2022 (9) TMI 1438 - AT - Income Tax

TP Adjustment - ALP adjustment pertaining to its receipts of corporate support services - HELD THAT - The same admittedly appears a recurring issue between the parties therefore. This tribunal s learned co-ordinate benches have been reversing the department s view questioning the impugned corporate support services received from the overseas associate enterprises AE namely M/s. Eaton (China) Investments Co. Ltd. at cost mark up of 9% and from Eaton Hydraulics LLC on cost to cost basis ; respectively. The Revenue could not pin-point any distinction on facts or law in all these assessment years; as the case may be.

Summary

Issues involved:
1. Assessment years 2013-14 and 2014-15 - TP adjustments for corporate support services.
2. Assessment years 2013-14 and 2014-15 - TP adjustments for manufacturing segments.
3. Assessment years 2013-14 and 2014-15 - Corporate cost allocation disallowance.

Analysis:
Issue 1: Assessment years 2013-14 and 2014-15 - TP adjustments for corporate support services
The appeals arose against assessments framed by the DCIT, Cir-8, Pune, following directions from the Dispute Resolution Panel-3, Mumbai. The main issue was the arm's length price (ALP) adjustment of Rs.13,16,72,743/- for corporate support services received from overseas associate enterprises. The tribunal's co-ordinate benches consistently ruled in favor of the assessee in previous assessment years. The tribunal found no distinction in facts or law presented by the Revenue, leading to a decision in favor of the assessee. The tribunal referred to previous cases where similar issues were decided in favor of the assessee, establishing a pattern of decisions supporting the assessee's position. The tribunal allowed the assessee's appeal concerning this issue.

Issue 2: Assessment years 2013-14 and 2014-15 - TP adjustments for manufacturing segments
The TP adjustments of Rs.6,26,38,000/- and 3,85,97,146/- related to manufacturing segments were also challenged. The tribunal noted errors in the TPO's rejection of the internal TNMM method used by the assessee to determine the ALP of international transactions. The tribunal upheld the internal TNMM method, citing previous cases where this method was deemed appropriate. The tribunal found no contrary orders presented by the Revenue, leading to a decision in favor of the assessee. The tribunal allowed the assessee's appeal regarding this issue.

Issue 3: Assessment years 2013-14 and 2014-15 - Corporate cost allocation disallowance
The disallowance of corporate cost allocation was another issue raised in the appeals. The tribunal, based on consistency in previous decisions and lack of distinguishing features, decided in favor of the assessee. The tribunal adopted judicial consistency and ruled in favor of the assessee against the department. The appeals were allowed in favor of the assessee, and a common order was issued for both appeals. The tribunal emphasized the importance of maintaining consistency in decisions across assessment years.