LINTAS INDIA PRIVATE LIMITED ,MUMBAI vs. DCIT, CIRCLE 16(1), MUMBAI

10. Fees paid pursuant to GNA Payment 119,758,403 CUP agreement TOTAL 257,564,571

Nature of Value of Arm's Length Excess being Transaction Transaction (in Price Adjustment (in Rs.) Rs.) GIS Services 6,60,82,190 NIL 6,60,82,190

GSA Services 1,72,01,346 NIL 1,72,01,346

TOTAL 8,32,83,536 NIL 8,32,83,536

M/s. Lintas India Private Limited 6. The Assessee, being aggrieved, challenged the said draft assessment order by filing the objections before the Ld. Dispute Resolution Panel (in short “Ld. DRP”) u/s 144C of the Act.

“6.3 Discussion and Directions of the DRP: 6.3.1 We have considered the contentions of the assessee, the order of the TPO and the facts and circumstances of the case. During the year under consideration. the assessee has paid to the AE on account of intra group services (IGS). The intra group services are broadly divided into the following categories: 1) Fees paid pursuant to Global Information Service (GIS) Agreement 2) Fees paid pursuant to Global Service Agreement (GSA GIS Services: The GIS agreement mainly includes Enterprise Infrastructure Services, Enterprise Application Services, Strategic Management and Application Services, Procurement Services. For the year under consideration, no markup has been charged and only the cost has been recovered by the AE. Total amount paid for the services under GIS agreement is Rs. 6,60,82,190/- GSA Services: The GSA agreement has been entered between Lowe & partners and Lintas India. The agreement states to provide assistance in financial administration services, vendor relationship management, legal counsel, tax guidance and business continuity services. The resources provided under the GS are said to confer significant benefits to Lintas India by enabling it to better meet its clients' needs. The services have been charged on cost + 5% mark up. Total amount paid for the services under GSA agreement is Rs.1,72,01,346/- Services similar to services under GSA agreement were rendered in earlier year MSF and MNC services. 6.3.2 We find that the issue involved is parimateria the same as those of earlier years and the DRP has decided the issue in A.Y 2014-15, 2016-17, 2017-18 and 2018-19. The findings of the DRP on this issue for A.Y 2018-19 are as below: "3.3 Findings of DRP :

M/s. Lintas India Private Limited We have gone through the submissions filed by the assessee and contentions made by the assessee during the course of hearing before us. During the year under consideration, the assessee has paid to its Associated Enterprises (AEs) on account of intra-group services. The intra group services are broadly divided into the following categories as mentioned below:

Payment of Global Information Services Rs.6,58,85,932 The Services provided to the assesse under these agreements mainly include Enterprises Infrastructure Services (EIS) Enterprises Application Services (EAS) strategic Management and Administration and Corporate IT Services Under the agreement, the AEs are to be compensated on a cost plus a mark-up in accordance with the group standard policy and procedures. However, in the FY year 2016-17 the AEs have recovered only the actual cost incurred in rendering the GIS services. MSF services - Rs.4,85,66,173/- & MNC Services Rs.1,71,25,298 The services provided to the assesse under the Management service agreement are in the nature of client co-ordination, corporate communications, digital executive, finance, human resources, information technology, new business targeting and strategic planning and research. The AE allocated total cost of such services along with a mark-up of 15% based on the proportion of the assesse revenue from respective division to the revenue of IPG from these divisions We have also gone through the contention of the assessee and heard of Ld. Council of the assesse

We find that the issue involve is pari material the same as those of earlier year and DRP had decided same issue in the AY 2014-15, 2016- 17and A.Y. 2017-18. The Ld. Council has also agreed that issues involved are the same as earlier AY 2014-15, 2016-17 and A.Y. 2017- 18. The findings of the DRP on this issue for AY 2017-18 are as below: We find that the issue involve is pari material the same as those of earlier year and DRP had decided same issue in the AY 2014-15 and 2016-17. The Ld. Council has also agreed that issues involved are the same as earlier AY 2014-15 and 2016-17 The findings of the DRP on this issue for AY 2014-15 are as below: 9.2 Findings of the DRP on assesse's contentions and TPO's stand-

