9911796707
TMI Blog2025 (5) TMI 493X X X X Extracts X X X X X X X X Extracts X X X X ..... 2020-21. 2. Heard and perused the record. The Appellant is mainly engaged in the business of designing, fabricating, manufacturing and supply of equipment plants & machinery for cement manufacturing companies. During FY 2019-20, the Appellant entered into various international transactions with its associated enterprises ('AEs'). All other international transactions of the Appellant have been accepted to be at arm's length and no adverse inference has been drawn by the TPO, except for the two and for which the tax authorities below have disregarded the economic analysis carried out by the Appellant in relation to the following two transactions and made the following adjustment: 2.1 Availing of supervision services. These services were in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y management, global sales support, global IT CAD etc. 2.3 As per the inter-company arrangement for providing central services, the AE incurs such costs for all Group companies and subsequently allocates them to the respective service recipients including HW India. The amount paid/ payable by HW India in respect of these services represents the proportionate share of HW India in the total cost incurred by the AE in providing these services plus 5% profit mark-up applied on internal cost while third party costs are charged on cost to cost basis. The transaction value was Rs 155,728,455/-. Analysis carried out in the TP documentation was Method: Cost Plus Method ('CPM')Tested Party NCPM:5%; Arm's length NCPM: 3.47% - 6.56% (median: 4.64%). S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llowed by the Hon'ble ITAT 2017-18 2018-19 2019-20 Not picked up for scrutiny 5. Then, in the Assessee's own case for AY 2014-15, AY 2016-17.2017-18 and 2018-19 the co-ordinate benches have considered the issue of mark and have held that the mark-up charged by the AE for the services provided should be allowed and deleted the entire adjustment made on this account. The relevant part of the decision in AY 2014-15, paras 5 to 8, are reproduced below:- "5. The markup of 4% and 5% has been disallowed by the TPO and accordingly enhanced the income of the assessee based on the ld. DRP observations for the year 2010-11. For the sake of ready reference, the same is reproduced as under: "3.3.2. In the assessee's case, the intr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... maining cost is allocated to different organizations of the group. The assessee pays the cost of services allocated to it plus ore-agreed mark up. In the course of hearing, the assessee was asked to justify the mark up. However, no detailed justification was provided in this regard. It was only stated that since the AE was providing the services, it was entitled to earn some margin on the same. However, as discussed earlier, while the primary beneficiary of the services is the assessed, there are also some incidental benefits accruing to the group. The parent company gets benefited by better synergies, scale of economy, better coordination and reporting. Considering this, the AE, in our opinion, was not justified in charging any mark up on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the co-ordinate bench in which one of us, the Hon'ble Accountant Member, was also in quorum has concluded that the issue of mark up being at arm's length is no more res integra, and the relevant part of order is reproduced below:- "5. In the light of the submissions made on behalf of the assessee, the issue is no longer res integra. The issue has been either endorsed by the Revenue itself or has been ruled in favour of the assessee by the Co- ordinate Bench in assessee's own case in Assessment Years 2014-15, 2016-17 and 2017-18. A reference is made in this regard to the decision of the Co-ordinate Bench in ITA No.349/Del/2020 order dated 27.04.2022 relevant to Assessment Year 2017-18 and ITA No.8119/Del/2018 order dated 18.08.2021 concer ..... X X X X Extracts X X X X X X X X Extracts X X X X
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