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2023 (6) TMI 1367 - AT - Income TaxTP Adjustment - evidence of intra-group services furnished by the assessee - direct nexus between the revenue earned/ cost incurred by the Assessee and the majority intra-group services received obtained or not? - HELD THAT - We note that the assessee has furnished enormous evidences which point out that intra group services have in fact been received by the assessee. Moreover, the agreement is a composite one and authorities below have allowed part of the same and treated part of the same not allowable. On similar facts, ITAT has deleted the adjustment for several years and the Revenue s appeal against them has been dismissed by Hon ble High Court. 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, we uphold the contention of the assessee and delete the TP adjustment.
Issues Involved:
1. Assessment of income under normal provisions. 2. Validity of the order passed by the AO. 3. Adjustment to international transactions of receipt of intra-group services. 4. Short-credit of TDS. 5. Incorrect computation of interest under section 234B. Summary: Issue 1: Assessment of Income under Normal Provisions The assessee contested the AO's assessment of income at INR 270,517,350 and INR 550,932,230 for the respective assessment years, as opposed to the returned income of INR 40,245,490 and INR 8,07,85,870. The Tribunal noted that the assessee's income was assessed under the normal provisions of the Act based on the directions of the Dispute Resolution Panel (DRP). Issue 2: Validity of the Order Passed by the AO The assessee argued that the AO's order was void ab-initio and not in conformity with section 144C of the Act. The Tribunal did not find merit in this argument and upheld the validity of the order passed by the AO. Issue 3: Adjustment to International Transactions of Receipt of Intra-Group Services The primary contention was the adjustment made by the AO/DRP/TPO to the assessee's international transactions concerning intra-group services, alleging non-compliance with the arm's length principle. The Tribunal observed that similar adjustments in previous years had been deleted by the ITAT and upheld by the Hon'ble High Court. The Tribunal noted that the assessee had furnished substantial evidence demonstrating the receipt of intra-group services and that the agreement was composite, making it inappropriate to unbundle the services. The Tribunal concluded that the adjustment should be deleted, following precedents from previous years. Issue 4: Short-Credit of TDS The assessee claimed that the AO erred in granting short-credit of TDS. The Tribunal did not specifically address this issue in detail, as the primary focus was on the adjustment of intra-group services. Issue 5: Incorrect Computation of Interest under Section 234B The assessee also argued that the AO incorrectly computed the amount of interest under section 234B. Similar to the TDS issue, the Tribunal did not delve deeply into this argument, focusing instead on the primary issue of intra-group service adjustments. Conclusion: The Tribunal allowed the appeals filed by the assessee, deleting the transfer pricing adjustments related to intra-group services for the assessment years in question. The stay applications were dismissed as infructuous. The Tribunal's decision was based on consistent precedents from previous years and the Hon'ble High Court's rulings.
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