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TMI Blog2020 (2) TMI 1608X X X X Extracts X X X X X X X X Extracts X X X X ..... g the international transaction, he has erred in applying the benefit test. On the other hand the assessing officer while purporting to invoke section 37(1) contradicted himself by stating that that he is not applying the benefit test, rather by raising issues of the documentation he has stepped into the shoes of the Transfer Pricing officer. DRP has also erred in holding that the agreement should have been entered into by the parties in a particular manner by incorporating several other clauses. In our considered opiionn here the dispute resolution panel exceeded its jurisdiction on this account. The format of agreement between the parties is not a subject matter of decision of DRP. The dispute resolution panel further erred in agreeing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as against the sum of ₹ 71,67,037/- determined by the Appellant and thereby proposing an adjustment of ₹ 71,67,037/-. 2. The Learned Dy. Commissioner of Income-tax, Circle 10(2)(2), Mumbai has erred in stating that no tangible or direct benefit was derived by the Appellant from receipt of the intra-group services and that the Appellant failed to furnish adequate evidences to demonstrate that the services were actually rendered by the AE, not appreciating the details, explanations and evidences submitted by the Appellant. 3. Brief facts of the case are as under :- Megger India Private Limited is engaged in the trading and distribution of electric test equipments and measuring instruments of the Megger Group, UK. During t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transfer pricing study report, the average PLI of the comparable companies and of the assessee on the basis of 3 years data is as follows :- Nature of International Transaction Most Appropriate Method Profit Level Indicator Megger s Adjusted Operating Margin Comparables Adjusted weighted average operating margin International transactions aggregated under the system integration segment Transactional Net Margin Method Adjusted Operating Profit / Sales 17.01 per cent 4.37 per cent On this basis, the assessee contended that its international transactions a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly boils down to the actual expenditure incurred in connection with such services and markup thereon. f) The assessee has filed a copy of master agreement with its AE which gives the basis of calculation of cost based on revenue which is nothing but a broad-brush approach aimed at flatly equating the costs related to the revenue. g) After carefully, considering the facts of the case submitted by the assessee, it is seen that the assessee has made detailed submissions regarding the legal provisions but has not responded to the undersigned queries on facts. The assessee has failed to furnish any evidences regarding the receipt of shared services. For determining the arm s length price of international transaction of receipt of shared se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e course of the assessment proceedings, to furnish any specific details which could determine whether the expenses so made are not excessive and reasonable. 6. The Assessing Officer in this regard referring to the TPO s order concluded as under :- 7.2 The assessee has not raised any objection against the above proposed addition/disallowance. However, since the TPO has taken the ALP of the said transaction at NIL, and effectively there has been an upward adjustment of ₹ 71,67,037/-, which has also been upheld by the Hon ble DRP, therefore, the said expenses after being not allowed u/s.37(l) and/or u/s.40A(2)(b) of the Act, are not added back to the total income of the assessee, as the same may result into the double taxation of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scribed for benchmarking the international transaction, he has erred in applying the benefit test. On the other hand the assessing officer while purporting to invoke section 37(1) contradicted himself by stating that that he is not applying the benefit test, rather by raising issues of the documentation he has stepped into the shoes of the Transfer Pricing officer. The DRP has also erred in holding that the agreement should have been entered into by the parties in a particular manner by incorporating several other clauses. In our considered opinion here the dispute resolution panel exceeded its jurisdiction on this account. The format of agreement between the parties is not a subject matter of decision of DRP. The dispute resolution panel f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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