9911796707
TMI Blog2023 (5) TMI 32X X X X Extracts X X X X X X X X Extracts X X X X ..... NR 9,55,98,734 to the total income of the Appellant, under section 92CA(3) of the Act in respect of the international transaction of payment of regional service fees made to its Associated Enterprises (AEs) during the year ended 31 March 2018. 1.2 On the facts and circumstances of the case and in law, the learned TPO/ learned AO/ Hon'ble DRP has erred in rejecting the Transfer Pricing (TP) analysis undertaken by the Appellant. 2. Re.: Transfer Pricing adjustment of INR 9,55,98,734 in respect of Payment of Regional Service Fees 2.1 On the facts and circumstances of the case and in law, the learned TPO/ learned AO/ Hon'ble DRP has erred in proposing/ upholding an adjustment to the Arm's Length Price (ALP) determined by the Appellant in respect of the international transaction of payment of regional service fees by the Appellant to its AES. In doing so, the learned TPO/ learned AO/ Hon'ble DRP has erred in law and in facts by: a. determining the ALP of the international transaction for payment of regional service fees at NIL value without providing any cogent reasons and not appreciating the facts of the case in their proper perspective; b. disregarding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd circumstances of its case and the law prevailing on the subject amount has been paid/ deposited, and hence, the same is allowable under section 43B of the Act and the stand taken by the Assessing Officer in this regard is misconceived, illegal, erroneous and incorrect. 4.3 The Appellant submits that the learned AO ought to be directed to delete the disallowance so made by him and to re-compute its total income and tax thereon accordingly. 5. Re.: Excessive Levy of interest u/s, 234B, 234C and 234D of the Act 5.1 The learned AO has erred in levying interest u/s. 234B of the Act while computing the tax payable by the Appellant. 5.2 The learned AO has erred in levying excessive interest u/s. 234C of the Act while computing the tax payable by the Appellant. 5.3 The learned AO has erred in levying interest u/s. 234D of the Act while computing the tax payable by the Appellant. Others 6. The learned AO erred in initiating penalty proceedings under section 270A of the Act. The Appellant claims relief on the above grounds and thereby deleting the adjustments made by the learned AO in the final assessment order. The Appellant craves for leave to add, amend, vary, omit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same appears to be only incidental benefits. It was also held that the assessee has failed to furnish evidence that such services have been rendered and received during the year. Accordingly, the TPO treated the arm's length price of this transaction at Nil and proposed an upward adjustment of Rs.9,55,98,734. In conformity, the AO passed the draft order under section 144C of the Act determining the total income of the assessee at Rs.10,99,05,924. The assessee filed detailed objections before the learned DRP against the transfer pricing adjustment proposed by the TPO/AO. Vide its directions dated 22/06/2022 issued under section 144C(5) of the Act, the learned DRP rejected the objections filed by the assessee and held that the description of services is in most general terms and the benefits said to have accrued have a theoretical tone instead of practical, realistic and demonstrable benefits. The DRP further held that the services for which a payment is claimed are in the nature of shareholder services only and nothing is placed to demonstrate any benefit received by the assessee from the services rendered for which the payment is claimed. In conformity with the directions issued by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve adequate human resources to perform the functions for which services of AE is availed. It was stated that assessee does not have dedicated staff for the various services included therein. The assessee has listed six kind of services which were provided for by the Singapore office to the assessee. Further, assessee has also incurred headqarter management fees amounting to Rs.18,60,449/- to its AE which performs central corporate and administrative services for the benefit of all its foreign affiliates. The claim of the assessee is with that these services are also 7 different kindsof services and are not duplicative in nature. These are also backed by an agreement. The assessee has benchmarked services under transactional net margin method. We find that both these services are in the nature of intra group services. To prove that an independent third party would have paid for the services, assessee need to establish and demonstrate by reasonable level of evidence and documentation that these services were required (need test), those were rendered (rendition test), resulted into benefit to the assessee (benefit test) and also are not duplicative in nature. Further, any third indepe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee's appeal is pertaining to an erroneous computation of total income for the year under consideration. As per the assessee, while computing the assessed income in the final assessment order, the AO considered the income processed under section 143(1) of the Act, as the starting point, instead of the returned income, which was considered in the draft assessment order. As per the assessee, the difference is on account of the additional customs duty paid/deposited before filing the return of income, which is allowable under section 43B of the Act, and in this regard the assessee has also filed a rectification applications dated 19/08/2022 before the AO, which is pending disposal. Therefore, in view of the above, we deem it appropriate to restore this issue to the file of the AO for computation of the total income, as per law, after necessary verification. As a result, grounds no.3 and 4 raised in assessee's appeal are allowed for statistical purposes. 10. Ground no.5, raised in assessee's appeal, is pertaining to the levy of interest under sections 234B, 234C, and 234D of the Act, which is consequential in nature. Accordingly, ground no.5 is allowed for statistical purposes. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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