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TMI Blog2018 (10) TMI 1504X X X X Extracts X X X X X X X X Extracts X X X X ..... esent days, such businesses are mostly done through emails and service provider, who is providing service through emails and electronic media. None of the lower authorities have made any adverse comment in respect of services provided through emails. Moreover, such is the practice since A.Y 2007-08 and in earlier A.Ys, the same has been accepted. Above all, composite contract/agreement is same and there is no change in the business profile of the assessee. The assessee has made payments in accordance with the written agreements which are supported by detailed evidences regarding receipt of services. Since the payments have been made in pursuance to written agreements, in our considered opinion, the same should be a reasonable basis to confirm that payments are legitimate. As in the case of Abhishek Auto Industries [2010 (11) TMI 730 - ITAT, DELHI] has held that legally, an agreement entered into between parties cannot be disregarded without assigning cogent reasons. In our considered view, the services, by their very nature, are intangible and therefore, the evidences regarding availing such services and benefits received as a result of availing such services can be best demonst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ickets, tags and labels, sustainable packaging, inventory visibility and loss prevention solutions, data management services, price tickets, printers and scanners, radio-frequency identification (RFID) inlays, fasteners, brand protection and security solutions. 7. Other speciality converting business delivers advance medical tapes, films and technologies to medical products and device manufacturers. 7. The international transactions reported in Form No. 3CEB are as under: S. No. Description of the transactions Amount (Rs.) 1 Purchase of Raw Material 1,347,132,039 2 Sale of Raw Material 29,190,959 3 Purchase of Finished Goods 977,148,014 4 Sale of Finished Goods 853,809,738 5 Receipt of services 83,684,249 6 Reimbursement of expenses paid 6,492,310 7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom the IGS vis a vis the payment made for the same. b. Please specifically state as to whether any benchmarking analysis was done at the time of entering into the agreement so as to compare the payment of IGS to the AE vis a vis an independent party under similar circumstances. If so, the details thereof. 9. Please show with evidence as to what tangible and direct benefit has been derived by the assessee company from the use of such IGS. 10. Whether the services availed from AEs, have also been performed by the assessee company itself or also availed from independent parties? If yes, a. The details of such expenditure for each of the services should be furnished. b. Please state as to why a separate payment has been made for such services to the AE. 11. Please furnish details and documentary evidence of cost incurred by the AE for rendering each type of services purportedly received by the assessee company and the mark up applied, if any by the AE. Please also state as to whether the cost incurred by the AE is audited. 12. Whether AE is rendering such services to any other AEs/independent parties also. If yes the details thereof including ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its reply vide letter dated 22.09.2017 and gave details of services which are as under: Nature of Services Amount (in INR) PSM 1 Marketing Support Services 79,828,604 2 Operations, Logistics and Technical Services 44,130,518 3 Labor Law and Employee Relations 25,206,149 4 Finance, Accounting, Administration and MIS Services 8,797,719 5 Corporate Support Centre [CSC) 33,037,258 6 ITSSC services 1,432,989 RBIS 1 Ticketing HUB 31,407,611 2 GVP Services 53,106,338 3 VIPFS Services 42,706,765 4 CSC Services 81,969,297 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TAT is plausible one and does not warrant any interference. 16. In A.Y 2008-09, again the matter travelled to the Tribunal and the Tribunal in ITA No. 4869/DEL/2014 and 4934/DEL/2014 followed its earlier A.Y of 2007-08 and decided the issue in favour of the assessee. 17. In A.Y 2010-11, once again similar issue arose and the Tribunal decided it in favour of the assessee following its earlier orders of A.Y 2007-08 and 2008-09 and the High Court once again declined to interfere following its earlier order dated 15.07.2016. 18. In A.Y 201-12 also, the Tribunal followed its orders and the Hon'ble High Court dismissed the Revenue s appeal following its order dated 28.07.2016. 19. Surprisingly, in A.Ys 2012-13 and 2013-14, the Tribunal restored the matter to the file of the Assessing Officer with the direction to the assessee to lead proper and credible evidence with respect to the nature of services and how and when those services have been rendered by the AE. 20. Before us, the ld. DR heavily relied upon the findings of the Tribunal given in A.Ys 2012-13 and 2013-14. 21. As mentioned elsewhere, the TPO made the transfer pricing adjustment by holding that no uncont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cerns to men this payment of referral fee to them at a high rate of 30%. 4.6 In the submissions given the assessee company has simply filed some invoices raised on the group entities where it is written that the referral fee @ 30% of the gross fee earned by C W India...............None of the agreements filed by the assessee company specify the exact percentage of fee to be received by CWS. No prudent business person will leave the issue of payment of fee open. The assessee has not been able to demonstrate the genuineness of the transaction, the services rendered by the group entities to merit this referral fee at a high rate nor the business purpose of the same. 4.8 On close scrutiny of the e-malls, copies of which have been given in the submissions, it is seen that most of them are cryptic mails in that most of them do not clearly mention either the client or the requirements of the client which is the mandatory requirement for any entity referring to any other entity. There is no evidence submitted regarding the services provided by the group entities to merit the referral fee. Copies of some invoices are also given but again raising invoices does not substantiate or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the arm's length price. When the Assessing Officer has no discretion in the matter, in view of the binding nature of the Central Board of Direct Taxes instructions dated 20th May 2003, directing all the officers of the Department to refer the matters to the Transfer Pricing Officer for determination of the arm's length price where the aggregate value of international transactions exceeds ₹ 5,00,00,000, the Assessing Officer has a very limited role. He has to mechanically follow these instructions. There is no application of mind. There is no formation of any opinion at the stage of reference. Thus, to presume that he has allowed a particular expenditure under section 37, does not seem to be the right view of the matter. In any event, this is not a case where the Transfer Pricing Officer or the Assessing Officer made a disallowance under section 37 of the Act. It is a case where an adjustment has been made under section 92C(4) of the Act, after the Transfer Pricing Officer determined the arm's length price at nil under section 92CA(3). Hence this argument is devoid of merit. Indeed, a Division Bench of this Court, in Sony India Pvt. Ltd. v. Central Board ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e present days, such businesses are mostly done through emails and service provider, who is providing service through emails and electronic media. None of the lower authorities have made any adverse comment in respect of services provided through emails. Moreover, such is the practice since A.Y 2007-08 and in earlier A.Ys, the same has been accepted. Above all, composite contract/agreement is same and there is no change in the business profile of the assessee. The assessee has made payments in accordance with the written agreements which are supported by detailed evidences regarding receipt of services. Since the payments have been made in pursuance to written agreements, in our considered opinion, the same should be a reasonable basis to confirm that payments are legitimate. 25. The coordinate bench in the case of Abhishek Auto Industries 15 ITR [Trib] 168 has held that legally, an agreement entered into between parties cannot be disregarded without assigning cogent reasons. In our considered view, the services, by their very nature, are intangible and therefore, the evidences regarding availing such services and benefits received as a result of availing such services can be be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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