9911796707
TMI Blog2019 (8) TMI 643X X X X Extracts X X X X X X X X Extracts X X X X ..... same. On a perusal of the result of the search carried out by the taxpayer from the SIA database summarised by the Ld. CIT(A) in his order at page No. 14 we are satisfied that the payment made by the assessee to Bain USA is far less than the list percentage paid by E.Merck (India) Ltd at 2%. Further as is evident from the order of the Ld. TPO at page No. 5, the Bain USA said to have provided the specialised expert eyes and vide spectrum of consulting capability which are running into dozens. On a careful consideration of all these services are enumerated by the Ld. TPO himself in his order and in the light of the decisions of Sony Ericsson [ 2015 (3) TMI 580 - DELHI HIGH COURT] , AWB India private limited [ 2014 (11) TMI 284 - ITAT D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. Brief facts of the case are that M/s Bain Company India Pvt. Ltd. ( the assessee ) was incorporated on 11/5/2006 as a 99.9 N percent subsidiary of Bain Company Incorporation Inc., USA ( Bain USA ) and has been engaged in the business of providing Management Consultant Services in India and is a part of their operations, the assessee has been providing and receiving Management Consulting Services to/from its overseas group entities. 3. For the assessment years 2008-09 and 2009-10 they have filed their return of income declaring a total loss of ₹ 7,96,12,217/-and ₹ 8,09,51,666/-. In respect of the international transactions entered into by the assessee, during these two assessment years, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Company Inc. 5. Contention of the Ld. DR is that there was no rendering of any service whatsoever by Bain USA to the assessee and even if the services said to have been rendered or accepted, such services are only duplicate services which the assessee got through their own resources. He further submitted that no cost has ever been incurred by the Bain USA as claimed by them at 5% of the total turnover. He further submitted that whether the assessee was provided the benefits of the R D conducted by Bain USA. He further submitted that if at all the assessee received any benefit of the tangibles from Bain USA, the assessee would not have been running in losses. 6. By inviting our attention to page No. 185 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntained by the assessee and further as requested by the Ld. TPO, the same was filed before the Ld. TPO but the Ld. TPO failed to consider the same in its proper perspective. It is further argued by the Ld. AR that the assessee had discharged the onus of proving the payment of royalty transaction and its being at arm s length and the Ld. TPO failed to provide specific reasons for rejecting the internal and external CUP and also is undertaken by the assessee. 9. Ld. AR submitted that pursuant to the royalty agreement, the assessee had access to the techniques and know-how developed by Bain USA and the same includes intangible asset base of Bain USA which would include techniques and know-how; Bain brand which would include ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the light of the submissions made on either side. It could be seen that the learned Ld. CIT(A) considered the question of linking the profitability of the assessee to determine if a royalty payment is warranted for the use of tangibles and the application of CUP method as a comparable uncontrolled transaction in comparable circumstances. 12. Ld. CIT(A) following the decision of the Hon ble Delhi High Court in the case of EKL appliances Ltd in ITA No. 1068/2011 and ITA No. 1070/2011 wherein it was held that in case an expense has been incurred for the purpose of business, there is no need to link it up with the profit arising from the same. Ld. CIT(A) observed that it is important to appreciate that both assessee and the L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l benefit as technology and know-how had not resulted in any substantial profit increase as totally unsustainable and the profitability of the assessee could have been lower are varied due to various reasons and lower profitability in one or more years cannot lead to the conclusion that no benefits were derived or technology was unproductive. 15. We find it difficult to ignore the contention of the assessee has been that the assessee had a compounded annual growth rate of 31.31% from FY 2006-07 to FY 2012-13 and the sale had been rapidly growing over the past few years, whereas, the growth in royalty payment to Bain USA has been negligible in comparison at 1% on domestic Revenue and 2% on foreign Revenue (affecting royalty ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