9.2.1 Our findings on the various contentions raised by the assessee are as follows:

(i) We have gone through the contentions and submissions made by the assessee and also heard the Ld. Counsel of the assessee. We have also discussed the findings and stand of the TPO for the relevant assessment year in detail in para 8.1 above. During the course of hearing it was informed by the Ld. Counsel that the facts and circumstances and the nature of evidences furnished and relied upon M/s. Lintas India Private Limited by the assessee are materially the same and that the case is covered by earlier years favourable orders of Hon'ble ITAT. However, we find that the TPO has distinguished his findings, approach and analysis of the current year from that of the earlier years as discussed in detail in his order, the gist of which has been mentioned above by us. We have perused the evidences furnished and being relied upon by the assessee with respect to GIS Services and we are in agreement with the factual finding given by the TPO in his order that the email correspondences do not provide specific details regarding specific services received by the assessee and that there is failure on the part of the assessee to provide the cost incurred or paid to the AE for such services claimed to have been received. Therefore, we are in agreement with the stand of the AO in rejecting the benchmarking analysis submitted by the assessee with respect to GIS Services. Further, we have also perused the evidences furnished and being relied upon by the assessee with respect to MSF and MNC Services and we are in agreement with the factual finding given by the TPO in his order that the documents submitted and being relied upon by the assessee: do not prove whether the assessee has gained/ received any commercial benefits; that there is failure on the part of the assessee to provide the cost incurred or paid to the AE for such services claimed to have been received; that there is failure of the assessee to submit bifurcation of cost paid for availing said claimed services and there is no evidence of actual receipt of any special service. After going into the nature of substantiating evidences being relied upon by the assessee, we are in agreement with the conclusion drawn by the TPO that the assessee fails yardstick of the Need- Evidence- benefit test, based on OECD guidelines.

