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TMI Blog2018 (6) TMI 1717X X X X Extracts X X X X X X X X Extracts X X X X ..... ient billed Expenses reed Profit Split Method(PSM) 8,56,018 Multicountry Execution Assignment reed Profit Split Method(PSM) 1,02,84,090 Services fee paid Profit Split Method(PSM) 2,90,51,116 Multicountry Execution Profit Split Method(PSM) 1,28,92,226 Assignment payment 5. The TPO did not agree to the ALP determined by the assessee and recomputed the ALP with regard to the payment of license fees and multi country execution fees paid resulting in adjustments of Rs. 2,38,10,137 and 26,08,136 respectively. 6. By the impugned order, DRP confirmed the additions proposed by the TPO against which assessee is in further appeal before us. 7. Common grievance of assessee in all the years pertains to transfer pricing (TP) adjustment in respect of transactions pertaining to cross border executive search fee (Multi Country Execution Fee) and payment of license fee. These Ground of Appeals is common for the captioned appeals for four years. 8. The issue with regard to cross border executive search fee (Multi Country Execution fee) has been raised vide ground No.3 in the A.Y.200910, 2010-11 and 2011-12 and ground No.7 in A.Y.2008-09. 9. The issue with regard ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee and the AEs Reliance in this regard can be placed on the following cases where in the High Court / ITAT have held that the APA holds persuasive value even in respect of the years which does not get covered by the term of the agreement and the benchmarking mechanism suggested in the agreement should necessarily be followed in determining the ALP of the transactions. - 3i India Private Limited v. DCIT (Mumbai ITAT - ITA No. 581/Mum/2015) - Pr. Commissioner of Income Tacx v. Ameriprise India Pvt Ltd (Delhi High Court - ITA 206/2016) - AXA Technologies Shared Services Pvt Ltd vs DCIT (Bangalore ITAT - IT (TP) A No. 659/Bang/2012) - JP Morgan Services Pvt Ltd vs DCIT (Mumbai ITAT- ITA No. 8987/Mum/210) - Ranbaxy Laboratories Ltd v. ACIT (Delhi ITAT - ITA No. 196/Del/2013) 13. We have considered rival contentions and carefully gone through the orders of the authorities below, APA dated 30th August 2016, as well as the order passed by the Tribunal dated 01/06/2018 in case of assessee‟s AE. We found that APA has laid down the application of most appropriate transfer pricing method and the arm‟s length price for these transactions. We also found that after havin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of search services and hence the same are not related to search fees. The reimbursements under consideration do not form part of paragraph 2(a)(v) of the Service Agreement, some of them are covered by paragraph 2(a)(vi) of the Service Agreement. We also found that the assessee has produced the invoices before TPO & DRP. The DRP has erred in treating the reimbursement of expenses as intra group services. From the record we also found that in the Paperbook Volume II (Part 1 & 2) filed in respect for AY 2011-12 (similar Paperbooks have also been filed for AY 2010-11 & AY 2009-10) where in vide letter dated 18th December 2014 & 15lh January 2015, the assessee has shown to TPO (as well as to DRP) that reimbursement of expenses and reimbursement for purchase of Fixed Assets does not have any element of mark-up charged by SSI BV to the assessee and the said expenses are backed by third party invoices. 16. We have also carefully gone through the decision of the Coordinate Bench in case of assessee‟s AE dated 01/06/2018 in ITA No.1696/Mum/2016, wherein the ITAT has examined these grounds and held as under:- "4.2. We find the assessee had received payments from SSIPL towards reimbur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... High Court dismissed the Department's appeal holding that the Tribunal had rightly observed that the Maersk-net-communication-system was an automated software based communication system which did not require the assessee to render any technical services, that it was merely a cost sharing arrangement between the assessee and its agents to efficiently conduct its shipping business, that it was part of the shipping business and could not be captured under any other provisions except under the DTAA, The Hon'ble Supreme Court dismissing the appeal held as under: "....... the facts that the assessee had its information technology system, that the assessee had appointed agents in various countries ' for booking of cargo and servicing customers in those countries, preparing documentation, etc., through these agents, that for the sake of convenience of all these agents, a centralised system was maintained to avoid unnecessary cost, that the system comprised booking and communication software. hardware and a data communications network and was, thus, an integral part of the international shipping business of the assessee and ran on a combination of mainframe and nonmainframe s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the following decisions Mumbai Tribunal has held that payment of expenses at cost to group entity which paid the expenses on behalf of the assessee is in the nature of reimbursement if it involves no margin or value addition: * ITO vs Vishinda Diamonds: [2014] 146 ITD 745 (Mumbai) * Onward e-services Limited vs ACIT: [2012] 52 SOT 66 (Mumbai) 20. In view of the above and respectfully following the decision of the Co-ordinate Bench in case of assessee‟s AE, we hold that reimbursements paid being backed by third party invoices without any element of markup, cannot be benchmarked at NIL as done by TPO. Accordingly, we delete the addition so made by the AO. 21. Assessee has also agitated short credit of taxes deducted at source in the A.Y.2009-10 vide ground No.6 and in A.Y.2011-12 vide ground No.7. 22. We have considered rival contentions and found that the assessee had claimed TDS credit in the return of income for the subject assessment years. The AO, while calculating the demand payable, gave short credit for tax deducted at source and determined the amount payable. We observe that the AO, while giving credit, failed to consider the TDS certificate which pertains to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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