THE PR COMMISSIONER OF INCOME TAX FARIDABAD vs. WILLIS TOWERS WASTON INDIA PRIVATE LIMITED

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ITA/65/2024HC Punjab & HaryanaPHHC01063036202412 August 2024Bench: MR. JUSTICE SANJEEV PRAKASH SHARMA,MR. JUSTICE SANJAY VASHISTH3 pages
AI SummaryDismissed

What did the High Court hold?

The High Court concurred with the order passed by the ITAT. The Tribunal had previously held the CUP method as the MAM for the assessee in earlier assessment years (2011-12, 2013-14, and 2014-15). The High Court found no reason for the TPO to adopt a new method for assessment year 2018-19, especially when the assessee had consistently followed a particular method. The Court noted that the ITAT's reasoning, which relied on the uniformity of rates charged for hours incurred by an individual for a project, irrespective of whether services were rendered to AEs or third parties by the same employee in India, was sound. The judgment cited the Supreme Court's decision in CIT, Delhi-II Vs. Cargill Foods India Ltd. The High Court concluded that no substantial question of law arose from the ITAT's order. Therefore, the appeal filed by the Revenue was dismissed.

What were the facts?

The Revenue filed an appeal against an order of the ITAT dated 11.09.2023. The appeal concerned the assessment year 2018-19. The Revenue contended that the Transfer Pricing Officer (TPO) correctly adopted the Transactional Net Margin Method (TNMM) as the most appropriate method (MAM), while the assessee had followed the Comparable Uncontrolled Price (CUP) method. The High Court noted that for earlier assessment years (2011-12, 2013-14, and 2014-15), the ITAT had held the CUP method to be the MAM for the same assessee. The High Court also referred to its own decision in ITA No. 85 of 2023 concerning the same assessee, which examined Rule 10B(4) of the Income Tax Rules, 1962, and concurred with the ITAT's order regarding the MAM for assessment year 2009-10.

What were the issues?

1. Whether the Tribunal erred in upholding the Comparable Uncontrolled Price (CUP) method followed by the assessee, when the Transactional Net Margin Method (TNMM) was the most appropriate method adopted by the Assessing Officer (AO) for the assessment year 2018-19? (Question of law) Assessee's Contentions: The judgment does not record specific contentions made by the assessee before the High Court. However, the ITAT's order, as quoted, indicates that the assessee had established its case in earlier years by submitting invoices to Associated Enterprises (AEs) and non-AEs, demonstrating the comparability of services rendered. The ITAT also noted that the amount/rate charged for hours incurred by an individual for a project was uniform, and services were provided to both AEs and third parties by the same employee located in India. Revenue's Contentions: The Revenue argued that the TPO rejected the assessee's CUP method and adopted TNMM due to the assessee's non-submission of documents and details for the assessment year 2017-18. Specifically, the Revenue contended that the assessee failed to provide details of independent contracts/functions/services rendered to different AEs and unrelated parties, despite multiple opportunities. The Revenue also argued that the TPO sought an 'invoice by invoice' comparison with third parties in the same geographical location, which was rejected by the assessee's CUP method.

Which sections of the Income-tax Act were involved?

Rule 10B(4)

AI-generated summary — verify with the full judgment below

1.

Present appeal has been filed by the Revenue against the order passed by the ITAT (for short ‘the Tribunal’) dated 11.09.2023, assailing that the Tribunal has erred in upholding the CUP method followed by the assessee, and submits that the TNMM was the most appropriate method adopted by the AO for the assessment year 2018-19. 2. We find that the Tribunal, in the case of the assessee for the assessment years 2011-12, 2013-14 and 2014-15, held the CUP method to be the most appropriate method, and binding on the TPO, more so as the factual matrix reveals the same. 3. In relation to the same assessee, we have decided ITA No.85 of 2023, wherein we had duly examined the other aspects, relating to Rule 10 B

(4) of the Income Tax Rules, 1962. However, so far as the most appropriate method adopted for the year 2009-10 in the relevant case, was the same as LAVISHA 2024.08.13 13:52 I attest to the accuracy and authenticity of this order/judgment Punjab & Haryana High Court, Chandigarh

adopted for the year 2011-12, 2013-14 and 2014-15 and we concurred with the order passed by the ITAT. 4. For the purpose of the present case, it would be apposite to quote the order passed by the ITAT in relation to the said aspect:- “9. The Id. DR argued that based on the assessee's non- submission of documents/details, the TPO has made upward adjustments by rejecting the assessee's CUP method and adopted TNMM. The Id. DR argued that in earlier year, the assessee had established its case by submission of the invoices to AEs as well as non-AEs of the services rendered (as mentioned in the order of the Tribunal for AY 2011-12) and established comparison of the same. But in the instant case for F.Y. 2017-18, the assessee has not submitted invoices raised even after multiple opportunities were given to the assessee. It was further argued that the assessee company has failed to provide

the details of

the independent contracts/functions/ services rendered to different AEs and unrelated parties, hence, CUP method followed by the assessee was rejected by the TPO and instead TNMM was selected as Most Appropriate Method. 10. We find that the Id. DRP has already allowed the CUP as MAM in the A.Y. 2011-12, Α.Υ. 2013-14 and A.Y. 2014-15 and the TPO sought to undertake the comparison "invoice by invoice" with the third party located in the same "geographical location" while rejecting the CUP undertaken by the assessee however, these facts are of no relevance as long as the amount/rate charges for hours incurred by an individual for a project is uniform and the services were provided to its AE as well as to third party by same employee located in India. Reliance is being placed on the judgment of Hon'ble Supreme Court in the case of CIT, Delhi-II Vs. Cargill Foods India Ltd. in CC No.19007/2016 dated 19.02.2016.” 5. Keeping in view that the consistent method has to be followed by the assessee which it has continued, there was no occasion for the TPO to LAVISHA 2024.08.13 13:52 I attest to the accuracy and authenticity of this order/judgment Punjab & Haryana High Court, Chandigarh

adopt a new method for the year 2018-19, treating the same as the most appropriate method. 6. Thus, we concur the order passed by the ITAT. No question of law, more to be substantial, arises in the present appeal. 7. Accordingly, present appeal stands dismissed. 8. Pending miscellaneous application(s), if any, shall stand disposed of. LAVISHA 2024.08.13 13:52 I attest to the accuracy and authenticity of this order/judgment Punjab & Haryana High Court, Chandigarh

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