(ii) As regards the stand of the TPO in rejecting the foreign AE's as a tested party, we find that the assessee did not establish as to how the AE's can be treated as tested party and how AE is the least complex entity. In this regard with respect to the issue of treating the AE's as a tested party, it is relevant to point out the recent decision of Hon'ble ITAT which has discussed in principle the issue whether the A. E's can be treated as a tested party. The gist of the decision is as under Gist of the Decision of Hon'ble ITAT Pune Bench in the case of Baekart Industries (P) Ltd. in dated 22/04/2019 (AY 2009- 10) on the issue-Whether the AE's can be considered as tested party: As mentioned by Hon'ble ITAT, tested party is a party in whose hands a transaction between the two related enterprises is tested vis-à-vis other comparable uncontrolled transactions for ensuring that is not structured in such a way so as to deprive the Indian exchequer of the rightful tax due to it. The Hon'ble ITAT have further discussed that the term 'enterprise' under the TNM method (and for that matter under all other methods) has been used to indicate the assessee in whose hands the benchmarking of the international transaction is done and the term 'associated enterprise' has been used to denote the foreign/AE, being the other related party to the international transaction. The underlying object of the transfer pricing provisions is, inter alia, to see that there is no profit shifting from the Indian taxation base by means of the foreign/AE charging more than that charges by comparable M/s. Lintas India Private Limited independent cases, which fact is ensured by determining the ALP of the international transaction. If foreign AE has, in fact, charged more, then its profit rate will shoot up and the corresponding profit of the Indian enterprise will be squeezed. In that scenario, a comparison of the profit rate of the foreign/AE will run contrary to the mandate of the provisions. Whereas, we were required to determine if the profit charged by the foreign AE is not more than that charged by uncontrolled comparables by seeing the profit rate of the Indian enterprise, we will end up doing a futile exercise of rather viewing the profit rate of the foreign/AE, if such foreign/AE is taken as a tested party for the purpose of comparison with the profit rate of the comparables. This exercise is not only off the mark, but also runs counter to the rule and spirit of the transfer pricing provisions. The Hon'ble ITAT has further opined that the essence of the matter is that it is the profit margin of the Indian enterprise and not that of the foreign AE, which should be compared with the comparables to see if any increase in the total income of the enterprise chargeable to tax in India, is warranted on account of transfer pricing adjustment. The contention of the Id. AR for considering the profit of the foreign/AE as 'profit A' for the purposes of comparison with profit of comparables, being 'profit B', for determining the ALP of transaction between the assessee and its foreign AE, misses the wood from the tree by making the substantive section 92 otiose and the definition of 'international transaction' u/s 92B and rule 10B becoming redundant. This is patently an unacceptable proposition having no sanction under the Indian transfer pricing law. It is axiomatic and again accentuated that the requirement under the Indian law is to compute the income from an international transaction between two AEs having regard to its ALP and the same is required to be strictly adhered to in the manner as prescribed. Thus, it is overt that the obligation under the Indian law is to compute the income from an international transaction between two AEs having regard to its ALP and the same is required to be strictly determined as stipulated. Hon'ble ITAT accordingly have held (in Para 11 & 12 of said order) that the foreign/AE be considered as a tested party for determining the ALP of international transaction is having no statutory sanction is sans merit and hence jettisoned. Similar view of not accepting the foreign/AE as tested party has been taken in umpteen number of cases, viz Mumbai Bench of Tribunal in Onward Technology Ltd. Vs. DCIT (2013) 36CCH46 (Mumbai) and Aurion Pro Solutions Ltd. Vs. ACIT (TS-75-ITAT-2013 Mumbai - TP)(2013) 27 ITR (Trib) 276 (Mumbai). In this regard, similarly in the case of Baekart Industries (P) Ltd., the Hon'ble ITAT in AY 2010-11, AY 2011-12 has also held that the assessee should be the tested party and not the AE's. (iii) Analysis of the Stand of the assessee The stand of the assessee is that the need and benefit is not required to be established. The assessee has not been able to independently substantiate /establish the actual cost of services claimed to have been received, yet the assessee expects that the cost to the AE and markup thereon should be accepted at face value, without any independent verification by the TPO being made possible. The said cost has been compared with certain comparables of the world by using TNMM method, however the deficiencies in such selection of comparables and M/s. Lintas India Private Limited FAR Analysis has been rightly highlighted by the TPO as discussed above. In fact, the assessee has totally ignored the Sixth method in its TPSR which is the "other method" which has been introduced for computing ALP in Indian TP regulations and introduced in the Income Tax Act w.e.f. AY 2013-14 and Rule 10AB has accordingly been introduced in the Income Tax Rules in this regard. Hon'ble ITAT Mumbai Bench in the case of Toll Global Forwarding India (P) Ltd. Vs DCIT ( ITA Number 3812/Mum/2015) has stressed upon the relevance and importance of this method and treated it at par with the other standard methods for determination of the ALP. In fact, Hon'ble ITAT Mumbai has approved application of this method in its recent decisions in similar circumstances as well viz. in the case of CLSA India (P) Ltd.- ITA- 6748/M/17, 7257/M/2018 and 7246/M/2019 dated 20/8/20. We agree with the TPO that in such circumstances when relevant details required for verification are not made available, the TPO cannot be expected to accept the transactions of the assessee at face value. Accordingly, we find that the assessee has given cogent reasons for rejecting the benchmarking analysis of assessee using foreign AE as tested party and using of External as MAM by the assessee. We are in agreement with the TPO that treatment of foreign AE as tested party without independently verifiable (not self-serving certificates) supporting evidences with TNMM as MAM by the assessee is not correct benchmarking analysis and accordingly reject the same. Further, we agree with the findings of the TPO in rejecting the Benchmarking analysis regarding GIS Services and proceeding to determine ALP as mentioned above. (iv) We find that the TPO has rightly relied upon the decisions of Hon'ble ITAT Bangalore in the case of Gemplus India (P) Ltd-(TS-100-ITAT-2010) and Cranes Software International Ltd (ITA no 1594/Bang/2012-AY 2008-09); Hon'ble Delhi ITAT in the case of Bombardier Transportation India (P) Ltd. (ITA No. 1626/Del/2015) -where the Hon'ble ITAT has held that the ALP can be determined at NIL if the taxpayer has not proved that it has received any commensurate benefit against the payments of service charges to the AEs. The TPO has also placed rightly reliance on the decision of Hon'ble Delhi High Court in the xase of Cushman and Wakefield in dated 23.05.2014, Decision of Hon'ble ITAT Bangalore in the case of Forsoc Chemicals India (P) Ltd.- ITA 148/Bang/2014 dated 10.4.2015. The TPO has also further correctly relied upon the decision of jurisdictional ITAT in the case of Deloitte Consulting India (P) Ltd (22 Taxman 1079-2012) where it has been held that the TPO can arrive at NIL ALP in absence of details from the assessee on the services claimed to be rendered by the AE's. The TPO has not merely quoted the decisions but in great detail discussed and analysed how the facts of the instant case are similar to the decisions being relied upon by the TPO.. We find that the reliance placed by the TPO on these decisions of Hon'ble ITAT is correct and these decisions are squarely applicable to the facts of the instant case. We have gone through the decisions cited by the assessee in its support but find that the facts of our case are on different footing. The TPO has further relied upon the relevant provisions of the Indian Evidence Act M/s. Lintas India Private Limited 1872. In view of the above discussion we find that the TPO has rightly concluded that the assessee has failed to prove evidences in respect of- : a) The benefits received by the assessee, b) When and how such services were rendered by the AE; c) At what rate these services were available in the open market. Based on the above discussion, we find that the TPO has rightly rejected the benchmarking of the international transactions relating to payments towards Intra Group Services by the assessee. (v) In view of the above, we agree with the TPO on his stand of rejecting the benchmarking analysis carried out by the assessee. We are also in agreement with the stand of the TPO regarding treatment of assessee as a tested party by the TРО. We are also in agreement with the TPO regarding adoption of Any other method" as Most Appropriate Method and for adopting the "NEED-EVIDENCE-BENEFIT TEST" for benchmarking the Intra Group services availed by the assessee from its Α.Ε.'s. The TPO has rightly selected the assessee as a tested party and rightly applied " Other Method"- (Need-Evidence-Benefit Test Method) as the MAM. We have already mentioned that the evidences relied upon by the assessee do not fulfill the NEED-EVIDENCE-BENEFIT TEST. Therefore, we find that the ALP of Intra Group Intra-group Transactions mentioned above has been rightly arrived at NIL by the TPO. (vi) The TPO has duly considered the decisions of Hon'ble ITAT of earlier years and has highlighted how the order passed in this year is different from the approach adopted by the TPO in earlier years. We are in agreement with the TPO that the analysis of facts of the relevant financial year and stand adopted by TPO are different from that of earlier orders of TPO and hence the decisions of ITAT being relied upon are not squarely applicable. We are in agrement with the TPO that the facts of the relevant assessment year and the adoption of "Other method" by the TPO duly differentiates the facts of the current year with that of earlier years, whose ITAT orders have been relied upon by the assessee. (vii) The contention raised by the assessee that the TPO has adopted estimation/ad-hoc basis for determining the ALP of international Transactions is not found to be correct. The contention that the TPO has challenged the commercial wisdom of the assessee is not correct. The TPO has the duty to examine the benchmarking exercise and adoption of correct MAM and correct ALP of the international transactions and hence we find that the TPO has not exceeded his jurisdiction in this regard. The lack of opportunity claim has been made, however we find that the assessee has made submissions before the AO, which have been considered. No additional submissions have been made before us. In any case, the assessee has been provided due opportunity to be heard before us and the issue has been discussed in detail. Accordingly, we reject the above contentions raised by the assessee.

