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TMI Blog2022 (3) TMI 1469X X X X Extracts X X X X X X X X Extracts X X X X ..... nts. Restricting the minimum alternate tax credit set of as per the provisions of section 115JAA - HELD THAT:- Assessee is directed to file requisite documents in support of the claim. The Ld.AO shall verify the details and consider the claim in accordance with law. - IT(TP)A No. 210/Bang/2017, IT(TP)A No. 2171/Bang/2017 - - - Dated:- 7-3-2022 - SHRI. CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. BEENA PILLAI, JUDICIAL MEMBER Assessee by : Ms. Sherry Goyal, Advocate Revenue by : Shri Sanjay Kumar, CIT DR ORDER PER BEENA PILLAI, JUDICIAL MEMBER Present appeals are filed by assessee against final assessment order dated 05/12/2016 and order dated 25/09/2017 passed by the Ld.ITO Ward 1(1)(3) and Ld.DCIT, Circle -1(2), Bangalore for assessment years 2012-13 and 2013-14 respectively on following grounds of appeal: IT(TP)A No. 210/Bang/2017 (A.Y. 2012-13): Based on the facts and circumstances of the case and in law. Amicorp Management India Private Limited (hereinafter referred to as Appellant'), respectfully craves leave to prefer an appeal against the assessment order passed by the learned Assessing Officer [hereinafter referred to a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... law: 1. The learned AO/ Hon'ble DRP erred, in law and in facts, by not accepting the economic analysis undertaken by the Appellant with respect to recovery of expenses from associated enterprises and holding that the Appellant's international transaction is not at arm's length, thereby making a TP adjustment of INR 13,13,200; 2. The learned AO/ Hon'ble DRP erred, in law and in facts, by concluding that a mark-up of 5% on net reimbursements should be charged towards finance cost for the funds blocked by the Appellant in the process of facilitating payments on behalf of it's associated enterprises and then subsequently recovering it from them; 3. The learned AO/ Hon'ble DRP has failed to appreciate the fact that working capital adjustment made by the Assessee in its transfer pricing study is after taking into account the outstanding trade receivables and payables. Thus the impact of blockage of funds and extension of any kind of credit facility by Amicorp India to its AE's is already considered in undertaking the transfer pricing analysis. Therefore, levying a mark-up of 5% on net reimbursement cost is not warranted; 4. The learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... based on certain comparables selected during the transfer pricing proceedings. 2.6 On receipt of the transfer pricing order, the Ld.AO passed the draft assessment order incorporating the adjustment so proposed. Against the draft assessment order, assessee filed its objections before the DRP. 2.7 Before the DRP, it was submitted that the recovery of expenses from the AE was under following heads being fixed assets, information technology expenses, travel expenses, professional fees, printing expenses, career charges, training and development expenses and other receivables. 2.8 The DRP after considering the submissions of assessee observed and held as under. Having considered the submissions, we have perused the record to find that the assessee has incurred certain expenditure for the AE and it also made the AE's to incur some expenditure on its behalf. The expenditure incurred by the assessee is for various needs of the AEs as listed in the submissions of the assessee. The expenses incurred both, for the AE by the assessee and for the assessee by the AE, are almost similar and the same cannot be considered as administrative support services as the assessee an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onal ground no. 6 raised by assessee is in respect of the markup to 5% computed by the Ld.AO on the net reimbursement of costs by the AE. The Ld.AR submitted that assessee incurred certain expenses on behalf of its AE towards printing, career, information technology, travelling and accommodation, professional fees, fixed assets etc. The Ld.AR submitted that assessee made payments to the 3rd party vendor s towards these expenses and across charged to its group companies at cost without any element of markup. It is also submitted by the Ld.AR that the cost of resources and time involved in making the arrangements as been debited in the profit and loss account as expenses and considered in the total cost base of assessee for the purpose of markup that comes to 20%. 7. The Ld.AR further submitted that working capital adjustment has been made and therefore the reimbursement which forms part of the receivables have already been accounted for while computing working capital adjustment. It was thus submitted by the Ld.AR that 5% applied by the Ld.TPO/AO amounts to double taxation. On the contrary the Ld.DR relied on orders passed by authorities below. We have perused the sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sonable period. If there is delay in making reimbursements beyond the reasonable period, it will result in providing of or extending credit facility to the AEs. In that case, we are of the view that the assessee should have been compensated for the interest cost . 25. In the instant case, in our view, the ALP of transactions should be examined from the above said angle of providing of/extending credit facility. If the reimbursements have been paid /received within reasonable period, then no transfer pricing adjustment is required, otherwise the same is called for. In our view, the following methodology may be adopted for this purpose, i.e., since there is mutual reimbursements, a ledger account of mutual reimbursements may be prepared date-wise and the same would reveal as to whether there was a case of extending/providing of credit facility by the assessee to its AEs. 26. We have noticed that the AO/TPO has not examined the issue from this angle and hence we are of the view that this issue needs to be restored to the file of AO/TPO for examining the same afresh. Accordingly, we set aside the order passed by the AO on this issue and restore the same to the file of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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