TMI Blog2022 (11) TMI 1417X X X X Extracts X X X X X X X X Extracts X X X X ..... ase of Kellogg India Pvt. Ltd. [ 2019 (8) TMI 698 - ITAT MUMBAI] M/s CLSA India Pvt. Ltd. v. DCIT [ 2019 (1) TMI 1351 - ITAT MUMBAI] Firmenich Aromatics India P. Ltd. v. DCIT [ 2018 (9) TMI 1007 - ITAT MUMBAI] Identical approach adopted by the TPO stands rejected by the Tribunal in the above said decisions including in the case of the Appellant for the Assessment Year 2012-13. Thus, respectfully following the above decisions of the Tribunal, we delete the transfer pricing addition - Decided in favour of assessee. - SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER AND SHRI RAHUL CHAUDHARY, JUDICIAL MEMBER For the Appellant : Shri Farrokh V Irani, Shri Krishna Kumar For the Respondent : Ms. Samruddhi Dhananjay Hande ORDER PER RAHUL CHAUDHARY, JUDICIAL MEMBER: 1. The present appeal is directed against Assessment Order dated, 25.09.2017, passed under Section 144C(13) of the Income Tax Act, 1961 [hereinafter referred to as the Act ], as per directions issued by Dispute Resolution Panel-I, Mumbai (hereinafter referred to as the DRP ) under Section 144C(5) of the Act pertaining to the Assessment Year 2013-14. 2. The Appellant has raised seven grounds, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as the most appropriate method on the same basis as was done in the Assessment Year 2012-13. Taking the base of 750 hours and multiplying the same with the man hour rate of INR 3,000/- per hour, the TPO determined Arm s Length Price of the international transaction at INR. 22,50,000/-, whereas the Appellant had paid Management Fee of INR 8,06,32,267/-. Accordingly, the TPO proposed upward transfer pricing adjustment of INR 7,83,82,267/-, vide letter dated, 31.10.2016 passed under Section 92CA(3) of the Act in respect of Intra-Group Services availed by the Appellant. The aforesaid transfer pricing adjustment was incorporated by the Assessing Officer in the Draft Assessment Order, dated 26.12.2016, passed under Section 143(3) read with Section 144C(1) of the Act. 3.2. Being aggrieved, the Appellant filed objections before DRP which were disposed off vide, order/directions dated 14.09.2017, passed under Section 144C(5) of the Act. The DRP rejected the objections raised by the Appellant observing that the DRP had, for the Assessment Year 2012-13, disallowed similar claim of the Appellant and the change in the method use for benchmarking the transaction did not the address the issue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment Year 2012-13, rejected the basis on which addition/transfer pricing adjustment was made by the TPO. The relevant extract of the aforesaid decision of the Tribunal [ITA No. 343/Mum/2017, Assessment Year 2012-13, Pronounced on 27.12.2019] read as under: 3. Before us, the Ld. counsel for the assessee submits that the assessee has During the course of hearing the Ld. counsel relies on the order of the Tribunal in the case of Kellogg India Pvt. Ltd. v. DCIT (ITA No. 2866/Mum/2014) for AY 2009-10; M/s CLSA India Pvt. Ltd. v. DCIT (ITA No. 1182/Mum/2017) for AY 2012-13; Firmenich Aromatics India P. Ltd. v. DCIT (ITA No. 2590/Mum/2017) for AY 2012-13. 4. On the other hand, the Ld. Departmental Representative (DR) submits that as observed by the DRP the assessee has not benchmarked the international transactions at all, which is clearly a violation of law. It has not shown how the various transactions are closely linked and how they cannot be evaluated adequately on a separate basis. It is further stated that the assessee has failed to show that specific and distinct services were rendered by the AE, for which payment to the extent made by it needs to be paid. Further, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es of the case. In the case of Kellogg India Pvt. Ltd. (supra), the Tribunal has rightly held that: Even assuming that the benchmarking done by the assessee was not correct, the Transfer Pricing Officer should have benchmarked the royalty payment by applying any of the prescribed methods. However, without applying any prescribed method he has simply determined the arm s length price of royalty payment at Nil. The aforesaid approach of the Transfer Pricing Officer is not in accordance with statutory provisions, hence, unsustainable. Similar view has been taken by the Tribunal in M/s CLSA India Pvt. Ltd. (supra) and Firmenich Aromatics India P. Ltd. (supra). 5.1 To sum up, in the instant case, the TPO has summarily rejected the TNMM followed by the assessee in respect of management fees paid/payable by it to its AE and proposing an adjustment under CUP without benchmarking with comparable uncontrolled transactions. Also the TPO has resorted to an ad-hoc unilateral pricing of management fees, disregarding the facts of the case. In view of the above factual scenario and position of law, we delete the addition of Rs. 3,83,75,622/- made by the AO as adjustment on account of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to interfere with the findings of the Mumbai Bench of the Tribunal that the transfer pricing adjustment made by the TPO without following one of the prescribed methods makes the entire transfer pricing adjustment unsustainable in law. The grievance of the revenue was that the consideration paid to the AE is only attributable to the services received / availed. 23. In the light of the facts of the case, provisions of the Law and the cases -discussed in the foregoing paras, we are of the considered view that the transfer pricing adjustment made by the Ld. TPO on ad hoc basis is not sustainable in law. Since, the order passed by the TPO u/s 92 CA(3) of the Act is not sustainable, the Ld. DRP ought to allowed the objection filed by the assessee. Hence, we decide both the questions mentioned in para No 17 (supra) in negative and further hold that the assessment order passed by the AO pursuant to the directions passed by the Ld DRP u/s 144(5) of the Act, is not sustainable in law. (Emphasis Supplied) 8. In the case before us pertaining to Assessment Year 2013-14, the TPO has determined the ALP of the transaction without following any of the prescribed methods. The transfer pric ..... 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