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TMI Blog2017 (10) TMI 1259X X X X Extracts X X X X X X X X Extracts X X X X ..... ction would be NIL nor any comparable has been taken where such adjustment on account of reimbursement of software cost or reimbursement of expatriate cost as the case may be has been taken as NIL. Also keeping in view the concept of “there is no free lunch” a third party shall not charge anything for providing services. TPO as well as CIT (A) have not disputed the incurring of the software cost. Even otherwise, rule of consistency is required to be followed by the Revenue particularly when there is no change in facts and circumstances of the case. When the Revenue has extended relief to the taxpayer in AY 2007-08 and 2008-09 the ld. CIT (A) had no reason to decline the same qua the year under assessment. The Revenue has also accepted sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R : Present cross appeals filed by the assessee as well as by the revenue are being disposed off by way of consolidated order to avoid repetition of discussion. 2. The Appellant, M/s. Benetton India Private Limited (hereinafter referred to as the taxpayer ) by filing the present appeal sought to set aside the impugned order dated 20.03.2013, passed by the AO in consonance with the orders passed by the ld. CIT (A)/TPO under section 143 (3) read with section 144C of the Income-tax Act, 1961 (for short the Act ) qua the assessment year 2009-10 on the grounds inter alia that :- The Appellant respectfully submits as under : Transfer Pricing ( TP ) Adjustment - Reimbursement of Software Costs (INR 69,59,814) 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... umstances of the case, the Ld. CIT (A) has erred in deleting the adjustment on account of expatriate cost. 2. Holding that there was no meaning full analyses/evidence produced by the TPO to hold that the entire royalty payment should be reduced to Zero and consequently deleting the addition of ₹ 13,57,77,031/- made on this point. 4. Briefly stated the facts necessary for adjudication of the controversy at hand are : Benetton India Private Limited (BIPL) is a wholly owned subsidiary of Benetton International NV, Netherlands which is also a subsidiary of Benetton Group SPA, Italy. The taxpayer is into the business of production and sale of readymade garments in the name and style of Benetton in India and for this purpos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CUP 12727600 Reimbursement of expenses to AEs CUP 76431330 6. TPO / CIT (A) have made Transfer Pricing adjustment to the tune of ₹ 69,59,814/- on account of reimbursement of software cost by the taxpayer to its Associated Enterprises (AE), namely, Benetton SPA on the ground that price of the intra-group services relating to expatriate salary and software cost royalty transaction in uncontrolled condition is treated as NIL under CUP. 7. TPO further made adjustment of ₹ 8,30,15,291/- on account of royalty transaction on the ground that the value of royalty transaction in uncontrolled condition is treated as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on this ground on the grounds inter alia that the taxpayer has failed to prove the benefits derived from the software activities; that it has failed to furnish no cost benefit analyses nor any documentation proof has been furnished to support claim for receipt of services nor the assessee has furnished proof of any tangible benefits for the use of software services. The ld. CIT (A) also upheld TP adjustment made by the TPO. The taxpayer has provided complete detail to the TPO as to the function performed and software provided by the AE, available at page 185 of the paper book. 11. Ld. AR for the taxpayer contended that the transaction as to reimbursement of third party cost paid to the AE is not on account of payment for any intra-group ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g services. TPO as well as CIT (A) have not disputed the incurring of the software cost. Even otherwise, rule of consistency is required to be followed by the Revenue particularly when there is no change in facts and circumstances of the case. When the Revenue has extended relief to the taxpayer in AY 2007-08 and 2008-09 the ld. CIT (A) had no reason to decline the same qua the year under assessment. The Revenue has also accepted same transaction at arm s length in AY 2011-12 and 2012-13. 15. In view of what has been discussed above, CIT (A) has erred in upholding the TP adjustment on account of reimbursement of software cost by the assessee to its AE. Consequently, grounds no.1, 2, 3 4 are determined in favour of the assessee. IT ..... X X X X Extracts X X X X X X X X Extracts X X X X
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