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TMI Blog2019 (12) TMI 1238X X X X Extracts X X X X X X X X Extracts X X X X ..... case. In the instant case, the TPO has summarily rejected the TNMM followed by the assessee in respect of management fees paid/payable by it to its AE and proposing an adjustment under CUP without benchmarking with comparable uncontrolled transactions. Also the TPO has resorted to an ad-hoc unilateral pricing of management fees, disregarding the facts of the case. In view of the above factual scenario and position of law, we delete the addition made by the AO as adjustment on account of transfer pricing. - Decided in favour of assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... Brink's Incorporated USA 3,53,07,309 2. Brink's Asia Pacific Ltd. Hong Kong 53,18,313/- The assessee has paid management fees to its AEs for the first time. In response to a query raised by the TPO to explain it, the assessee filed a reply stating that the services are availed under an agreement entered into with its AEs dated 01.01.2011 for management and technical services. As per the said agreement, the AEs will be providing the following services to the assessee : * Accounting Services * Management and Operations Services * Financial and Treasury Services * Legal Services * Human Resources Services * Research and Development * Information Systems Services and Related Equipment * Other Services The assessee sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce for receipt of service has not been furnished to justify the cost allocation or to enable the ALP determination. Therefore, the TPO estimated that, at the very best, the AE could have devoted a maximum of the following man hours in respect of various services claimed to have been availed by the assessee Name of the AE Total (in INR) Brink's Incorporated USA 3,53,07,309 750 hrs for all services considering all submissions Brink's Asia Pacific Ltd. Hong Kong 53,18,313 Total 4,06,25,622 750 hrs Observing that the assessee has failed to file the details regarding the number of employees working with the AE, salaries paid to those employees, their educational qualification, number of hours dedicated by those employees towar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 3. Before us, the Ld. counsel for the assessee submits that the assessee has consistently been benchmarking all of its transactions with the AE under Transactional Net Margin Method (TNMM) from the beginning, for now over seven years and in all three previous assessment years i.e. from AY 2009-10 to 2011-12, wherein its international transactions with AEs were in scrutiny, the assessments have been completed by accepting the transactions with AE being at arm's length, holding TNMM as the most appropriate. It is stated that in respect of management fees paid/payable during the year under consideration, the assessee has inter alia submitted its working, calculation, allocation, method, rational and business expediency before the TPO. In re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... garding the facts and circumstances of the case and erred in rejecting the ALP determined by the assessee. During the course of hearing the Ld. counsel relies on the order of the Tribunal in the case of Kellogg India Pvt. Ltd. v. DCIT (ITA No. 2866/Mum/2014) for AY 2009-10; M/s CLSA India Pvt. Ltd. v. DCIT (ITA No. 1182/Mum/2017) for AY 2012-13; Firmenich Aromatics India P. Ltd. v. DCIT (ITA No. 2590/Mum/2017) for AY 2012-13. 4. On the other hand, the Ld. Departmental Representative (DR) submits that as observed by the DRP the assessee has not benchmarked the international transactions at all, which is clearly a violation of law. It has not shown how the various transactions are closely linked and how they cannot be evaluated adequately o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gth holding TNMM as the most appropriate method. The assessee had submitted before the TPO that its operating revenue is ₹ 168.88 crores and the operating profit is ₹ 21.78 crores; the profit level indicator i.e. OP/OR works out to 12.90% for the year under consideration. The assessee submitted working of it before the TPO. Also it submitted the arithmetic mean of the profit level indicator of the comparables which worked out to 4.86% for the year under consideration. We find that in respect of management fees paid/payable during the year under consideration, the assessee had submitted before the TPO its working, calculation, allocation, method, rational and business expediency. In such a situation, the TPO should not have summ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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