9911796707
TMI Blog2025 (1) TMI 1475X X X X Extracts X X X X X X X X Extracts X X X X ..... otherwise arbitrary and is thus bad in law and void-ab- initio. 2. That the DRP directions are bad in law to the extent the same are prejudicial to the Appellant. Grounds on Transfer Pricing ("TP") 3. That the AO has erred on the facts and in law in making the TP adjustment of INR 56,38,26,985 in respect of the international transactions. Ground on Rejection of the bonafide TP Documentation/Economic Analysis maintained by the Appellant 4. That the Transfer Pricing Officer ("TPO") and DRP erred on the facts and in law, in rejecting the economic analysis in the TP documentation filed by the Appellant in terms of the Section 92D of the Act read with Rule 10D of the Income Tax Rules, 1962 ("the Rules") and proceeded to make the TP addition based on re-determination of the arm's length price ("ALP") of the international transactions. Grounds on Rejection of combined Transactional Net Margin Method ("TNMM") selected as Most Appropriate Method ("MAM") by the Appellant and adopting Comparable Uncontrolled Price ("CUP") Method/ Other Method without any comparable transaction or any basis for applying such method. 5. That on the facts and circumstances of the case an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmercial agreement filed by the Appellant to demonstrate that the expenditure was incurred for obtaining operational efficiency in the production of cement. 11. The DRP/TPO/ AO erred in questioning the commercial expediency of the Appellant with respect to the international transaction of payment of technical service fee and license fee. 12. Without prejudice and notwithstanding the fact that payment of technical service fee and license fee is to be benchmarked using combined TNMM approach, the Appellant undertook an external corroborative CUT search to substantiate the ALP of the said international transaction. The corroborative analysis was rejected by the TPO and affirmed by the DRP without providing any cogent reasons thereof. 13. The DRP/TPO erred in the inappropriate application of the Other Method without providing any particulars for the comparability of the independent transactions. Grounds on Incorrect Economic Analysis of Payment of Sub-license fee undertaken by the TPO and DRP-INR 11,37,28,509 14. The DRP/TPO/ AO have erred, on facts and in law, by determining the ALP of payment of sub-license fee for the use of the trademark at 'NIL' using Other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... btained from the AES. 23. The DRP/TPO erred by not giving cognizance to the submissions submitted by the Appellant and concluded that the services provided by the AE were in the nature of "shareholder activity" and duplicative in nature and therefore, did not warrant any payment to be made. 24. The DRP/TPO erred in assessing that the payment towards Intra Group service fee is based on an apportionment of expenses basis the agreements despite the fact that same is based on actual receipt of services from the AE. 25. The DRP/TPO erred in assessing that the ALP for the Intra Group services is Nil stating that no Functions, Assets and Risk ("FAR") analysis was submitted by the Assessee in its TP Documentation. 26. The DRP/TPO erred in the inappropriate application of the Other Method without providing any particulars for the comparability of the independent transactions. Grounds on Incorrect Economic Analysis in relation to Payment of Interest on Masala Bonds undertaken by the TPO and DRP - INR 5,83,39,725. 27. The DRP/TPO/ AO has erred, on facts and in law, by determining the ALP of payment of interest on masala bonds using Other Method, accordingly, arriving at the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f excess dividend distribution tax ("DDT") 36. The AO has not given cognizance to the DDT already paid by the Appellant and the documentary evidence substantiating the same furnished during the assessment proceedings, and accordingly, the demand thus created should be deleted. 37. The DRP/ AO has erred, on the facts and in law, in rejecting the claim of refund of excess DDT paid by the Appellant, which was claimed during the assessment proceedings. 38. The DRP/ AO has erred, on the facts of the case, in not allowing the refund of the excess DDT paid by the Assessee inadvertently at the rate of 20.92 percent instead of 20.357 percent amounting to INR 46.83 lakhs. Other Grounds on Erroneous Computation 39. The AO has erred by not allowing the set-off of the Minimum Alternate Tax ("MAT") credit amounting to INR 15,33,21,507 while determining the net tax liability of the Appellant, at the time of passing the final assessment order. 