble Third Membe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd computing ALP of an international transaction is to find out the profits which such enterprise would have earned if the transaction had been with some third party instead of related party. When the data is available showing profit margin of that enterprise itself from a third party, it is always safe and advisable to have recourse to such internal comparable case. The reason is patent that the various factors having bearing on the quality of output, assets employed, input cost etc. continue to remain by and large same in case of an internal comparable. The effect of difference due to such inherent factors on comparison made with the third parties, gets neutralized when comparison is made with internal comparable. Ex consequenti, it follows that an internal comparable uncontrolled transaction is more noteworthy vis- -vis its counterpart i.e. external comparable . 10.19 In the instant case, the assessee, has applied the internal TNMM method as most appropriate and from the aforesaid rule we note that the rule 10B of the rules has to be apply to select the method for the purpose to determine the ALP and TNMM method could be applied as internal as well as external. 10.20 At t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on taking the rate of the ALP. We find force in the argument of the learned AR for the assessee and accordingly direct the revenue to make the adjustments with respect to the international transactions with the AE s which are in dispute. However, we are conscious to the fact that the direction at this stage will not make any difference to the assessee for the reason that the appeal has been decided in favour of the assessee. However, we have recorded this observation for the statistical purposes. 10.25 In view of the above and after considering the facts in totality we reverse the finding of the learned DRP and direct the AO to delete the addition made by him. Hence the ground of appeal of the assessee is allowed. 11. The 4th issue raised by the assessee is that the Ld.TPO/Ld. DRP have erred in enhancing the income by INR 218,597,391 in relation to receipt of data management and other related service fees paid by the Appellant to its AEs by rejecting the TP documentation maintained by the Appellant and arbitrarily determining arm s length price as Nil by applying Comparable Uncontrolled Price Method( CUP ) Method. 12. The assessee in the year under consideration has made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eived any services therefore the arm s length price with respect to the receipt of data management and other related services adjusted to nil. The AO/TPO thus proposes to make downward adjustment of Rs. 21,85,97,391/- on account of payment of data management services and related services. 13. Aggrieved, assessee raised the objection before the Ld. DRP and submits the list of services availed from its AEs as well as details about the benefit from the services availed and reiterated the submission as made before the AO/TPO. 13.1 The assessee further submitted that detailed economic analysis were made with respect to benchmark transactions for payment of availing the services from AE as specified in TPSR whilst the AO/TPO has rejected the same without providing any material and cogent reason. 13.2 The assessee also submitted that the AO/TPO has not followed any method/process as prescribed under section 92C(1) of the Act to determine the ALP in respect to the cost for data management and other related services. 14. However the Ld. DRP rejected the contention of the assessee by observing as under: 10. We have perused the draft assessment order/ TPO's order. We \ hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urnished the break-up of cost as well as allocation of cost incurred by the AEs before the Ld. DRP. The assessee has applied the TNMM method as MAM to determine the ALP for the aforesaid transaction and found the ALP as cost plus 6% markup. Further, the assessee has contended that the TPO has applied CUP method as most appropriate method for determination of ALP of the said services, without giving any cogent reasons and has determined the ALP of management support and other related services received by the assessee at NIL, taking the view that no independent party would have made the payment in the uncontrolled circumstances. The assessee has submitted that the said action of the TPO is arbitrary and is not in line with rule 10B(1)(a) of the Rules which lays down the need for 'comparable uncontrolled transactions' while applying the CUP method. 18.1 It is pertinent to mention here that there is no dispute on the legal proposition that if the TPO finds that the method applied by the assessee is not appropriate, it can carry out his own analysis however he has to follow the methodology as provided in Chapter-X of the Income-tax Act. 18.2 It may further be noted that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1,026,044 2 Schneider Electric (Australia) Pty. Limited 130,609 3. Schneider Electric Canada Inc. 207,280 5. Schneider Electric Industries SAS 25,824,134 6. Schneider Electric Korea Ltd (ex-Samwha EOCR Co. Ltd) 146,506 7. Schneider Electric Ltd 715,594 8. Schneider Electric Protection et Controle SAS 2,971,444 9. Vamp OY 1,843,605 10. Schneider Electric Logistics Asia Pte. Ltd. 265,457 11. Schneider Electric O.M. LLC 355,719 Total 33,697,775 20.1 The assessee regarding this submits that the cost incurred by it on behalf of the AEs were recovered/reimbursed on co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therefore no adjustment with respect to the same can be made in the given facts and circumstances. 25. On the other hand, the learned DR before us submitted that the transaction in dispute represents the international transaction which cannot be completed between 2 unconnected entities without having some markup. But the assessee has not done any markup on the cost incurred on behalf of the AE. The learned DR vehemently supported the order of the authorities below. 26. We have heard the rival submissions of both the parties and perused the materials available on record. The issue in the present ground is with respect to the adjustment made on account of reimbursement of cost. Before us, it is an assessee's submissions that the expenses which were reimbursed of all expenditure which were inter-alia incurred by the assessee on behalf of the AEs and the same have been reimbursed to the third parties and for which no value addition has been done by the assessee. It is further assessee's submissions that the reimbursement are on cost to cost basis and transactions were undertaken only to provide administrative assistance to the AEs. The aforesaid contentions of the AR hav ..... X X X X Extracts X X X X X X X X Extracts X X X X
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