M/s. Lintas India Private Limited viii) Without prejudice to the above, with respect to the decisions of Hon'ble ITAT in the case of the assessee, which have been relied upon, we find that further appeal has been preferred against the order of Hon'ble ITAT of earlier years. In this regard, we also place reliance on the order of DRP in the case of the assessee for AY 2015-16 and earlier years, where the issue of Intragroup services has been discussed and decided against the assessee. The assessee has raised the principle of consistency in one of its grounds Dispute Resolution Panel, though a quasi-judicial body, however, does not represent a pure judicial setup. It is a forum constituted for the purpose of resolution of disputes between the Assessing Officer (AO) and the assessee to the extent possible, related to the draft order proposed by the AO, before a final order is passed. It is important to note that the Panel does not deal with the final order and it does not issue an order as such, but only directions are issued to the AO. As per section 144C(4), the directions are issued by the DRP for the guidance of the AO to enable him to complete the assessment. As per section 144C(5), the DRP, while issuing directions, has to rely on the draft order, objections filed by the assessee; evidences furnished by the assessee; report, if any, of the AO, Valuation Officer or TPO or any other authority; records relating to the draft order, evidences collected by, or caused to be collected by, it; and result of any enquiry made by, or caused to be made by it. It can be concluded that as per the provisions of Sec. 144C(4) and 144C(5), the directions of the DRP are of the nature of guidance to the AO so as to enable him to complete the assessment. The documents on which reliance is to be placed by the DRP are the factual documents available with the AO, submissions made by the assessee and further inquiries, if any, conducted by the DRP. As mentioned earlier, the functions of the DRP are more in the nature of dispute resolution between the assessee and the AO, for the issues which have not been handled correctly by the AO (whether in favour of the assessee or against the assessee). On the issues which have not been handled correctly by the AO, the DRP issues appropriate directions u/s. 144C(5). As such, the DRP does not deal with an appeal filed by the assessee arising from a final order issued by the AO. It has been held by Hon'ble Bombay High Court in the case of Vodafone India Service (P.) Ltd. [2013] 37 taxmann.com 250 (Bombay) that any type of objection can be raised before the DRP, jurisdictional or related to international transactions. In light of the above discussion and even otherwise, the DRP is not bound by its own orders for earlier year(s), if there is a variation in the surrounding circumstances or the facts of the case. Further, it is necessary to point out that for the year under consideration, only the assessee has a right to appeal against the final assessment order framed by the AO after incorporating the directions of the DRP and the Department does not have any such right of appeal. Under these circumstances, whereby the decision of the Panel cannot be challenged by the Department, the DRP would not be bound by its decisions given in the earlier year(s), when the decision of the Panel could be challenged by the Department. It is pertinent to point out that if the DRP for the year under consideration arrives at a conclusion, which is against the Department and in favour of the assessee, especially on a legal issue which has not yet attained finality in the Supreme Court, and if the said issue is eventually decided by the Hon'ble Supreme Court in favour of the Department, there will be no recourse available for collecting the revenue attributable M/s. Lintas India Private Limited to the said issue, since the Department's appeal would not have been pending, as for the year under consideration, DRP orders cannot be appealed against by the Department. As the issues raised in above grounds of objection is pending for decision by higher judicial forums, also relying on the findings of DRP for AY 2015-16, we reject the grounds of objection raised by the assessee. 9.3. Based on the above discussion in para 9.1 and 9.2 above, we reject the ground of objection No.1 (1A, 1B, 1C, 1D) raised by the assessee and uphold the adjustment of Rs 23,21,76,727/- proposed by the TPO. We find that there is no substantial change in material facts during the year under reference. The submission of the assessee is also found to be largely the same as was made during AY 2016-17. Relying on the direction of DRP in the assessment year 2014-15 and 2016-17 on the same issue, we reject the ground of objection No.1 raised by the assesse." 6.3.3 We find that there is no substantial change in the material facts during the year under consideration. The submission of the assessee is also found largely to be the same as was made in A.Y 2017-18 and 2018-19. Relying on the directions of the DRP for the A.Y 2014-15, 2016-17, 2017-18 and 2018-19 on the issue, we reject the ground of objection no 1 with all the sub grounds (1A, 1B, 1C,1D,1E) raised by the assessee”

