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TMI Blog2015 (3) TMI 1276X X X X Extracts X X X X X X X X Extracts X X X X ..... etermine whether the assessee has derived any benefit from payment of professional fees and if any benefit had derived, whether such payment is commensurate to comparable transaction has to be examined by the TPO. For the above said purpose, the Transfer Pricing issue is restored to AO/TPO for de- novo consideration. - Appeal of the assessee is partly allowed for statistical purposes. - Stay No.57/Del/2015 (in ITA No. 567/Del/2015) And ITA No. 567/Del/2015) - - - Dated:- 31-3-2015 - SHRI R.S. SYAL, ACCOUNTANT MEMBER SHRI GEORGE GEORGE K., JUDICIAL MEMBER ASSESSEE BY: SHRI NITIN NARANG, CA REVENUE BY: SHRI AJIT KUMAR SINGH, CIT DR O R D E R PER GEORGE GEORGE K., JM: This appeal, at the instance of the assessee, is directed against the assessment order passed under section 143(3) r.w.s. 144C of the Income-tax Act, 1961 dated 31.12.2014. The relevant assessment year is 2010-11. 2. The assessee has raised four grounds in its memorandum of appeal. Ground No.1 2 relates to the Transfer Pricing adjustment. Ground No.3 relates to initiation of penalty proceedings. This ground is premature and is not maintainable, hence, ground no.3 is dismissed. Ground No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TPO s order, the AO issued a draft order under section 143(3) of the Act. The assessee filed objections to the draft assessment order to the DRP. The DRP disposed off the assessee s objections vide its order/directions dated 02.12.2014. The DRP confirmed the TP adjustment made by the TPO/AO. Pursuant to the DRP s directions, final assessment order was passed on 31.12.2014. 4. Aggrieved by the TP adjustment, the assessee has filed the appeal before us. Both the sides agreed that the Transfer Pricing issue is to be restored to the AO/TPO for fresh consideration in the light of the judgment of the Hon ble Jurisdictional High Court of Delhi in the case of CIT-I Vs. Cushman and Wakefield (India) (P.) Ltd. reported in [2014] 46 taxmann.com 317 (Delhi) . It was submitted that similar view was taken by tribunal in assessee s own cases for AY 2008-09 and 2009-10 in ITA No.6262/Del./2012 ITA No.504/Del./2014 (order dated 22.12.2014). 5. We have heard rival submissions and perused the material on record. The Hon ble Jurisdictional High Court in the case of Cushman and Wakefield (India) (P.) Ltd. (Supra) held that TPO cannot determine arm s length price of the payments made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enefit, in terms of financial results, from these services. This analysis is also completely irrelevant, because whether a particular expense on services received actually benefits an Assessee in monetary terms or not even a consideration for its being allowed as a deduction in computation of income, and, by no stretch of logic, it can have any role in determining arm's length price of that service. When 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 determined in such cases is whether the price of this service is what an independent enterprise would have paid for the same. Similarly, whether the AE gave the same services to the assessee in the preceding years without any consideration or not is also irrelevant. The AE may have given the same service on gratuitous basis in the earlier period, but that does not mean that arm's length price of these services is 'nil'. The authorities below have been swayed by the considerations which are not at all relevant in the context of determining the arm's length price of the costs incurred by the assessee in co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Transfer Pricing Officer has exceeded his jurisdiction by disallowing certain expenditure, is against the facts. The Transfer Pricing Officer has not disallowed any expenditure. Only the arm's length price was determined. It was the Assessing Officer who computed the income by adopting the arm's length price decided by the Transfer Pricing Officer at nil . This is a slender yet crucial distinction that restricts the authority of the TPO. Whilst the report of the TPO in this case ultimately noted that the ALP was 'nil', since a comparable entity would pay 'nil' amount for these services, this Court noted that remarks concerning, and the final decision relating to, benefit arising from these services are properly reserved for the AO. 36. In this case, the issue is whether an independent entity would have paid for such services. Importantly, in reaching this conclusion, neither the Revenue, nor this Court, must question the commercial wisdom of the assessee, or replace its own assessment of the commercial viability of the transaction. The services rendered by CWS and CWHK in this case concern liaising and client interaction with IBM on behalf o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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