9911796707
TMI Blog2017 (6) TMI 236X X X X Extracts X X X X X X X X Extracts X X X X ..... by AE to the assessee and the adjustment made by AO while passing the order u/s.92CA(1) of the IT Act. 3. It was argued by learned AR that TPO erred in making a transfer pricing adjustment of Rs. 2,43,29,305 in relation to the international transaction of reimbursement of expenses received by the assessee from the AE disregarding the fact that the expenses were primarily the liability of the AE and were incurred initially by the assessee only for administrative convenience. 4. Learned AR placed on record the order of the Tribunal in assessee's own case for the immediate preceding AY 2011-12 in ITA No.696 & 1006/Mum/2016 dated11/11/2016 wherein exactly similar issue was dealt by the Tribunal and the addition so made was deleted. The precis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce in such an arrangement and further noted that such expenses were recovered by the assessee from its associated enterprises after a certain time lag, during which period it had to bear the financial costs. For the aforesaid reasons, the Transfer Pricing Officer added 10% mark-up as means to compensate the assessee which came to Rs. 3,19,51,284/- and such amount was determined as income in the hands of the assessee. 13.1 Before us, the Ld. Representative for the assessee vehemently pointed out that the lower authorities have not appreciated the facts in their proper perspective. It has been explained that the impugned expenses relate to cost of travel, accommodation, visa expenses, per diem and other day to day expenses, which were incur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted on a cost plus mark-up basis and such transactions have been separately bench-marked. In the course of rendering such services, assessee also incurred certain costs relating to travel, accommodation, visa, per diem and other day-to-day expenses, which were expended by its personnel. Further, assessee also incurred certain out of pocket expenses on the specific request of its associated enterprises. The responsibility for the aforesaid type of expenses was of the associated enterprises but the payment towards these costs were initially made by the assessee and thereafter, recoveries were made from the associated enterprises. Before the DRP, assessee also pointed out that such expenses, which are recovered by it from its associated enterp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nfer notionally about recovery of mark-up or profit element in the hands of assessee. It has also been brought out that it is a standard practice in the I.T. Industry to recover out of pocket expenses incurred during the course of providing services for the clients on a cost to cost basis. Under these circumstances, in our view, the Transfer Pricing Officer erred in proceeding to infer a non-existent understanding between assessee and its associated enterprises so as to impute income qua the instant transaction in terms of section 92(1) of the Act. Another pertinent fact which has not been rebutted by the Revenue before us is to the effect that in similar situation, from assessment year 2004-05 to 2010-11, no transfer pricing adjustment has ..... X X X X Extracts X X X X X X X X Extracts X X X X
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