TMI Blog2023 (6) TMI 350X X X X Extracts X X X X X X X X Extracts X X X X ..... ices are undisputedly rendered, the entire agreement has to be viewed as a whole. Whether the services have actually resulted in a benefit to the assessee or not is not material. The conclusion of the Ld. TPO that the services have not resulted in any benefit and no independent entity would have made such a payment is in the realm of surmised and conjunctures and not backed by any material. Thus, the ALP determined by the assessee company is accepted and the TPO adjustment is deleted. Also in the Assessee s case for AY 2008-09 [ 2016 (1) TMI 933 - ITAT DELHI ] held that OECD guidelines end an aggregated benchmarking approach in a situation, where the underline transactions are closely linked to the core business operations We find that the above order applies on all fours to the present appeals. Here also from the composite agreement, some have been accepted at arm s length price and some have been treated as not acceptable at arm s length price. Huge details of intra-group services have been furnished by the assessee. Respectfully following the precedent from the ITAT and Hon ble High Court [ 2016 (9) TMI 244 - DELHI HIGH COURT ] we uphold the contention of the assessee and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... services cannot be assumed to be Nil and the adjustment made ought to be deleted; 3.3. Ignoring the specific evidences such as Management Representation Letters ( MRLs ) from AEs, Travel details, hotel details, etc. which were submitted by the Appellant based on the specific request of the Ld. TPO during the hearings; 3.4. Ignoring the decisions of the Hon'ble High Court and the Hon'ble Tribunal for earlier as well as subsequent assessment year(s) wherein Transfer Pricing adjustment on account of intra group services has been deleted. ITA No.7961/Del/2019 (AY 2012-13) 1. That on facts and circumstances of the case and in law, the AO erred in assessing the income of the Appellant under the normal provisions of the Act at INR 550,932,230 in pursuance to the directions of the Dispute Resolution Panel ( DRP ), as against the returned income of INR 8,07,85,870. 2. That on the facts and in the circumstances of the case and in law, the order passed by the learned Assessing Officer ( AO ) is bad in law and void ab-initio. 3. That on the facts and in the circumstances of the case and in law, the AO erred in making a reference to the Transfer Pricing Officer ( TP ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the arm's length price for the intra-group services received by the Appellant; and 4.7. Not appreciating that even at a transactional level, the margin earned by AEs from provision of intra-group services were at arm's length. 5. That on the facts and in the circumstances of the case and in law, the AO erred in granting short-credit of TDS. 6. Without prejudice to the above grounds, the AO erred in incorrectly computing the amount of interest under section 234B. 3. Since the facts are similar in both the appeals and the appeals were heard together, we are adjudicating both the appeals by this common order. For the sake of convenience, we are adjudicating with the facts and figures from the AY 2012-13. 4. Briefly stated the facts necessary for adjudication of the controversy at hand are : M/s. Avery Dennison (P) Pvt. Ltd., the taxpayer is a subsidiary of Avery Dennison Corporation, USA and is into the manufacturing and trading of pressure sensitive adhesive material, selfadhesive paper, self-adhesive film, tape, sheets, tags and labels in its two segments, namely, Pressure Sensitive Material (PSM) AND Retail Branding Information Solutions (RBIS). 5. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upon the order passed by the ld. DRP in AYs 2010-11 and 2011-12 applied CUP method for benchmarking the international transactions qua intra group services and thereby proposed an adjustment of Rs. 23,02,71,861/-. 7. In first round, the ITAT remanded the issue to the file of TPO to examine the evidence of intra group services afresh. In the second round, ITAT again remanded the matter to the TPO to examine the evidence of intra group services afresh by TPO. 8. Assessee took the matter to Hon ble High Court. Hon ble High Court upon assessee s appeal set aside the orders of ITAT for AYs 2012-13 and 2015-16 and directed that ITAT should examine the issue and appreciate the evidences. 9. In these circumstances, we have heard both the parties and perused the records. 10. Ld. Counsel for the assessee submitted that the issue involved in the present appeals is squarely covered in assessee s own case for the Assessment Years 2007-08, 2008-09, 2010-11, 2011-12, 2014-15 2016-17 wherein the similar adjustment on account of intra-group services received by the assessee had been made by the CIT(A) and DRP. As against such adjustments, the assessee had preferred appeals before this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has applied TNMM, in respect of the services received to arrive at the ALP. It is observed that the Id. CIT(A) accepted the contentions of the assessee that; intra group services were received by the assessee as per the agreement, and that these are critical, and linked to the core business operations of the assessee. However, the Ld. CIT(A) held that certain services specified in the agreement did not result in any benefit to the assessee. 21. All the services received are part of composite contracts/agreements which in our view cannot be unbundled... 23. From the above discussion we are of the considered opinion that the agreement is an intrinsic one and that it is wrong to split the same and hold that some services are at arm's length and some services are not. 24. The Ld. CIT(A) accepted TNMM to arrive at the ALP, in respect of certain services received by the assessee and in the same breath, has rejected the analysis undertaken by the assessee under the TNMM in respect of other services. We are informed by the assessee that, the authorities have accepted TNMM as MAM in the subsequent years. The revenue has to be consistent in its approach. In our view, the TPO ana ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transactions wherein arm's length price can be determined for a number of transactions taken together... 31. The assessee is predominantly a manufacturer and the services received by the assessee from its AEs are intrinsically linked to the core business operations of the assessee, in the following form: a. Based on the support provided by the AEs in terms of marketing services and strategic services, the assessee is able to achieve higher sales, both in terms of higher sales quantity and sales prices. b. Based on the support provided by the assessee in terms of operations and logistics the assessee has been able to procure raw materials at lower costs. Accordingly, the impact of such support services is received by the assessee in the form of lower direct costs. 32. We observe that there exists a direct nexus between the revenue earned/ cost incurred by the Assessee and the majority intra-group services received, it would be incorrect to analyse the intra-group services received as a single element of cost in isolation... 23. Further, the Department has also filed appeal against the order of ITAT before Hon'ble Delhi High Court. Hon'ble Delhi High Court ..... X X X X Extracts X X X X X X X X Extracts X X X X
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