TaxTMI 
TaxTMI 
2022 (10) TMI 1170
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....ns before Ld. DRP. Subsequently, final assessment order was passed by Ld. AO pursuant to the directions of Ld. DRP which is in further appeal before us. The grounds raised by the assessee read as under: - 1. That on the facts and in the circumstances of the case the Ld AO and the Hon'ble Dispute Resolution Panel (Hon'ble DRP) erred in not confirming the arms length nature of the international transaction of payment of management service fee without considering the fact that the information as provided in earlier years has also been shared for the year consideration and it was accepted to be at arms length by the Ld. DRP for AY 2009-10 and there has been no change in the facts around the transactions, which can lead to an alternate view: 2. That on the facts and in the circumstances of the case the Ld. AO and the Hon'ble DRP erred in rejecting be economic analysis submitted by the appellant and adopted Comparable Uncontrolled Price (CUP) Method as the most appropriate method for the international transaction of parent of management service lee by the appellant and thereby determining the Arms length Price (ALP) to be NIL. 3. That on the facts and in the circumstances of the ....
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....o various documents as placed on record including earlier order of Tribunal for AY 2009-10. The Ld. CITDR controverted the arguments of Ld. AR and supported the assessment framed by Ld. AO. The ld. CIT-DR distinguished the facts of AY 2009-10 and submitted that in that year, evidences of rendering of services were furnished by the assessee which is not the case in this year. Drawing attention to each of the services, Ld. CIT-DR submitted that the services were not required by the assessee and no evidences were placed on record to support rendering of services. Having heard rival submissions and after due consideration of relevant material on record, our adjudication would be as under. 4. Ground Nos. 2 to 4 : TP Adjustment on Management Charges 4.1 One of the international transactions carried out by the assessee was payment of Rs.898.30 Lacs to its Associated Enterprises (AE) M/s Flakt Woods Group AG, Switzerland. The same was pursuant to a management service agreement dated 15.12.2002 under which the assessee was to receive services of varied nature viz. international marketing and sale and product support, manufacturing services, purchasing services, administrative services, T....
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....d the adjustment before Ld. DRP and made elaborate submissions in support of its case. The Ld. DRP noted the directions given in AY 2009-10 which rejected application of CUP and upheld use of TNMM. The same was so since Ld. TPO had made adhoc disallowance of 25% under CUP method which was not permissible. Differing from the view of earlier year, Ld. DRP held that CUP was most appropriate method. The demand raised by AE on the ground enterprises was not based on actual cost incurred by the AE on provision of services on each group enterprises. The actual receipt of services that are beneficial to the assessee must be established. It was necessary for assessee to prove that the services were actually provided by the AE to the assessee and further, these services were beneficial to the business of the assessee from economic and commercial standpoint. But the assessee miserably failed in all respect. Finally, the TP adjustments were confirmed. Aggrieved, the assessee is in further appeal before us. Our findings and Adjudication 5. Upon due consideration of material facts, we find that the assessee has made payment to its AE pursuant to a management service agreement dated 15.12.2002....
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....im of the assessee was not justified. As rightly observed by the Dispute Resolution Panel, the Transfer Pricing Officer has not brought on record the base on which he estimated the Arm's Length Price at 25%, when Rule 10B(c) provides for method of determining the Arm's Length Price. This Tribunal is of the considered opinion that estimation of the services rendered and costs for such services may be outside the scope of transfer pricing adjustment. Without identifying the comparable cases, this Tribunal is of the considered opinion that estimation of the disallowance without any base is not called for. Therefore, the Dispute Resolution Panel has rightly upheld the transfer pricing study made by the assessee. This Tribunal do not find any reason to interfere with the order of the lower authority and accordingly the same is confirmed. The bench thus held that in the absence of any comparison of the transaction with transaction carried out in uncontrolled market, Ld. TPO could not independently come to conclusion that volume and quality of services was disproportionate to the payment made by the assessee. The estimation of the services rendered and costs of such service was ....
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....l transactions. 9. The Ld. CIT-DR has referred to the decisions of Bangalore Tribunal in Herbalife International India (P.) Ltd. vs. ACIT (81 Taxmann.com 178); Taegu Tec India (P.) Ltd. vs. DCIT (83 Taxmann.com 81); Safran Engineering Services India (P.) Ltd. vs. ACIT (89 Taxmann.com 77); Volvo India (P.) Ltd. vs. DCIT (89 Taxmann.com 79): the decision of Delhi Tribunal in Akzo Noble India Ltd. vs Addl. CIT (137 Taxmann.com 369). 10. After going through all these decisions, we find that in all these decisions, it was the finding of the benches that the assessee could not establish rendering of services and accordingly, the TP adjustment were confirmed by Tribunal. However, the same is not the case before us. The present assessee has submitted evidences in support of rendering of services which have been held to be routine activities in nature. Therefore, these case laws have no application to the fact of case before us. 11. Finally, considering the facts of the case, the impugned adjustment confirmed by ld. DRP could not be sustained. We order so. The Ld. AO is directed to re-compute the income of the assessee. 12. Ground Nos. 5 to 7 : TP Adjustment on FCCD 12.1 The assessee ....