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TMI Blog2023 (1) TMI 465X X X X Extracts X X X X X X X X Extracts X X X X ..... gement fee, the Assessee had explained that the Assessee was being charged a lump sum fee for the management services and therefore, was not able to furnish the service-wise break up.TPO failed to take the same into consideration. Ground No. 1 to 5 raised by the Revenue are dismissed. - ITA No. 2078/MUM/2021 - - - Dated:- 19-9-2022 - SHRI B.R. BASKARAN, ACCOUNTANT MEMBER AND SHRI RAHUL CHAUDHARY, JUDICIAL MEMBER For the Appellant Shri : Samruddhi D Hande For the Respondent/Assessee : Shri Sanjay R Parikh ORDER Per Rahul Chaudhary, Judicial Member 1. By way of the present appeal the Revenue has challenged the order, dated 07.09.2021, passed by the Ld. Commissioner of Income Tax (Appeals)-56, Mumbai [hereinafter referred to as the CIT(A)‟] for the Assessment Year 2012-13, whereby the Ld. CIT(A) had allowed the appeal filed by the Assessee against the Assessment Order, dated 12.04.2016 passed under section 143(3) read with Section 144C(3) the Income Tax Act, 1961 (hereinafter referred to as the Act‟). 2. The Revenue has raised the following grounds of appeal: 1. Whether on the facts and circumstance of the case and in law, the Ld.CIT(A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee is 50:50 joint-venture of HamonD‟Hondt Group headquartered in Belgium and Shriram Group of India and was formerly known as Hamon Shriram Cottrell Private Limited. 4. The Assessee filed return for the Assessment Year 2012-13 on 29.11.2012 declaring income of INR 6,59,03,790/-. The case of the Assessee was selected for scrutiny. During the course of assessment proceedings, a reference was made to the Transfer Pricing Officer (TPO). Vide order dated 29.01.2016 passed under section 92 CA(3) of the Act, the TPO accepted the value of all the international transactions to be at arm‟s length except for the R D Expenses and Management Fees in respect of which the TPO proposed upwards transfer pricing adjustment of INR 1,72,28,220 and INR 1,43,25,803/-, respectively. The Assessing Officer, vide Assessment Order dated 12.04.2016, passed under Section 143(3) read with section 144C(3) of the Act, made a transfer pricing adjustment of INR 3,15,54,023/- to the returned income to arrive at total assessed income of INR 9,74,57,817/-. 5. Being aggrieved, the Assessee preferred an appeal before CIT(A) which was allowed by the CIT(A) by following the decision of the Tribunal in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the aforesaid services and therefore, their ALP was considered as Nil‟. In the case of CIT Vs Lever India Exports Ltd: [2017] 292 CTR 393 (Bombay) it was held by the Hon‟ble Bombay High Court that the TPO‟s jurisdiction was to only determine the Arm‟s Length Price (ALP) of the International Transaction. It is not part of TPO‟s jurisdiction to consider whether the expenditure incurred passes the test of Section 37 of the Act and/or genuineness of expenditure. We note that the TPO had accepted that some services forming part of Research Development Service, and Management Service were rendered to the Assessee. However, since the Assessee had failed to provide the exact cost details and break-up, the ALP of the services as a whole was taken as Nil‟. In our view, the TPO was under obligations to determine the ALP for the services as held by the Hon‟ble Bombay High Court. In identical facts and circumstances, the Tribunal had allowed the appeal preferred by the Assessee for the Assessment Years 2007-08, 2009-10 and 2010-11 by way of common order, dated 27.05.2020 wherein it was held by the Tribunal as under: 7. The adjustment propos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure which has been incurred by the respondent assessee passed the test of Section 37 of the Act and/or genuineness of the expenditure. This exercise has to be done, if at all, by the Assessing Officer in exercise of his jurisdiction to determine the income of the assessee in accordance with the Act . In the present case, the Assessing Officer has not disallowed the expenditure but only adopted the TPO's determination of ALP of the advertisement expenses. Therefore, the issue for examination in this appeal is only the issue of ALP as determined by the TPO ... The jurisdiction of the TPO is specific and limited i.e. to determine the ALP of an International Transaction in terms of Chapter X of the Act read with Rule 10A to 10E of the Income Tax Rules. The determination of the ALP by the respondent assessee has not been disputed on the parameters set out in Chapter X of the Act and the relevant Rules. In fact, as found both by the CIT (A) as well as the Tribunal that neither the method selected as the most appropriate method to determine the ALP is challenged nor the comparables taken by the respondent assessee is challenged by the TPO. Therefore, the ad-hoc determination ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om 88), deleted the adjustment vide paragraph 7 to 10 of the order. The relevant findings of the bench were as under: - xxx xxx We find that Ld. TPO has primarily relied upon the order of Ld. DRP in AY 2007-08 while proposing similar adjustments in this year. Since the order of Ld. DRP for AY 2007-08 has been reversed by Tribunal and the facts as well as findings of Ld. TPO / Ld. DRP are pari-materia the same, we are inclined to adopt the earlier view of the bench. Accordingly, both these adjustments stands deleted. The assessee succeeds on both these grounds. (Emphasis Supplied) 10. The CIT(A) has allowed appeal of the Assessee for the Assessment Year 2012-13 by following above decision of the Tribunal holding as under: 5.2 It is noted that similar adjustments/ disallowances have been deleted by the Hon'ble Tribunal in assessee's case vide common order dated 27 05 2020 for AY 2007-08, 2010-11 and 2011-12 The Hon'ble Tribunal has relied on the decisions of Hon'ble jurisdictional High Court. in the case of CIT VS Lever India Exports Ltd [(2017) 78 taxmann.com 88 (Bombay)] and Hon'ble Delhi High Court in the case of CIT VS Cushman and Wake ..... X X X X Extracts X X X X X X X X Extracts X X X X
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