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2023 (3) TMI 778 - AT - Income TaxTP adjustment - payment of cost allocation charges towards Central Regional Support Services and Business Support Services - HELD THAT - Once availing of various services from the associated enterprise is duly substantiated by the documentary evidence and the cost allocation among the group companies is also on the basis of a well-accepted allocation key method, we find no basis in upholding the transfer pricing adjustment made by the TPO/AO. Accordingly, the AO is directed to delete the transfer pricing adjustment on account of payment of cost allocation charges towards Central Regional Support Services and Business Support Services. As a result, grounds no.2 and 4 raised in assessee s appeal are allowed. TP Adjustment on account of payment of cost allocation charges towards Software Development and other IT services - HELD THAT - As once availing of various services from the associated enterprise is duly substantiated by the documentary evidence and the cost allocation among the group companies is also on a cost-to-cost basis, we find no reason to uphold the transfer pricing adjustment made by the TPO/AO. Accordingly, the AO is directed to delete the transfer pricing adjustment on account of payment of cost allocation charges towards Software Development and other IT services. Ground no.3 raised in assessee s appeal are allowed. TP Adjustment on account of payment made for availing Investment Advisory Services - HELD THAT - As it is evident that the assessee has not only proved the receipt of services from the associated enterprise but also provided the details of the benefit received by it from the Investment Advisory Services received from the associated enterprise. Therefore, in view of the above, we find no basis for upholding the transfer pricing adjustment made by the TPO/AO. Accordingly, the AO is directed to delete the transfer pricing adjustment on account of payment made for availing of Investment Advisory Services. As a result, ground no.5 raised in assessee s appeal is allowed.
Issues Involved:
1. Transfer Pricing Adjustment for Risk Management Services. 2. Transfer Pricing Adjustment for Central and Regional Support Services. 3. Transfer Pricing Adjustment for Software Development and IT Services. 4. Transfer Pricing Adjustment for Business Support Services. 5. Transfer Pricing Adjustment for Investment Advisory Services. Summary: 1. Transfer Pricing Adjustment for Risk Management Services: The issue pertains to the addition of Rs. 9,97,195/- for payment of cost allocation charges towards Risk Management services to its Associate Enterprises (AE). The Revenue's appeal was dismissed as the tax effect was below the revised monetary limit of Rs. 50 lakh as per CBDT Circular no.17/2019. The Revenue was given liberty to seek recall of the order if the appeal falls under any exceptions provided in the Circulars. 2. Transfer Pricing Adjustment for Central and Regional Support Services:The assessee challenged the upward adjustment of Rs. 11,382,173 made by the AO/TPO. The TPO had determined the arm's length price of these services as Rs. Nil, arguing that the assessee failed to prove the rendition and quantification of services. The Tribunal found that the services were substantiated by documentary evidence, and the cost allocation was based on a well-accepted allocation key method. The Tribunal directed the AO to delete the transfer pricing adjustment. 3. Transfer Pricing Adjustment for Software Development and IT Services:The assessee challenged the upward adjustment of Rs. 12,192,637 made by the AO/TPO. The TPO determined the arm's length price as Rs. Nil, citing lack of proof of services rendered and benefits derived. The Tribunal found that the services were substantiated by documentary evidence, and the cost allocation was on a cost-to-cost basis. The Tribunal directed the AO to delete the transfer pricing adjustment. 4. Transfer Pricing Adjustment for Business Support Services:The assessee challenged the upward adjustment of Rs. 2,831,154 made by the AO/TPO. The TPO determined the arm's length price as Rs. Nil, arguing that the assessee failed to prove the rendition and quantification of services. The Tribunal found that the services were substantiated by documentary evidence, and the cost allocation was based on a well-accepted allocation key method. The Tribunal directed the AO to delete the transfer pricing adjustment. 5. Transfer Pricing Adjustment for Investment Advisory Services:The assessee challenged the upward adjustment of Rs. 44,90,434 made by the AO/TPO. The TPO determined the arm's length price as Rs. Nil, citing lack of proof of services rendered and benefits derived. The Tribunal found that the services were substantiated by documentary evidence, and the cost allocation was on a cost-to-cost basis. The Tribunal directed the AO to delete the transfer pricing adjustment. Conclusion:In the result, the appeal by the Revenue was dismissed, and the appeal by the assessee was allowed. The Tribunal directed the AO to delete the transfer pricing adjustments on account of payment of cost allocation charges towards Central & Regional Support Services, Software Development and IT Services, Business Support Services, and Investment Advisory Services. Order pronounced in the open Court on 16/03/2023.
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