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TMI Blog2022 (3) TMI 1512X X X X Extracts X X X X X X X X Extracts X X X X ..... espect of cost contribution charges. The draft assessment order was passed by the AO wherein the AO incorporated eleven disallowances pertaining to the various expenses claimed by the assessee. Aggrieved, the assessee filed its objections before the DRP who confirmed the additions made by the AO and also the TP adjustments. The final order was passed in pursuant to the directions of the DRP. The assessee is in appeal before us against the final order. 3. The assessee raised six grounds pertaining to transfer pricing adjustments and thirty seven grounds pertaining to the various disallowances made by the AO. Ground No.38 is consequential in natures. Before the Tribunal the assessee also raised additional grounds with regard to deduction in respect of 'education cess on income-tax' and 'secondary and higher education cess on income-tax' for the year under consideration. However the assessee did not press the additional grounds in view of the change in law in terms of retrospective amendment introduced by the Finance Bill 2022. Hence, this ground is dismissed as not pressed. 4. The main issue contended by the assessee in this appeal are as follows:- i. TP adjustmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly integrated with group's business. The charges for the services rendered by the AE are allocated to all subsidiaries across the world and this allocation is done using a uniform allocation policy/key. The assessee makes payment to the AE for the direct and indirect services availed as management consultancy charges which are linked and related to the core business of the assessee. Therefore, the transaction of cost contribution charges were aggregated with the transactions related to the business and benchmarked under TNMM. 6. The TPO during the proceedings made an adjustment towards this cost contribution charges. The TPO considered the cost contribution charges as a separate class of transaction and applied CUP method as the most appropriate method for computing the ALP of this particular class of transaction. While making the TP adjustment applying CUP method, the TPO made an estimate towards this adjustment after taking into account, the cost of personnel, time spent etc. After the estimation, the TPO concluded that out of the total payment of Rs.2,40,69,613/-, Rs.65,30,000/- is the reasonable amount for providing the services and hence made an adjustment of Rs.1,75,39,613/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and deleted the additions made by the AO observing as follows:- * It is only elementary that how an assessee conducts his business is entirely his prerogative and it is not for the revenue authorities to decide what is necessary for an assessee and what s not. * An assessee may have any number of qualified accountants and management experts on his rolls, and yet he may decide to engage services of outside experts for auditing and management consultancy; it is not for the revenue officers to question assessee's wisdom in doing so. * Whether a particular expense on services received actually benefits an assessee in monetary terms or not is not even a consideration for its being allowed as a deduction in computation of income, and, by no stretch of logic, it can have any role in determining arm's length price of that service. * The real question which is to be determined in such cases is whether the price of this service is what an independent enterprise would have paid for the same. * Similarly, whether the AE gave the same services to the assessee in the preceding years without any consideration or not is also not relevant. * The Assessee has filed a huge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cost construction charges as a separate class of transaction and applying CUP as the most appropriate method as against TNMM, we notice that the the Hon'ble Tribunal while rendering the decision in the case of Ingersoll Rand India Ltd (supra) has also addressed the issue of adopting CUP as the most appropriate method for the cost contribution charges in para 23 as extracted above. In assessee's case the TPO has treated the cost contribution charges as a separate class of transaction quoting that there is no restriction that the TP should be done only at enterprise level and also on the basis that it is an intra group transaction. From the details of services and the benefits received from these services as submitted by the Ld AR, the payment made towards these charges are integral part of the core business of the assessee. Considering the decision of the Hon'ble Tribunal in Ingersoll Rand India Ltd (supra) and the facts of the present case we are of the considered view that the TPO is not justified in applying CUP is the most appropriate method for computing the ALP treating the cost contribution charges as the most appropriate method. 14. On the corporate tax the AO made the foll ..... X X X X Extracts X X X X X X X X Extracts X X X X
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