2022 (10) TMI 1056 - HC - Income Tax

TP adjustment - international transaction pertaining to receipt of business support services and the arm s length price of the said transaction at Nil - Whether ITAT has erred in subjecting the transaction pertaining to receipt of administrative services to comparable uncontrolled price ( CUP ) method without demonstrating any comparable instances and ignoring the arm's length analysis submitted by the Appellant? - HELD THAT - This Court finds that all the three authorities below have given concurrent findings of fact that the Appellant had failed to furnish evidence to demonstrate that administrative services were actually rendered by the AE and the assessee had received such services. In fact, the ITAT has noted in the impugned order .On a specific query made by the Bench to demonstrate the receipt of services from AE through cogent evidence, including, any communication with the AE, learned counsel for the assessee expressed his inability to furnish any evidence and repeated his submission to restore the matter back to the Assessing Officer for enabling the assessee to furnish evidence, if any. . This Court is also of the view that every Assessment Year is a separate unit which is governed by its own peculiar facts. ITAT in the impugned order has clarified that its decision would not prejudice the assessee s claim in any other assessment year, as it has to be decided based on the evidences produced to establish the claim of receipt of services from AE. Further, this Court in Principal Commissioner of Income Tax-6 vs. Make My Trip India (P) Ltd. 2017 (11) TMI 587 - DELHI HIGH COURT has held that difference of opinion between the parties, as to the appropriateness of one or the other methods to calculate arm s length price, cannot per se be a ground for intereference and the appropriateness of the method unless shown to be contrary to the Rules specially 10B and 10C are hardly issues that ought to be gone into u/s 260A of the Act.

Summary

Issues:
1. Challenge to the transfer pricing adjustment in an income tax appeal.
2. Alleged errors in upholding the transfer pricing adjustment.
3. Application of the comparable uncontrolled price method.
4. Lack of evidence to demonstrate receipt of administrative services.
5. Treatment of each assessment year as a separate unit.
6. Precedent regarding the appropriateness of methods to calculate arm's length price.
7. Dismissal of the appeal due to the absence of substantial questions of law.

Analysis:
1. The appellant filed an income tax appeal contesting the order by the Income Tax Appellate Tribunal (ITAT) concerning a transfer pricing adjustment related to business support services for the Assessment Year 2008-09.
2. The appellant argued that the ITAT erred in upholding the transfer pricing adjustment and determining the arm's length price at 'Nil' for the international transaction.
3. It was contended that the ITAT incorrectly applied the comparable uncontrolled price method without providing comparable instances and disregarding the arm's length analysis presented by the appellant.
4. The appellant highlighted that similar administrative services were accepted in subsequent assessment years by the ITAT, emphasizing the inconsistency in treatment.
5. The court noted that all lower authorities found the appellant failed to provide evidence demonstrating the receipt of administrative services from the associated enterprise (AE) for the specific assessment year.
6. Each assessment year was considered a distinct unit, and the ITAT clarified that its decision did not affect the appellant's claim in other years, emphasizing the need for evidence to support service receipt claims.
7. Referring to precedent, the court cited a case to support that differences in calculating arm's length price methods do not automatically warrant interference unless contrary to specific rules, leading to the dismissal of the appeal due to the lack of substantial legal questions.