8. The AO in pursuance to the DRP’s order/directions dated 22.08.2024 u/s 144C(5) of the Act, vide assessment order dated 17.09.2024 u/s 143(3) r.w.s. 144C(13) r.w.s. 144B of the Act, ultimately made the addition of Rs.832,83,536/- on account of arm’s length price adjustment in conformity with the Ld. DRP’s order dated 22.08.2024.

9. Therefore, the Assessee being aggrieved challenged the aforesaid addition of Rs.8,32,83,536/- by filing instant appeal before the Tribunal. The Assessee, at the outset, has claimed that identical issues with regard to the GSA and GIS services were also cropped up in the previous assessment year i.e. 2018-19. There was no difference between the MSF and MNC services rendered in the A.Y. 2018-19 and 2021-22 as this fact is noted by the Ld. DRP in its order at para 6.3.1. In the AY 2018-19 case, the similar documents as submitted by the Assessee during the AY 2020-21 have been considered qua GIS agreement, cost, allocation, working, management certificate for allocation working, opinions, assets and risk analysis, benchmarking of GIS services, benefits derived from M/s. Lintas India Private Limited GIS services and documentary evidence to substantiate the services received. The Ld. Counsel for the Assessee further submitted that Ld. DRP itself has noted in its order that MSF and MNC services rendered in AY 2018-19 are similar to GSA services. The Ld. Counsel further submitted that the Assessee had submitted various documentation for GSA services which are on the same lines as of AY 2018-19, such as copy of agreements, Benchmarking in analysis, FAR analysis, cost allocation working, independent auditor’s certificate for allocation of GSA, post benefits derived from GSA services, chart-summary of GSA services etc..

10. On the contrary, the Ld. DR though accepted the fact that the issues involved in the instant case are identical to the issues dealt with in the case pertaining to AY 2018-19, however, refuted the claim of the Assessee on the ground that every case is based on the particular facts and circumstances and over the year, the Department is at liberty to consider the case in particular set of facts and circumstances and documents.

“5. Global Information Services (GIS) 5.1. The services provided to the assessee under GIS mainly include enterprise infrastructure service (EIS), enterprise application services (EAS) and strategic management and administrative and corporate I.T. services. The assessee had only 5 experienced / qualified members in its India I.T. Team to serve and assist the needs of its staff of more than 646 employees. Accordingly, in order to manage the massive support required by employees of the assessee, it received GIS from its AE. The assessee, for availing the services, has entered into inter- M/s. Lintas India Private Limited company agreement whereby the AE can charge the assessee the actual cost incurred along with mark up in accordance with group standard policy and procedure. However, no markup has been charged for the year under consideration. The AE follows a cost pooling mechanism in respect of such services and the same is consistently followed across all entities within the group. The assessee in the TP study has submitted a detailed note on the benefit from these services (page 225 of paper book). The assessee also provided the evidences to substantiate the rendition of group services by the AE. For the year under consideration, the AE has allocated the cost using various allocation keys towards providing the GIS services. The costs are pooled together and apportioned to various group entities based on appropriate allocation key such as number of employees, number of mail boxes, active directory, number of user accounts, number of licences, etc. (page 2269 of paper book) The assessee submitted before the TPO that the services were for the benefit of various group entities and not only for the assessee. The working of cost allocation was supported by a certificate from Group CFO, confirming the fact that service fee mechanism adopted by Lowe group has been consistently applied across all the Lowe group entities, the same has been scrutinized and accepted by the tax authorities across the world. The pricing of the transaction using an indirect charge method was considered to be an appropriate basis for calculating the arm’s length charges. The assessee further submitted that the allocation keys based on which the costs are allocated, were prudently collected and consistently applied to all entities including the assessee. The assessee has selected the transaction under net margin method (TNMM) as the most appropriate method and considering no markup has been charged by the AE to assessee, the payment of GIS services by assessee was considered to be in accordance with the arm’s length standards under Indian TP regulation. The assessee to support the claim submitted the relevant agreement, the calculation of GIS services charges allocated for AE to assessee along with relevant allocation key and sample evidences to substantiate the receipt of services. 6. …. 6.1. …. 7. …. 7.1 …. 7.2 The TPO rejected the bench marking done by the assessee. The TPO held that the assessee failed the need – evidence – benefit test by not providing adequate of proof of rendering of services by the AE, the proof of receipt of services and the proof of cost claimed to have been incurred by the AE in rendering the said services. The Ld. TPO alleged that the GIS agreement is for namesake purpose only and almost no activity has taken place as a part of GIS. With regard to MSF and MNC services the Ld. TPO after evaluating various evidences and the details filed, concluded that these services cannot be said to have been rendered to the assessee warranting any payment by the assessee. The ld TPO Rejected the benchmarking analysis undertaken by the M/s. Lintas India Private Limited Assessee stating that the assessee failed to provide the search process, databases used, accept/reject matrix, filters used, etc. The TPO questioned the need of the Assessee to avail such services from its AE and the quality/creativity/commercial value of the creative inputs received from the AE. The TPO also remarked that the Assessee failed to provide the rationale for charging a mark-up of 5% on the costs Stated that the Assessee failed to furnish a direct co-relation between the inputs from global team and the corresponding benefits. The TPO also did not accept the submission of the assessee that the issue is covered by the decision of the Hon’ble Tribunal in assessee’s own case for A.Y. 2010-11 to 2013-14 for the reason that the findings of TPO and the justifications are applicable for the respective assessment year. Accordingly, the TPO determined the ALP of the payments made towards all three services as Nil and made an adjustment of Rs.13,15,77,403/-. The DRP upheld the adjustment by relying on its own order for A.Y. 2015-16.

