9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2025 (1) TMI 1475 - AT - Income TaxTP Adjustment - selection of MAM - Assessee had adopted the aggregate transactions approach and applied Transactional Net Margin Method ( TNMM ) for bench marking of the international transactions - TPO and Ld. DRP adopted the Comparable Uncontrolled Price ( CUP ) and Other Method ( OM ) and rejected the TNMM adopted by the assessee - Whether close inter-linking between all the transactions exist or not so as to justify the aggregation approach? - HELD THAT - There is a substantial change in the nature of services received by the assessee and the service provider in A.Y. 2018-19 as compared to A.Y. 2009-10. It is also a fact that the co-ordinate bench of ITAT in assessee s own case for A.Ys. 2011-12 to 2014-15 2016-17 and 2017-18 has given their findings in favour of the assessee relying on the findings of A.Y. 2009-10. As there is substantial changes in the nature of services received by the assessee and the service provider in A.Y. 2018-19 as compared to A.Y. 2009-10 the facts on the basis of which the Tribunal has decided the issue in A.Y. 2009-10 has got substantially changed. Therefore close inter-linking between all the transactions are required to be established with documentary evidence before deciding whether aggregate transactions approach can be adopted or not. Therefore we set aside the issue to the file of Ld. TPO to verify with the documentary evidence and confirm whether there is any close inter- linking between all the transactions or not and decide as per law. Accordingly the grounds of the assessee are dismissed. Adjustment for payment of interest on Masala Bond - assessee has paid interest on Masala Bond @ 8.70% per annum and the Ld. TPO bench marked the same at 7.53% per annum - HELD THAT - Considering the factual matrix of the case we are of the opinion that the bench marking of the interest on Masala Bond can be taken at 8.70% per annum. Therefore we direct the Ld. TPO to consider the rate of interest on Masala Bond at 8.70% per annum and delete the addition. Accordingly these grounds of assessee are allowed. Refund of excess Dividend Distribution Tax ( DDT ) - HELD THAT - We are of the considered opinion that if any tax has been paid erroneously in excess over the applicable rate then it should be refunded to the assessee. Therefore we direct to the AO to verify the same from the record and issue the refund towards the excess payment if any made by the assessee. Accordingly these ground of the assessee are allowed for statistical purposes. AO allowed less credit on account of MAT and TCS - HELD THAT - We are of the considered opinion that the eligible credit on account of MAT and TCS should be provided to the assessee. Accordingly we make a direction to the Ld. AO to allow necessary credit on account of MAT and TCS after verification of the record as per law. Accordingly these grounds of the assessee are allowed for statistical purposes
ISSUES PRESENTED and CONSIDERED
The core legal issues considered in this judgment are:
ISSUE-WISE DETAILED ANALYSIS 1. Aggregation Approach and ALP Determination Relevant Legal Framework and Precedents: The aggregation approach is permissible under Rule 10A(d) of the Income Tax Rules and OECD transfer pricing guidelines when transactions are closely linked or continuous. Court's Interpretation and Reasoning: The Tribunal emphasized the need for documentary evidence to establish close inter-linking of transactions for adopting the aggregation approach. The Tribunal noted that substantial changes in the nature of services and service providers between assessment years 2009-10 and 2018-19 necessitate a fresh examination. Key Evidence and Findings: The Tribunal found no sufficient evidence to substantiate the aggregation approach for the transactions in question. Application of Law to Facts: The Tribunal remanded the issue back to the TPO to verify the inter-linking of transactions with documentary evidence. Treatment of Competing Arguments: The Tribunal considered the assessee's reliance on past favorable judgments but highlighted the changed circumstances in the current assessment year. Conclusions: The Tribunal directed the TPO to reassess the issue based on evidence of inter-linking. 2. Rejection of TNMM and Adoption of CUP/Other Methods Relevant Legal Framework and Precedents: The selection of the most appropriate method for determining ALP is guided by the Income Tax Rules and past Tribunal decisions. Court's Interpretation and Reasoning: The Tribunal noted the need for a close examination of the appropriateness of the methods used by the TPO and DRP. Key Evidence and Findings: The Tribunal found that the TPO and DRP did not adequately justify the rejection of TNMM. Application of Law to Facts: The Tribunal remanded the issue for re-evaluation by the TPO. Treatment of Competing Arguments: The Tribunal acknowledged the assessee's arguments but emphasized the need for methodical justification. Conclusions: The Tribunal set aside the issue for re-examination by the TPO. 3. Adjustments for Specific Transactions Technical Know-How, Sub-License Fees, Intra-Group Services: These issues were remanded to the TPO for re-evaluation in light of the Tribunal's directions on aggregation and method selection. Interest on Outstanding Receivables: The Tribunal directed the TPO to reassess the imputation of interest, considering the assessee's consistent policy of not charging interest. 4. Interest Rate on Masala Bonds Relevant Legal Framework and Precedents: The Tribunal considered the Advance Pricing Agreement (APA) and past assessments. Court's Interpretation and Reasoning: The Tribunal found no reason to deviate from the agreed interest rate in the APA. Key Evidence and Findings: The Tribunal noted the agreed rate of 8.70% in the APA and past acceptance by the TPO. Application of Law to Facts: The Tribunal directed the TPO to apply the 8.70% rate. Conclusions: The Tribunal allowed the assessee's claim regarding the interest rate. 5. Refund of Excess DDT Relevant Legal Framework and Precedents: The Tribunal referenced the Special Bench decision in JCIT Vs. Total Oil India Pvt. Ltd. Court's Interpretation and Reasoning: The Tribunal agreed with the need to refund any excess DDT paid. Key Evidence and Findings: The Tribunal accepted the assessee's claim of excess payment. Application of Law to Facts: The Tribunal directed the AO to verify and refund any excess DDT. Conclusions: The Tribunal allowed the refund subject to verification. 6. Credit for MAT and TCS Relevant Legal Framework and Precedents: The Tribunal considered the statutory provisions for MAT and TCS credits. Court's Interpretation and Reasoning: The Tribunal emphasized the need for accurate credit allocation. Key Evidence and Findings: The Tribunal acknowledged the potential oversight in credit allocation. Application of Law to Facts: The Tribunal directed the AO to verify and grant the appropriate credits. Conclusions: The Tribunal allowed the claims for statistical purposes. SIGNIFICANT HOLDINGS Core Principles Established: The Tribunal reaffirmed the necessity of substantiating the aggregation approach with documentary evidence and the importance of adhering to agreed terms in APAs. Final Determinations on Each Issue: The Tribunal remanded several issues for further examination by the TPO and allowed claims related to the Masala Bond interest rate and excess DDT refund, subject to verification.
|