40. The AO has erred by not granting the partial credit for Tax Collected at Source ("TCS") while determining the net tax liability of the Appellant, at the time of passing the final assessment order, while there is no discussion about thes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... HC Trading Malta Limited Freight charges 2,24,25,072 11 Heidelberg Cement AG Borrowing 43,38,08,215 12 Ciments Francais S A Recovery of expenses 2,01,550 13 HC Trading Malta Limited Recovery of expenses 2,15,60,010 14 Suez Cement Company SAE Recovery of expenses 14,77,328 15 Singha Cement Pvt. Ltd. Recovery of expenses 1,11,17,498 16 Heidelberg Cement AG Reimbursement of expenses 13,62,750 17 Heidelberg Cement Asia Pte Limited Reimbursement of expenses 9,80,139 18 Singha Cement Pvt. Ltd. Trade Receivables 33,52,854 19 HC Trading Malta Limited Trade Receivables 2,15,60,010 20 CimentsCalcia SA Trade Payables 17,78,547 21 HC Trading Malta Limited Trade Payables 2,24,25,072 22 Italcement S p A Trade Payables 14,49,24,523 23 Heidelberg Cement AG Trade Payables 7,27,54,364 24 Heidelberg Cement Asia Pte Limited Trade Payables 49,60,847 25 C T C G S p A Trade Payables 7,46,106 26 Ciments Francais S A Trade Payables 3,75,05,066 27 Buta Heide Bergcement SDN BHD Advances received 6,89,539 28 Heidelberg Cement AG Interest payable 8,34,22,808 29 Heidelberg Cement AG Outstanding loan balance 5,00,00,00,000 4.1 The L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is whether close inter-linking between all the transactions exist or not, so as to justify the aggregation approach. If a number of transactions are closely linked or continuous in nature and arising from a continuous transactions of supply of amenity or services, the transactions can be permitted as closely linked transactions for the purpose of transfer pricing and in terms of Rule 10A(d). Aggregation and clubbing of the closely linked transaction are permitted under the Rules and it is also supported by OECD transfer pricing guidelines. In order to examine whether the number of transactions are closely linked or continuous so as to aggregate for the purpose of evaluation it is to be considered that one transaction is follow-on of the earlier transaction and then the subsequent transaction is carried out and dependent wholly or substantially on the earlier transaction. It can be vice-versa when the earlier transaction has been entered into between parties by keeping in mind that a continuous transaction of similar nature will be entered into between the parties thereafter. Therefore, when the transactions are influenced by each other and particularly in determining the price and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sactions. There is also no dispute about the fact that, there is a substantial change occurred in the nature of services received by the assessee and the service provider in A.Y. 2018-19 as compared to A.Y. 2009-10. It is therefore crucial to go through the details of the nature of services received by the assessee and the service provider for these two years. The details for A.Y. 2018-19 has already been provided herein above and the details for A.Y. 2009-10 are reproduced as under : Name of AE Nature of transaction Amount (INR) Climent Francais SA Technical know and research and other fee 12,53,26,000 Climent Francais SA Sub-license fee for use of trade mark 6,26,62,000 Italcementi Fabbriche Riunite Cemkento SPA Procurement service fee paid 7,11,82,000 Bravo Solutions SPA Consultancy fee paid 38,10,000 CTGA SPA Consultancy service fee paid 42,10,94,000 Climent Francais SA Reimbursement of expenses 82,95,000 Bravo Solutions SPA Reimbursement of expenses 4,07,000 Climent Francais SA Reimbursement of expenses 13,25,000 Italcementi Fabbriche Riunite Cemkento SPA Reimbursement of expenses 26,79,000 CTGA SPA Reimbursement of expenses 9,29,000 On going ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d at Annexure 9 of paper book) for A.Y. 2021-22 to 2025-26, wherein, the rate of interest on Masala Bond has been agreed at 8.70%. Ld. AR further submitted that, in A.Y. 2017-18 no adverse inference has been taken by the Ld. TPO with regards to bench marking of interest on Masala Bond. Therefore, the Ld. AR prayed before the bench to accept the bench marking of interest at 8.70% per annum as per APA. 10. Per contra, the Ld. DR relied on the order of Ld. TPO / Ld. DRP and prayed before the bench to dismiss these grounds of the assessee. 11. We have heard the rival contentions and also gone through the record in the light of the submissions made by either side. We have gone through the APA entered into by the assessee (Annexure 9 of paper book), wherein, the rate of interest on Masala Bond for A.Y. 2021-22 to A.Y. 2025-26 has been agreed at 8.70% per annum. Further, in A.Y. 2017-18 no adverse inference has been taken by the Ld. TPO with regards to bench marking of interest on Masala Bond. No changes in facts and circumstances affecting the bench marking of the rate of interest on Masala Bond has been brought to our notice by the Revenue. Therefore, considering the factual matrix of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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