11. The Ld. DR, on the other hand, submitted that the assessee has failed to show the rendition test and the benefit test and, therefore, the TPO has correctly arrived at the ALP of the international transaction to be at Nil. With regard to the contention of the Ld.AR that the ALP cannot M/s. Lintas India Private Limited be determined at Nil, the Ld. DR submitted that the TPO has applied CUP method and has accordingly arrived at the ALP to be Nil for the reason that no independent party would have paid for such services. The Ld. DR further submitted that the evidences produced by the assessee in the form of email, etc. does not substantiate anything so that the determination of ALP of assessee can be accepted. Accordingly, the Ld. DR supported the orders of the lower authorities. 12. …. 13. …. 14. ….

M/s. Lintas India Private Limited 16. Considering the nature of services as discussed above and the perusal of the documents in our view the assessee has reasonably satisfied the various tests i.e. the need test, rendition test, benefit test, duplicate test and shareholder’s activity. Therefore, we hold that the TPO is not correct in arriving at the ALP as NIL on the ground that the need and benefit test is not satisfied by the assessee without giving any contrary findings with regard to the various documents including the TP study submitted by the assessee. Accordingly, we delete the TP adjustment made towards rendering of GIS services by the AE to the assessee.”

12.1 The Ld. DRP specifically in para 6.3.2 has not denied the fact that the issue involved with regard to the GIS is pari-meteria the same, as those of earlier years and the erstwhile Ld. DRP has decided the issue in AY 2014-15, 2016-17, 2017-18 & 2018-19. Further, the Ld. DRP in para 6.3.3 has also given a finding that there is no substantial change in the material facts during the year under consideration. The submission of the Assessee is almost found largely to be the same as was made in AY 2017- 18 & AY 2018-19. The Ld. DRP therefore relying on the directions of the erstwhile Ld. DRP for the AY 2014-15, 2016-17, 2017-18 & 2018-19 on the issue qua GIS, affirmed the arm’s length price determined qua GIS, by rejecting the relevant objections raised by the Assessee.

M/s. Lintas India Private Limited 12.2 As observed above, the facts and circumstances documentation and the issue involved, are exactly similar except variation in amounts and there is no huge change in the same. The Ld. DRP has not considered the order dated 01.06.2023 passed by the Tribunal in Assessee’s own case for AY 2018-19 being wherein the TP adjustment made towards rendering of GIS services by the AEs to the Assessee, has been deleted, as observed above but the Ld. DRP simply relied on its own previous orders and the AO also without taking into consideration the decision of the Tribunal (supra), made the addition of Rs. 6,60,82,190/- on account of arm’s length price adjustment qua GIS services. Thus, on the aforesaid reasons and respectfully following the decision of the Tribunal on the issue qua GIS, the addition in hand is liable to be deleted and hence the same is deleted.

M/s. Lintas India Private Limited “The Assessee has selected foreign AEs as tested party instead of assessee. The claim of the assessee is that AEs have charged 5% markup on the cost of services incurred by them, also cannot be proved. The assessee has selected several comparables from Europe Region, North America, and Asia Pacific Region. No data is provided with regard to the accepted matrix, type and number filters used and qualitative functional analysis of the comparables. Most importantly, the audited financial of the comparable is not provided for an authenticity and verification of margin. In view of the above reasons and discussion, the benchmarking done by the assessee using TNMM cannot be accepted and the same is rejected.

