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TMI Blog2019 (8) TMI 647X X X X Extracts X X X X X X X X Extracts X X X X ..... ification of minimum margin that could be retained by its AE. In AY 2015-16 the Ld. TPO, has restricted the margins of assessee s AE to 0.5% of sales of the AEs. Therefore, keeping in view the rule of consistency and in view of the fact that this methodology has been accepted by the assessee as well as revenue, we direct TPO to adopt the same methodology for the year under consideration and work out TP adjustment by accepting AE s margin to be 0.5%, as adopted in the latest order. The assessee is directed to provide the working of the same. - ITA No. 1913/Mum/2016, C.O. No.152/Mum/2016 [Arising out of ITA No.1913/Mum/2016] - - - Dated:- 30-7-2019 - Shri Saktijit Dey, JM And Shri Manoj Kumar Aggarwal, AM For the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng remand proceedings before TPO, by mentioning in Transfer Pricing Study Report of UK entity itself that the transactions are not at ALP and adjustment of ₹ 77.09 lacs is required to be made. The assessee upon receipt of hearing notice, has filed cross-objections against the same on following grounds: - The below mentioned grounds are without prejudice to the relief granted by the learned Assessing Officer ('AO') under directions issued by the Hon'ble Dispute Resolution Panel ('Hon'ble DRP') in relation to the transfer pricing adjustment made by the Transfer Pricing Officer ('TPO') on the international transaction of provision of investment/economic/business research servi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .e. Assessment Year 2012-13) has accepted AE as 'Tested Party' being the least complex entity thereby restricting the adjustment to difference between profits of the AEs and 1% of sales of AEs being bare minimum that could be allowed to be retained by the AEs. The profits of the AEs during the year are 0.26% for Aranca US and 0.13% for Aranca UK, which is less than 1% of sales as determined by the TPO in the subsequent year. It is therefore prayed that the since the profits retained by the AEs are less than 1%, there cannot be any adjustment at all. 2.1 Facts in brief are that the assessee being resident corporate assessee stated to be engaged in providing solution in the areas of investment research, b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, draft assessment order was passed by Ld. AO on 16/03/2015 which was subjected to objections before Ld. DRP. 3.1 The assessee agitated the adjustment before Ld. DRP by way of elaborate written submissions, which has already been extracted in the order of Ld. DRP and therefore, not repeated here for the sake of brevity and to avoid duplication. The assessee has filed certain additional evidences during proceedings before Ld. TPO, which were remanded to Ld. TPO for enquiry verification. During remand proceedings, the assessee carried out fresh benchmarking by treating overseas AEs as the tested party on the ground that AEs were the least complex entities. In the fresh benchmarking, the margins of USA AE were demonstrated to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xceed the total profits of the group which was worked out to be ₹ 147.54 Lacs. The Ld. DRP, relying upon the decision of Delhi Tribunal in HCL Technologies BPO Services Ltd. (ITA No.3547/Del/2010) and various other decisions, concurred with the said submissions and directed Ld. TPO not to make any adjustment exceeding the total profits of the AEs. The aforesaid directions of Ld. DRP has reduced the TP adjustment to Nil which is evident from final assessment order dated 30/01/2016. Aggrieved, the revenue is in further appeal before us whereas the assessee has filed cross-objections against the same. 4. We have heard the rival submissions and perused relevant material on record. It is evi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r TP adjustment of ₹ 81 Lacs after considering 1% profit retention by its AEs being bare minimum that could be allowed to be retained by AEs as a risk free distributor. Similar methodology has been accepted by Ld. TPO for AY 2015-16 vide its order dated 31/10/2018 although with slight modification of minimum margin that could be retained by its AE. In AY 2015-16 the Ld. TPO, at para 6.8, has restricted the margins of assessee s AE to 0.5% of sales of the AEs. Therefore, keeping in view the rule of consistency and in view of the fact that this methodology has been accepted by the assessee as well as revenue, we direct Ld. TPO to adopt the same methodology for the year under consideration and work out TP adjustment by accepting AE s mar ..... X X X X Extracts X X X X X X X X Extracts X X X X
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