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TMI Blog2017 (12) TMI 1636X X X X Extracts X X X X X X X X Extracts X X X X ..... produced before them and in the light of the decisions relied on by the assessee before us. We, therefore, restore the entire issue to the file of the Assessing Officer/TPO with a direction to decide the issue afresh in accordance with law after giving due opportunity of being heard to the assessee. We hold and directly accordingly. The grounds raised by the assessee are accordingly allowed for statistical purposes. Assessee appeal allowed for statistical purposes. X X X X Extracts X X X X X X X X Extracts X X X X ..... ; 4,49,25,556/- and determined the total income of ₹ 8,00,64,090/-. 4. Aggrieved with such order of the Assessing Officer/TPO, the assessee is in appeal before the Tribunal by raising the following grounds :- "Appeal under Section 253(1) of the Income Tax Act, 1961 ("Act") against the order dated 09 December 2016 (received on 16 December 2016) passed under Section 143(3) read with section 144C of the Act ("impugned order"), by the ld. Assistant Commissioner of Income Central Circle - 20, New Delhi ("AO"). Following grounds are without prejudice to each other: "GROUNDS OF APPEAL 1. That on the facts and circumstances of the case and in law, Assessing Officer ("Ld. AO") erred in assessing the income of the Appellant at INR. 8,00,64,090/- as against the returned income of INR. 3,51,38,534/-. 2. That on the facts and circumstances of the case and in law, the Final Assessment order passed under section 143(3) read with section 144C of the Income Tax Act, 1961 ("the Act") by the Ld. AO is bad in law as the same do not consider complete and relevant facts, are not in accordance with provisions of law and principles ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i) of the Act. 10. That the basis to disallow the payments made for management services by considering CUP as Nil is based purely on surmises and conjectures and has no basis in facts and in law. 11. The Ld. TPO/ Hon'ble DRP erred in passing an order that is perverse in law by ignoring the relevant submissions, information and documents provided by the Appellant including but not limited to email exchanges, cost allocation documents, service agreement, invoices etc. to substantiate the receipt of business services, and based on a preoccupied mind reached at an inappropriate conclusion that the arm's length value of the impugned transactions should be Nil. 12. The Ld. TPO/Hon'ble DRP erred in arriving at various unwarranted and erroneous conclusions unsupported by any material and have also failed to consider, specifically rebut the various material and evidences adduced and the submission made by Appellant to substantiate the arm's length nature of transaction relating to payment of management support charges. 13. The Ld. TPO/ Hon'ble DRP has erroneously relied on the Base Erosion and Profit Shifting ('BEPS') report released in 2015 to reject the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... takes by the Ld. AO. The Appellant craves leave to add to, alter or amend the above Grounds of Appeal as and when advised. 5. Grounds of appeal nos .1 and 2 being general in nature were not pressed by the ld. counsel for the assessee for which ld. DR has no objection. Accordingly, these grounds are dismissed as not pressed. 6. So far as ground nos .3 and 4 are concerned, it is grievance of the assessee that the benchmarking of transaction through the combined transaction approach by applying of TNMM was wrongly rejected. 7. Ld. counsel for the assessee submitted that the TPO disregarded the combined transaction approach on the ground that the transaction are separate in nature as according to him export commission, royalty and model fee are separate in nature. He submitted that there is no specific findings by the DRP on this issue. He submitted that the combined transaction approach is well accepted as per the provisions of section 92C(1) of the I.T. Act which speaks about "nature of transaction or class of transaction". Further, the term 'transaction' itself is defined in Rule 10A(d) of the I.T. Rules, 1962 to include a number of 'closely linked transac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the following decisions :- a. AWB India (P.) Ltd. v. Dy. CIT [2014] 50 taxmann.com 323/[2015] 152 ITD 770 (Delhi - Trib.) b. Frigoglas India (P.) Ltd. v. Dy. CIT [2016] 68 taxmann.com 370 (Delhi - Trib.). c. Mitsui Prime Advanced Composites India (P.) Ltd. v. Dy. CIT [2016] 70 taxmann.com 123 (Delhi - Trib.). d. Knorr Bremse India (P.) Ltd. v. Asstt. CIT [2017] 77 taxmann.com 101 (Delhi - Trib.) 10. He accordingly submitted that the above grounds should be allowed. 11. So far as ground nos. 5, 16 and 17 are concerned, the same relate to the failure of the TPO/DRP to appreciate that benefit has been received by the assessee. 12. Ld. counsel for the assessee referring to the above grounds submitted that as per the TPO, no documentary evidences were produced to establish that the Intra Group Services were needed by the assessee and the services are merely duplicative in nature and they do not amount to IGS. The DRP held that the assessee failed to demonstrate that services were actually needed. According to them, the assessee has failed to prove that services are not duplicative and payment was made at arm's length price. According to the DRP, the evidence filed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt in the case of CIT v. Max India Ltd. [2016] 75 taxmann.com 268, he submitted that the receipt of service is established on balance of probabilities and the agreement for services may be oral or written. He accordingly submitted that the above grounds raised by the assessee should be allowed. 14. So far as ground nos. 14 and 15 are concerned, the same relate to action of the TPO/DRP in questioning the commercial expediency of the transactions entered into by the assessee. 15. Ld. counsel for the assessee referring to the decision in the case of CIT v. EKL Appliances Ltd. [2012] 24 taxmann.com 199/209 Taxman 200/345 ITR 241 (Delhi) submitted that it is well-established principle that the Department cannot question the commercial expediency of a transaction. 16. So far as ground no.13 is concerned, the same relates to the order of the DRP/TPO in relying on the BEPS report without considering the reports in their entirety and by ignoring binding provisions of the Act and decisions of the Tribunal. 17. Ld. counsel for the assessee submitted that the BEPS report, if read in entirety, clearly provides that centralized services, services on call as IGS ought to be considered for d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot received any export commission, royalty or model fee. It is also his argument that the TNMM has been adopted for five transactions using the combined transaction approach as these activities are closely linked to the main business activity i.e. sale and distribution of handsets. It is also his submission that the Assessing Officer/TPO has not rebutted the basis adopted in the TP report for adopting TNMM and they failed to indicate the reasons for rejecting the TNMM as the most appropriate method. Further, they have been incorrectly applied the CUP method without bringing out any comparable on record. It is contrary to Rule 10B(2) of the I.T. Rules, 1962. Similarly, it is also his arguments that the assessee had filed voluminous documents to establish that the IGS were needed by the assessee and are not duplicative in nature. All those details filed before the TPO/DRP were completely ignored. It is also his argument that the Department cannot question the commercial expediency of the transactions. In our opinion and considering the totality of the facts of the case, the matter requires a fresh adjudication at the level of the Assessing Officer/TPO in the light of the various evid ..... X X X X Extracts X X X X X X X X Extracts X X X X
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