In view of the above discussion the GIS services and GSA services claimed by the assessee failed to prove the Need – Evidence - Benefit test. Since the assessee failed to prove in providing the adequate and complete proof of rendering all services by the AE, number of receipt of services, details and documentary evidences of expenses and cost claimed to have been incurred by the AE in rendering the said services, details and basis of allocation and quantification of post similar allocations made to other AEs, and the benefit derived by the assessee. Moreover, the services are not specifically mentioned in the agreements and are in general terms and more in the nature of non-beneficial services identified by the OECD– shareholder / steward activities. The Mullen Lowe Groups Ltd., the main AE is holding 62.55% of the shares in the assessee (duplicative services) that profit incidental benefits; passive association benefits; and on call services, for which no payment is necessary by the assessee to the AEs. The agreements are more of self-serving agreement between the assessee and AEs and management certificate, instead of actual conduct of parties”.

13.1 The Ld. TPO at last held that the assessee did not submit complete details of such expenses which requires compensation at arms’ length. The assessee debited the above expenses under various heads of expenditure. Further, the assessee did not provide any primary evidence to show that the services are actually rendered by the AE, except describing the nature of services and producing the copy of such invoices. The assessee did not produce sufficient evidences regarding the actual services rendered by the AE and how they would be quantified at an arms’ length conditions. The assessee could not produce the complete details M/s. Lintas India Private Limited and quantum of expenditure spent by the AE in rendering services in connection with the services claimed. The assessee has to prove the services rendered, however did not prove substantially and also not shown how such services, would be valued by an independent entity dealing in similar circumstances.

13.2 The Ld. TPO ultimately rejected the TNMM applied by the assessee and consequently applied the other method (Need – Evidence – Benefit test) as the most appropriate method and worked out the value of transaction in respect GSA services to the tune of Rs.1,72,01,346/-.

15. The AO, therefore in pursuance to the directions of the learned DRP for giving effect to the findings and directions issued in terms of provisions of section 144C(13) of the Act, vide assessment order dated 17.09.2024, ultimately made the aforesaid addition of Rs.1,72,01,346/- qua GSA services on account of variation proposed by the learned TPO.

M/s. Lintas India Private Limited Particulars AY 2018-19 - MSF Services AY 2021-22 - GSA Services Agreement Service headings as Der MSF Services headings as per GSA agreement agreement: • Fostering and developing creativity Financial Administration • • New Business targeting ssistance services, • Public Relation Services Vendor relationship • • strategic planning management, • Media support services • Legal counsel, Tax guidance Financial Administration services • • HR and • Business services (including Business continuity services • assistance in disputes, litigation, consultant management etc.) • Services have also been referred in Hon’ble ITAT noting in its order (refer Para 17, refer PB pg. no. As can be observed, the services under 1603): GSA agreement are primarily in nature of support services and a sub Client coordinating, corporate communication, digital executive, finance, human resources, set of broad gamut of services covered information technology, new business targeting under MSF) and strategic planning and research.

Pricing policy Charged by Associated Enterprise Charged by AE at cost plus 5% (‘AE’) at cost plus 5% markup markup

Transactional Net Margin method TNMM Method used for (‘TNMM’) benchmarking

Benchmarking AE as tested party. AE as tested party. of Comparable’s : Comparable’s: services European Region, European Region, • • North America Region and North America Region and • • Asia Pacific Region Asia Pacific Region • • Para 6.1 of ITAT order of AY 2018- Refer PB page no. 112 19 (Refer PB pg. no. 1594) Revenue ratio Revenue ratio Basis of cost allocation Cost Allocation working Cost Allocation working (Refer PB Cost Allocation (Screenshot of MSF allocation page no. 1102) working working): The total cost pool along with 5% Para 17 of ITAT order of AY 2018- mark up, has been allocated basis 19 (Refer PB pg. no. 1604) revenue ratio Para 6.1 of ITAT order of AY 2018- Refer PB pg. 1103 to 1108 Independent 19 (Refer PB pg. no. 1595) auditors certificate Appellant discussed detailed Evidence chart summary and Documentary evidences before Hon’ble ITAT: detailed evidences: evidence to refer Para 17 of ITAT order of AY Refer PB pg. no 1427 to PB page 2018- 19 (Refer PB pg. no. 1601) substantiate 1538 receipt of Maintenance of reasonably Similar to AY 2018-19, Appellant Acknowledgmen services sufficient documentation: has maintained detailed and t by Hon’ble refer Para 14 of ITAT order of AY voluminous documentations 2018- 19 (Refer PB pg. no. 1601) covering all the aspects of ITAT the charge, as explained above Refer PB pg. no 1427 to PB page 1538 16.1 The Ld. Counsel also submitted that the Assessee had submitted various documentation for GSA services, which are on the same lines as of AY 2018-19, such as copy of agreements, Benchmarking in analysis, FAR analysis, cost allocation working, independent auditor’s certificate for allocation of GSA, post benefits derived from GSA services, chart- summary of GSA services etc..

