2017 (12) TMI 1860 - ITAT BENGALURU

TP Adjustment - TPO/AO adopting the ALP in respect of management and marketing support services fees paid by the appellant to its AE at Rs.Nil - payment for said services was made in terms of master agreement entered by the appellant with Volvo Truck Corporation, Sweden, i.e., its AE, which is a holding company.

HELD THAT:- Only valid reasons assigned by the TPO which remain uncontroverted for determining the ALP of the transaction of payment of management and marketing support services fees at Rs.Nil is that there was no evidence in support of rendering of services by the AE and the failure to substantiate real nature of services actually rendered by the AE .

We hold that the TPO was justified in determining the ALP of transaction of marketing and management support fees at ‘nil’.

When the case is covered against the assessee in its own case for the earlier assessment year, we find no reason for assessee to seek adjournment of the case, especially in the matters of very old matters i.e., 2010. It is for the assessee to arrange for its own affairs. The court cannot come to the rescue of an assessee who keeps changing counsel from time to time in order to gain time. We do not approve of this kind of practice of frequent change of counsel.

When the application for admission of additional evidence was rejected, the assessee again started pleading adjournment of the case. In any case, once the issue is duly covered against assessee, there was no occasion for the bench to adjourn the matter and further it is not befitting the stature of the counsel, to seek for adjournment in a covered matter.

It is a classic example of shifting of profit base outside the country. The appellant has also not controverted the findings of the TPO that it adopted a colourable device to shift the tax base of this country.

When the other transactions are accepted to be at arm’s length under the TNMM method, the TPO is not justified in adopting the CUP method for the purpose of benchmarking the transaction of payment of management and marketing support services fee, is not correct in asmuchas the TPO had not examined the other transactions under the TNMM method.

Deduction u/s 10A - AO in reducing the tele-communication expenses incurred in India from 'export turnover' while computing deduction under section 10A as 'expenditure attributable to delivery of software outside India' under Explanation 2(iv) to Section 10A - HELD THAT:- We find that this issue is squarely covered in favour of the assessee by the decision of Tata Elxsi (2011 (8) TMI 782 - KARNATAKA HIGH COURT). We direct the AO to reduce telecommunication expenses both from export turnover as well as total turnover.