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TMI Blog2023 (5) TMI 32X X X X Extracts X X X X X X X X Extracts X X X X ..... or the year under consideration - difference is on account of the additional customs duty paid/deposited before filing the return of income - As per the assessee, while computing the assessed income in the final assessment order, the AO considered the income processed under section 143(1) of the Act, as the starting point, instead of the returned income, which was considered in the draft assessment order - HELD THAT:- As the difference is on account of the additional customs duty paid/deposited before filing the return of income, which is allowable u/s 43B of the Act, and in this regard the assessee has also filed a rectification applications dated 19/08/2022 before the AO, which is pending disposal. Therefore, in view of the above, we deem it appropriate to restore this issue to the file of the AO for computation of the total income, as per law, after necessary verification. As a result, grounds no.3 and 4 raised in assessee s appeal are allowed for statistical purposes. - ITA No. 2532/Mum./2022 - - - Dated:- 28-4-2023 - SHRI AMARJIT SINGH , ACCOUNTANT MEMBER AND SHRI SANDEEP SINGH KARHAIL , JUDICIAL MEMBER For the Assessee : Shri Ketan K. Ved a/w Shri Ninad A. Patade ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rvice fees; c. not giving due consideration to the additional evidence filed and the explanations provided in the reply to the remand report filed before the Hon'ble DRP in relation to payment of regional service fees; d. not considering the benefits derived from service availed by the Appellant and questioning the commercial expediency of the transaction; e. not appreciating that the international transaction of payment of regional service fees is interlinked to other international transactions and thereby disregarding the aggregation of transactions for the purpose of benchmarking the international transaction of payment of regional service fees; f. rejecting Transactional Net Margin Method ('TNMM') as the Most Appropriate Method ( MAM') for the determination of the ALP; and g. not appropriately applying any of the prescribed methods as per Section 92C(1) of the Act. Corporate Tax Grounds 3. Re.: Erroneous computation of total income for the year under consideration 3.1 The learned AO erred in considering the starting point for computing the total assessed income of the Appellant in the final assessment order as incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uring the course of hearing of this appeal, the Appellant requests that the appeal be allowed as prayed. 3. The issue arising in grounds no.1 and 2, raised in assessee s appeal, is pertaining to transfer pricing adjustment on account of payment of Regional Service Charges. 4. The brief facts of the case pertaining to this issue are: The assessee is a company and is engaged in the business of trading of modified and other forms of starches. It is also engaged in rendering sales services to its group company. The assessee is a part of the Ingredion Incorporated group. For the year under consideration, the assessee filed its return of income on 30/11/2018 declaring a total income of Rs.1,43,07,190. During the transfer pricing assessment proceedings, pursuant to the reference made by the Assessing Officer ( AO ), the assessee submitted that in respect of the international transaction pertaining to availing of Regional Services, Ingredion Singapore (i.e. its associated enterprise) functions as the regional headquarters for Ingredion s APAC operations, provided significant level of strategy and operational direction to the assessee, and controls key entrepreneurial risks in relat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee filed material which was not looked into either by the TPO or by the learned DRP. The learned AR further submitted that no specific defect has been pointed out in the evidence so furnished by the assessee. Accordingly, the learned AR prayed that the matter may be restored to the file of the learned TPO to consider the evidence furnished by the assessee afresh. In this regard, the learned AR also placed reliance upon the decision of the coordinate bench of the Tribunal in assessee s own case in the preceding assessment year. 6. On the other hand, the learned Departmental Representative vehemently relied upon the orders passed by the lower authorities. 7. We have considered the submissions of both sides and perused the material available on record. We find that while deciding a similar issue of transfer pricing adjustment on account of payment made to the associated enterprise for regional services, the coordinate bench of the Tribunal in assessee s own case in Ingredion India Pvt. Ltd. vs ITO, in ITA No. 2156/Mum./2017, vide order dated 20/10/2022, for the assessment year 2012-13 remanded the issue to the file of the learned TPO with a direction to the assessee to demonstra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is angle. 011. ...... 012. The assessee benchmarked all these above three transactions on an aggregate basis using transactional net margin method as the most appropriate method. The claim of the assessee is that net operating margin of the assessee is higher than the comparable companies and therefore it is at arm s length. The learned TPO has determined ALP of royalty at ₹ Nil. The assessee claims that the MNE group has a global royalty policy which is common across all regions. The agreement entered into is also containing standard clauses. Picking one of the standard clause from that agreement cannot be used against the assessee. The royalty payment by using trademark and patent is only for the sale of the product. As assessee is engaged in FMCG food sector, the assessee would require know how about the product information, product specification, application and formulation for its customers. Assessee also stated that, without trademark the assessee would not earn such a markup. 013. The learned TPO has determined the ALP of royalty and other two IGS at ₹Nil. As of these three international transactions have not been benchmarked properly, we set asi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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