16.2 The Ld. Counsel at last submitted that GSA services provided in the assessment year under consideration are similar to the services rendered in earlier year qua MSF and MNC services, as also acknowledged by the learned DRP in paragraph 6.3.1 and 6.3.2 of its order.

16.3 The assessee further claimed that the learned DRP relied on the order passed by its predecessor for A.Y. 2018-19 which in fact travelled upto Tribunal in wherein the Hon’ble Co-ordinate Bench of the Tribunal, vide order dated 01.06.2023 considered the identical issue qua MSF and MNC Services and ultimately remitted the issue qua determination of ALP with respect to MSF and MNC services, back to the file of Ld. TPO with a direction to analyze various documents submitted including the benchmarking already done by the assessee, afresh and decide in accordance with law, by observing and holding as under:

“17. Now coming to MNC and MSF services we have in the earlier part of this order have narrated the nature of services rendered by the AEs being executive services, operations best practices, finance, human resources, information technology, new business targeting and strategic planning and research etc. The assessee has in the TP study has done the FAR analysis with respect to these services and also the detailed description along with the benefits derived. During the course of hearing the ld. AR took us through the various documents evidencing the rendering of services. One such service is M/s. Lintas India Private Limited executive services were it was explained that the ideas created by the global creative team for various products which is to be customized according to the Indian products/market. The ld. AR in this regard submitted that the global team creates a common story board for the products and the same is used by the assessee to customize to Indian products / market and for this the AE is charging the assessee (page 1999 to 2066 of paper book). The Id AR further submitted that the with respect to other services under the category of MSF and MNC services also the AE is charging the assessee towards using the common resource materials, using standardized tools, accessing global information data base etc. (page 1994 to 1997 of paper book). The ld. AR drew our attention t the cost allocation and the key use for allocation which is reproduced below –

18. From the above facts it is clear that the assessee is allocated the overall cost incurred by the AE for using certain tools, data base, resources etc., on the basis of revenue with a markup of 5%. In these services though the assessee has elaborated the benefits derived in the TP study, in our view the assessee has to demonstrate how the tools and contents are used by the assessee, there is no duplication of services, etc., and the same needs to be bench marked accordingly. We therefore remit the determination of ALP with respect to MSE and MNC services back to the TPO with a direction to analyse the various documents submitted including the bench marking already done by the assessee afresh and decide in accordance with law. Needless to say that the assessee be given a reasonable opportunity of being heard. It is ordered accordingly.

18.1 The learned DRP by relying on its previous order passed in A.Y. 2018-19, ultimately affirmed the decision of the learned TPO in rejecting the claim of the assessee applying the TNMM and affirmed the other method applied by the learned TPO and consequently directed the AO to frame the assessment and/ or to pass appropriate order in pursuance to the draft assessment order as well as order of the learned TPO.

18.2 The Hon’ble Co-ordinate Bench of the Tribunal also dealt with the issue qua MSF and MNC services and the assessee has claimed that GSA services as involved in the assessment year and MSF services provided by the assessee in the A.Y. 2018-19 as dealt with by the learned DRP and the Tribunal are pari materia and the Tribunal has ultimately remanded the issue qua MNC and MSF services to the file of the TPO for benchmarking afresh by analyzing various documents submitted including the benchmarking already done by the assessee for determination of ALP. Thus, the Assessee has claimed that same treatment may be given to the issue in hand, on which the learned DR did not refute such claim of the Assessee.

18.3 As observed above, that the learned TPO rejected the TNMM applied by the Assessee and applied the other method by giving specific findings that the Assessee failed to provide all the relevant documents as observed in the learned TPO’s order and the learned DRP simply relied on the order passed its erstwhile ld. DRP in A.Y. 2018-19, whereas the latest development is that the Hon’ble Co-ordinate Bench of the Tribunal in the case pertaining to A.Y. 2018-19, which was relied upon by the learned DRP, has also dealt with the issue qua MSF and MNC services which are pari-materia with GSA services as involved in this case and has remitted to the same to the file of the learned TPO, in the directions referred to above.

Thus, considering the peculiar facts and circumstances in totality for just and proper decision of the case, substantial justice and fair play, we deem it appropriate to remand the instant issue qua GSA services to the file of the learned TPO in the similar directions, as made by the Hon’ble Co-ordinate Bench in the case referred to above {AY-2018-19} and to determine afresh the ALP with respect to GSA services, by considering the documents filed including the bench marking already done by the assessee and affording a reasonable opportunity of being heard and for submissions of the details and documents, if any requires in addition to already filed.

Order pronounced in the open court on 19.11.2025.