TMI Blog2023 (3) TMI 455X X X X Extracts X X X X X X X X Extracts X X X X ..... ect the Ld. A.O./TPO to delete the ALP adjustment made on recovery of expenses. - ITA.No.1221/Mum./2021 - - - Dated:- 29-7-2022 - SHRI B.R. BASKARAN, ACCOUNTANT MEMBER AND SHRI ANIKESH BANERJEE, JUDICIAL MEMBER For the Assessee : Shri Siddhesh Chaugule For the Revenue : Shri Rakesh Ranjan (CIT-DR) ORDER PER ANIKESH BANERJEE, J.M. The instant appeal filed by the Assessee is directed against the Order of the Learned Commissioner Income Tax (Disputes Resolution Panel)-2 [In short Ld. CIT DRP ] bearing Din Order No.ITBA/DRP/F/144C(5)/ 2020-21/1031567827(1) vide order dated 17.03.2021 passed under section 144C(5) of the Income Tax Act, 1961 [In short Act ] and arises out of the draft assessment order passed by the Learned ACIT, Circle-11(10(2)], Mumbai [in short A.O. ], vide order dated 13.12.2019 passed under section 143(3)/144C(1) of the I.T. Act, 1961. 2. Briefly stated facts of the case are that the assessee viz., M/s. UPS Jetair Express Private Limited is engaged in the business of International Integrated transportation services. During the under consideration, the assessee company filed it s return of income on 30.11.2016 declaring ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... necessary to look at the basis for the quantification of the payment to be made. There is no change in the facts of the case during the year under reference. Again No effort to establish the cost, if any, to the concerned AE in providing such services to the assessee has been made. Therefore, following the judicial precedence of the earlier years the determination of the Comparable Uncontrolled Price (CUP) of the so called technical knowhow fees at nil by the TPO and the consequent recommendation of the entire actual payment made as a transfer pricing adjustment to the returned income is hereby upheld. 2.2. The DRP accordingly observed that since the material facts and circumstances in the instant case for the A.Y. 2016-17 remain the same, therefore, following the findings of the DRP in earlier years, the objection raised by the assessee company was rejected. 3. The DRP with respect to objection No.2 relating to proposed mark up of 1.74 percent on recovery of expenses from M/s. UPS Worldwide Forwarding Inc., USA. observed as under : 6.3.1. We have considered the submissions of the assessee company on this issue. We find that this issue too was consistently a subject ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ransaction basis, using the most appropriate method having regard to functional analysis and availability of the comparable uncontrolled benchmark. If the aggregation of non-closely linked transaction is allowed as sought by the assessee provisions of 92(3) would become otiose, as the negative adjustment of one of the international transactions would automatically be set-off against the positive adjustment of another international transaction. Therefore, this plea of the assessee is also rejected. 6.1.2 Material facts remaining same during the year under reference, we find no reason to deviate from the decision of the DRP for the preceding years. The ALP of the mark up determined at 1.31% by the TPO has not been disputed before us. Therefore, the determination of the mark up of 1.31% for providing services by the assessee to its AE as service compensation / transfer pricing adjustment in respect of international transaction of recovery of expenses by the TPO, is hereby upheld. The Ground No.2 of the Objection is rejected accordingly 3.1. The DRP accordingly noted that since the material facts and circumstances in the instant case for the A.Y. 2016-17 remain the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al transaction be considered to be at arm's length. Ground No. 2 - Incorrect imputation of mark-up of 1.74 percent (INR 27,78,346) on recovery of expenses by the Appellant from its AE On the facts and circumstances of the case and in law, the learned TPO/AO/NeAC erred in holding, and the Hon'ble DRP further erred in directing, that the Appellant provides services to its AE throughout the year and thereby levying a mark-up on recovery of expenses. The Appellant prays that the said international transaction be considered to be at arm's length. Ground No. 3 - The transactions with JV entities are inherently at arm's length On the facts and circumstances of the case and in law, the learned TPO / AO / NeAC erred by ignoring the fact that the two independent parties had an equity stake in the Appellant and commercially both the parties would be inclined to ensure that the prices charged for services rendered even by other group companies to the Appellant are not more than arm's length rates. Ground No.4 Initiation of penalty proceedings The learned AO / NeAC, based on the facts of the case and in law, has erred in init ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he ALP, is unacceptable. Respectfully following the aforesaid decision, we hold that there is no provision made in the statute empowering the Id. TPO for determining the ALP of a particular international transaction at Nil without resorting to any methods prescribed. Since, the relief is granted to the assessee on the preliminary issue of the Id. TPO not following the prescribed methods as provided in the statute for determination of ALP, the other arguments advanced by the Id. AR and the Id. DR on merits of ALP adjustment are left open and not adjudicated herein. Accordingly, the ground Nos.1.1 to 1.3 raised by the assessee are allowed. 9.1. Since the assessee has raised identical ground for this impugned assessment year and seeking for similar relief as was granted by the Coordinate Bench of the Tribunal in assessee s own case for the A.Y. 2013-14 (supra), we respectfully following the decision of Coordinate Bench of the Tribunal in assessee s own case for the A.Y. 2013-14 and the reasons for decision arrived therein, with similar directions, the grounds of appeal no.1 of the assessee is allowed. 10. Grounds of appeal no.2 of the assessee is with respect to incorrect com ..... X X X X Extracts X X X X X X X X Extracts X X X X
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