9911796707
TMI Blog2015 (8) TMI 1082X X X X Extracts X X X X X X X X Extracts X X X X ..... tion. 2. We have heard and considered the arguments advanced by the parties in view of orders of the authorities below, material available on record and the decisions relied upon. 3. The facts in brief are that the assessee is a private limited company registered in India and is a wholly owned subsidiary of Danisco A/S, Denmark. The assessee was incorporated on 21.1.1991 for manufacturing and marketing of food and non-food ingredients. M/s. Denisco India is primarily engaged in manufacturing of artificial flavors, food and non-food ingredients and trading of ingredients. 4. During the year, the assessee had following international transactions with its associated enterprises: S. No. Description of the transactions Amount (In INR) Met ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ort. He observed further that no cost sheets or corroborative agreements have been provided to demonstrate that these services were actually received by the assessee. He held further that if the services had been rendered at all, those may be termed as ancillary services. No independent party would pay anything for such services under uncontrolled circumstances. The TPO thus held the payment of Rs. 61,62,872 is nothing but a device of profit shifting and arm's length price of this transaction shall be determined at nil under CUP Method. The TPO added the payment made by the assessee to its AE to the arm's length price charged by the assessee. The Learned CIT(Appeals) has, however, deleted this disallowance against which the Revenue is in ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it would not be feasible to expect any independent company to provide such services on a free of cost basis as has been contemplated by the learned TPO in his order. Such payments were made on account of global agreement procured by the A. E. for the benefit of entire group and were mainly towards internet connectivity, standard operating system such as MS Office, software support and IT Helpdesk. The costs had been allocated without any markup based on the number of head counts using specific IT Services. He referred page Nos. 227 to 232 of the paper book i. E. copy of the relevant extracts of the submissions before the learned TPO and giving the detailed description of the services utilized by the assessee in its operations and their ben ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mentioned in Rule 10B(1)(a) of the Income-tax Rules, 1962. The expenses incurred by the assessee, including expenses for I. T. costs have formed a part of the cost base of the assessee. He placed reliance on the following decisions: i) Dresser Rand India Pvt. Ltd. - ITA No.8753/Mum/2010; ii) AWB India Pvt. Ltd. - ITA No. 4454/Del/2011; iii) Ericson India Pvt. Ltd. - ITA No. 5141/Del/2011; & iv ) McCann Erickson India Pvt. Ltd. - ITA No. 5871/Del/2011. 9. Having gone through the orders of the authorities below, we find that there are some undisputed facts and that no such payment in question i. E. information technology cost was made to any other party and in the assessment year 2006-07, the learned TPO in the case of assessee itself u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etwork which allows Danisco India to communicate and exchange information using the global network. iv. SAP Support Fee: This includes the expenditure incurred handling, user support and training and minor changes to the SAP template. This also includes all the support for company Business process software based on SAP platform and the technical support for local ERP system (Navision). v. License Fee: This is the fee with respect to licenses for software such as Lotus notes, Adobe, Windows Operating system, all server Application, Navision Software License, Pricing system software, SAP Software, BMC remedy (problem reporting software), and Antiviruses which are procured globally by the group companies; vi. Service Desk: These are the cha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is not the case of the Revenue that the above claimed services are not required to the nature of business of the assessee, nor is it the case of Revenue that the claimed payment for such services was made by the assessee to any other entity. The learned TPO has not drawn any adverse inference on the claim of the assessee that based on the benchmarking analysis undertaken, the mark-up earned by the assessee is at arm's length. The Learned CIT(Appeals) has rightly followed the decision of Mumbai Bench of the ITAT in the case of Dresses Rand India (Pvt.) Ltd. (supra) holding that while evaluating the arm's length price of a service, it is wholly irrelevant as to whether the assessee benefits from it or not; the real question which is to be det ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
