9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2024 (1) TMI 794 - AT - Income TaxTP Adjustment - Upward adjustment of Arm s Length Price in respect of Management Services - AO observed that the assessee had entered into international transactions and had paid fees for availing management services from it s Associated Enterprise in China - CIT(A) decided the issue in favour of the assessee on the ground that the ITAT Pune in assessee s own case for A.Y. 2009-10 2019 (6) TMI 1716 - ITAT PUNE has decided this issue in favour of the assessee - HELD THAT - In view of the arguments put before us, it would be useful to reproduce the relevant extracts of the ITAT ruling rendered in assessee s own case for A.Y. 2009-10 as held that the assessee entered into an agreement with Schaeffler Holding (China) Co., Ltd for receipt of Management support. Services , for which separate benchmarking was required to be done. Such services were actually rendered. These services are not in the nature of stewardship or shareholder activity. The payment to Schaeffler Holding (China) Co. Ltd. at the actual costs incurred in providing such services plus 5% mark-up is at ALP, which does not require any transfer pricing addition. We, therefore, set aside the impugned order by holding that the international transaction of payment of Fees for Management, services is at ALP, which does not require any transfer pricing addition. Upward adjustment of ALP made by the TPO in respect of benchmarking of manufacturing segments - As decided in own case or A.Y. 2009-10 in the interest of justice, the TPO is directed to re-compute the adjustment.
Issues Involved:
1. Upward adjustment of Arm's Length Price (ALP) in respect of Management Services. 2. Upward adjustment of ALP in respect of benchmarking of Manufacturing Segment. 3. Granting benefit of +/- 3% margin to the assessee in determining the ALP. 4. Consideration of comparable companies by the TPO and AO. 5. Adjustment of operating cost in computing margins of manufacturing segment. Summary: 1. Upward adjustment of ALP in respect of Management Services: The Department challenged the deletion of upward adjustments made by the TPO regarding management services fees paid by the assessee to its Associate Enterprise (AE). The TPO had determined the ALP at "NIL" due to lack of details and cost-benefit analysis provided by the assessee. The Ld. CIT(A) decided in favor of the assessee, relying on the ITAT Pune's decision in the assessee's own case for A.Y. 2009-10, which held that the services were not in the nature of stewardship activities and were at ALP. The Tribunal upheld the Ld. CIT(A)'s decision, dismissing the Department's appeal on this issue. 2. Upward adjustment of ALP in respect of benchmarking of Manufacturing Segment: The TPO made an upward adjustment due to the assessee's claim of higher depreciation rates, which was not found correct. The Ld. CIT(A) allowed the appeal of the assessee, following the ITAT Pune's decision for A.Y. 2009-10, which granted depreciation adjustment. The Tribunal directed the TPO to re-compute the adjustment in accordance with the ITAT Pune's directions, allowing the Department's appeal for statistical purposes. 3. Granting benefit of +/- 3% margin to the assessee in determining the ALP: The Department contested the Ld. CIT(A)'s decision to grant a +/- 3% margin benefit to the assessee. The Tribunal upheld the Ld. CIT(A)'s decision, dismissing the Department's appeal on this ground. 4. Consideration of comparable companies by the TPO and AO: The assessee's cross objections included the improper consideration of comparable companies by the TPO and AO. The Tribunal noted that these objections supported the Ld. CIT(A)'s findings and disposed of them accordingly. 5. Adjustment of operating cost in computing margins of manufacturing segment: The assessee raised objections regarding the non-adjustment of operating costs while computing margins. The Tribunal directed the TPO to carry out necessary adjustments as per the ITAT Pune's directions for A.Y. 2009-10. Conclusion: The Tribunal partly allowed the Department's appeal for statistical purposes and upheld the Ld. CIT(A)'s decisions on several grounds, dismissing the Department's appeals on those issues. The cross objections filed by the assessee were disposed of in line with the Tribunal's observations.
|
