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TMI Blog2019 (5) TMI 327X X X X Extracts X X X X X X X X Extracts X X X X ..... issed. MAM selection - assessee has applied CUP as MAM for bench marking provision of consulting services - Rejection of Comparable Uncontrolled Price [CUP] method thereby applying Transactional Net Margin Method [TNMM] as the MAM - HELD THAT:- No force in the contention that the evidences are not brought on record. The invoices raised to AEs and non AEs are exhibited in the paper book. Whether the same person is providing service to both the AEs and non AEs is irrelevant, so as long as the evidences of services provided are available. The services are provided by different set of personnel, having different qualification and it would not be justifiable to ask for invoices of the same person who has provided service to AEs and also to non AEs. A proper team composition is there to take care of the nature and technical difficulties of the project. Even the OECD Guidelines of July 2010 preferred internal CUP over other methods, since it bears a more direct and closer relationship to the transaction under review. Considering invoices relating to AEs and non AEs exhibited in the paper book, we are of the considered opinion that CUP is the MAM and has been rightly adopted by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd financial management, specializing in the areas of human capital consulting, employee benefits and insurance. 4. The international transactions reported during the year as per Form 3 CEB are as under: 'SI. No Transaction Amount of transaction in Rs. Method adopted 1 Purchase of publications (Paid/Payable) 98,619 CUP 2 Provision of consulting Services rendered (Received/Receivable) 2,45,64,401 CUP 3 Provision of consulting Services availed (Paid/Payable) 67,54,487 CUP 5 Service Agreement: Income (Received/Receivable) 7,70,23,981 6 Commission on Publication Sold (Received/Receivable) 12,51,725 7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 981/- on this count and no method was used to bench mark because it is the claim of the assessee that no third party would give like subsidy to unrelated party. 8. Even before us, the ld. AR vehemently stated that this is nothing but exgratia payment made by the AE to support structural loss of the appellant, which is in line with the service charge agreement executed on 30.06.2006. 9. The ld. DR strongly opposed to this contention of the assessee and stated that the service charge subsidy received from the AE is inseparably linked to the provision of services rendered by the assessee to its AE. It is the contention of the ld. DR that the purpose of the payment of this subsidy is to maintain the strategic presence of WW Global Network. It is the say of the ld. DR that clause 1.1 clearly mentions, each subsidiary shall provide the WW Global Network all or any of the services outlined in Schedule 1 to the agreement. 10. We find that the Schedule 1 to the agreement which is at page 315 of the paper book lists out the services which the subsidiaries are bound to provide for receiving the service charges and reads as under: The subsidiary agree ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h marked this transaction under CUP. The bench marking is based upon invoice billed by the appellant towards consultancy services rendered. The appellant company has compared the invoice raised on its AE with the invoices raised on other group entities. The appellant has also compared the invoices raised on its AE with the invoices raised on few Indian entities. The TPO has dismissed this claim of the assessee on the ground that the comparison of the invoice has been done with AEs and third parties located in different geographical locations and the charges depend upon the nature and technical difficulties of the services rendered. The TPO further observed that the assessee has not furnished any of the technical description of the services rendered to the AE and non-AEs. 16. Before us, the ld. AR stated that the comparables as per the CUP may be external or internal comparable. It is the say of the ld. AR that internal comparables have a more direct and closer relationship to the transaction under review than the external comparables. The ld. AR explained that the assessee is dealing in professional expertise of human resource services and time is recorded based on Rate P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sume total risk when it is providing services to the UREs whereas when the services are provided to AEs, the risk is that of the AEs whose client has been serviced. 20. We do not find any force in the contention that the evidences are not brought on record. The invoices raised to AEs and non AEs are exhibited in the paper book. Whether the same person is providing service to both the AEs and non AEs is irrelevant, so as long as the evidences of services provided are available. The services are provided by different set of personnel, having different qualification and it would not be justifiable to ask for invoices of the same person who has provided service to AEs and also to non AEs. 21. Moreover, considering the nature of services provided by the assessee, we do not find the geographical locations relevant because the consulting services provided by the assessee would remain the same whether the service receiver is located in X country or Y country as long as service provider is in India. Our view is fortified by the fact that the price charged to non AEs, [irrespective of geographical location] is comparable to the price that is charged to Indian entities ..... X X X X Extracts X X X X X X X X Extracts X X X X
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