The Tax Publishers2019 TaxPub(DT) 6580 (Mum-Trib)

INCOME TAX ACT, 1961

Section 92C

Market support services had been received by assessee pursuant to agreements entered with AE in Financial Year 2008-09 and had been found to be at arm's length price in earlier two assessment years. it was not jurisdiction of TPO to question assessee's commercial wisdom to avail services in a particular manner. Assessee had placed on record plethora of documentary evidences such as email exchanges, details of inputs received from overseas AE and report of independent accountants, etc., to support the fact that services were actually received and benefits were derived. However, same had been disregarded and brushed aside in a very light manner and TPO determined nil ALP without applying any of the methods prescribed under section 92C, which was not at all justified. Accordingly, TP adjustment could not be sustained.

Transfer pricing - Determination of ALP - Payment to AE towards marketing support services - TPO applied benefit test and determined nil ALP without applying any of the prescribed method

Assessee made payments to Ae towards marketing support services. TPO determined ALP thereof at nil on the ground that assessee could not establish factum of receipt of services and also could not demonstrate corresponding benefits received by assessee by availing these services. The said servcies, in view of TPO, could be obtained from an independent consultant in India at lower cost.Held: Concerned services had been received by assessee pursuant to agreements entered with AE in Financial Year 2008-09 and had been found to be at arm's length price in earlier two assessment years. it was not jurisdiction of TPO to question assessee's commercial wisdom to avail services in a particular manner. Assessee had placed on record plethora of documentary evidences such as email exchanges, details of inputs received from overseas AE and report of independent accountants, etc., to support the fact that servcies were actually received and benefits were derived. However, same had been disregarded and brushed aside in a very light manner and TPO determined nil ALP without applying any of the methods prescribed under section 92C, which was not at all justified. Accordingly, TP adjustment could not be sustained.

Supported by:CIT v. Lever India Exports Ltd. [ITA No. 1306, 1307,1349 of 2014] : 2017 TaxPub(DT) 590 (Bom-HC) and Firmenich Aromatics India (P) Ltd. v. Dy. CIT [ITA No. 2590/Mum/2017, dt. 23-7-2018] : 2018 TaxPub(DT) 6042 (Mum-Trib). Distinguished:Gemplus India (P) Ltd. v. ACIT 3 Taxmann.com 755, Deloitte Consulting India Pvt. Ltd. (2012) 22 Taxmann.com 107 (Mum) : 2012 TaxPub(DT) 2512 (Mum-Trib)Knorr-Bremse India (P) Ltd. (2013) 27 Taxman.com 16 (Del) : 2013 TaxPub(DT) 997 (Del-Trib).

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