INCOME TAX ACT, 1961

Section 92C

Transfer pricing - Computation of arm's length price - ALP adjustment made to group service fees paid by the assessee to its AE - Remand of matter

Assessee was engaged in the business of manufacturing articles and providing services. Assessment was taken up for scrutiny by issuance of notice under section 143(2). During the course of scrutiny assessment, AO referred the matter to TPO for determining the ALP of the international transactions entered by assessee with its AEs. TPO passed order under section 92CA proposing TP adjustment to group service fees paid by assessee to its AEs. TPO was of the view that assessee was not able to justify the need for making payment to its AEs on account of group service fees. TPO held that assessee had not received any benefit/service from its AEs for making such payment. Accordingly, TPO treated the ALP as 'Nil' and proposed transfer pricing adjustment. Held: Tribunal in assessee's own case for assessment year 2012-13 had directed to do afresh transfer pricing analysis and determine the ALP of international transactions with regard to group service fees paid by the assessee to its AEs. AO/ TPO shall follow the same directions that were given by ITAT in assessee's own case for assessment year 2012-13 for determining the ALP of international transaction the assessee had with its AEs. Accordingly, matter was remanded back for fresh consideration.

Relied:CIT v. Cushman And Wakefield (India) Pvt. Ltd. (2014) 46 Taxmann.com 317 (Del), Disa India Ltd. v. Asstt. CIT [IT(TP)A No.290/BANG/2017, dt. 25-11-2020], Deloitte Consulting India (P.) Ltd. v. Dy.CIT [2012] 137 ITD 21 (Mum-Trib) : (2012) 22 Taxmann.com 107 (Mum-Trib)(Mag) : 2012 TaxPub(DT) 2512 (Mum-Trib) and Dresser-Rand India Pvt. Ltd v. Addl. CIT [2011] 47 SOT 423 (Mum-Trib) : (2011) 13 Taxmann.com 82 (Mum-Trib)(Mag) : 2012 TaxPub(DT) 317 (Mum-Trib)