O.C TANNER INDIA PRIVATE LIMITED ,MUMBAI vs. DCIT, CIRCLE -2(3)(1), MUMBAI

PER OM PRAKASH KANT, AM

This appeal by the assessee is directed against final assessment order dated 10.09.2022, passed by the Assessment
Unit, Income-tax Department [in short ‘the Ld. Assessing Officer’]
for assessment year 2021-22, pursuant to the direction dated
30.08.2024 of the Ld. Dispute Resolution Panel-2, Mumbai [in short
‘the Ld. DRP’]. In the grounds raised, the assessee is agitated with the addition of Transfer Pricing Adjustments, firstly, in relation to Intra Group Services outstanding receivab
2. Briefly stated, f return of income for declaring total incom assessee was selecte
Income-tax Act, 196
with. In view of in assessee with its determination of arm transactions was ref
The ld. TPO proposed transaction of the In receivables.
The L consideration, transfe passed draft assessm
2.1 Aggrieved by th assessee filed objecti along with additiona services from its AE.
and, after considerin issued directions un those directions, the O.C
ITA s of Rs.6,80,87,902/- and secon le of Rs.2,97,647/-.
facts of the case are that the a r the year under consideration me at Rs. Nil. The return of inco d for scrutiny and statutory no 1 (in short ‘the Act’) were issue nternational transaction carrie
Associated Enterprises(AEs), m’s length price (ALP) of thos ferred to the ld. Transfer Pricin d adjustments to the value of th tra group services and interest
Ld.
Assessing
Officer after fer pricing adjustment proposed ment order on 28.11.2023. he variations proposed in the ons before the Dispute Resoluti al evidences relating to receipt
The DRP sought a remand rep ng the same along with the asse nder section 144C(5) of the Ac e AO passed the final assessme
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ndly, interest on assessee filed its on 15.03.2022
ome filed by the otices under the ed and complied ed out by the the matter of se international ng Officer (TPO).
he international on outstanding r taking into by the Ld. TPO, draft order, the ion Panel (DRP), t of intra-group ort from the AO ssee’s rejoinder, ct. Pursuant to ent order under section 144C(13), up full. The additions ma
S. No.
Part
1
Income as per
2
Unabsorbed de
3
TP Adjustment

- Management
- Marketing Se
- Interest on R
4
Total Income (
3. Before us, the L additional ground ch order. However, durin primarily seeks admi to the intra-group restored to the lower additional ground c adjudication at appro a sample set of emai an adverse finding findings and substan assessee now prop including:
O.C
ITA pholding the transfer pricing ade in the final assessment are ticulars
Amount (INR return
Nil epreciation set off (-) 11,78,16,8
ts
6,83,85,549
t Fee ervices
Receivables
5,29,72,345
1,51,15,557
2,97,647
Loss)
(-) 4,94,31,33
Learned Counsel for the assesse hallenging the limitation for pa ng hearing, it was submitted th ission of further documentary e services, and requested that r authorities for re-adjudication challenging limitation may be opriate stage. The assessee con ils was submitted before the DR on receipt of services. To re ntiate the claim of actual servic oses to file an expanded s
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adjustments in as under:
R)
880
31
ee has raised an assing the final hat the assessee evidence relating the matter be n on merits the e left open for ntends that only
RP, which led to ebut the DRP’s ce rendition, the set of evidence

 Comprehensive and nature of se
 Sample invoices
 Details of the a establish comm
4. The learned admission of addit opportunity had alr proceedings before th
5. We have heard the relevant materia intra-group services extensive analysis, ground that the evid receipt and benefit of the ALP at nil using alia, citing the failure lack of third-part documentation. The as under:
“8.3.4. The (i) Failure of O.C
ITA email correspondences demo ervices; s raised by the AE on other grou assessee’s employees and their q mercial necessity of AE support.
Departmental
Representative tional evidence, contending ready been afforded to the a he DRP.
rival submissions of the parti als on record. Insofar as the c is concerned, we note that held against the assessee pr dences were insufficient to dem f services rendered by the AE. T g the "Other Method" under R e of the need, rendition, and be ty comparables or detaile relevant finding of the Ld. DRP findings of the Panel are as unde of Service Rendition and Receipt Te
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nstrating scope up entities; qualifications to opposed the that sufficient assessee during ies and perused claim regarding the DRP, after rimarily on the monstrate actual
The DRP upheld ule 10AB, inter enefit tests, and ed cost-benefit
P is reproduced er:
est:

In this case analyzed the AE to the Ap also worked scrutiny, the not yield a benefits to th
Length Price establish the rendition of applicant.
(ii) "Other M
Method:
In the absen well as tang arrived at th at Rs. Nil/-.
transfer pric length to en that such a Method". The impugned tr fitted in the 92C (1) and (MAM) in the Panel holds for TNMM a receipt, and payment is Therefore, P
Most Approp
(iii) Further, advanced by the "evidenc
Working wit
Cost Alloca rendition or all the docu
Marketing fe and there is O.C
ITA e, the Transfer Pricing Officer has e extent of the so-called services pro pplicant Assessee. The Transfer Pricin d out the price of services actually ren e T.P.O concluded that the services r any further discernible economic or he Applicant, than what was determin e. Even, the Applicant assessee h e threshold conditions of necessity, services by the AE or receipt of ser
Method" (chosen by TPO) as Most A nce of concrete evidence demonstratin gible benefits received by the assesse he decision to set the ALP for the so-ca
This decision has been based on the p ces between related entities should nsure absence of tax avoidance. The decision can be arrived at by usin e Panel holds that the method to be ap ransactions undertaken by the Appli e "Other Method" provided in Rule 1
in our opinion this is the Most Approp e peculiar facts of the Assessee. Acc that "Other Method" is an appropria as there is lack of service rendition d looking to the peculiar fact that s to be segregated for deeper
Panel upholds adoption of "Other me priate Method on the facts of the case.
the Panel has examined the facts an y the applicant assessee. It is found ces" comprise of e-mails, Invoices, th invoice, Cost allocations, working tions etc. There are no other do receipt of any services. The panel ha uments related to Management Servi ees, etc. These documents are gener no evidence of actual rendition or spe
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meticulously vided by the ng Officer has ndered. Upon rendered did r commercial ned as Arm's has failed to request, and rvices by the Appropriate ng receipt as ee, the T.P.O alled services principle that be at arm's e Panel finds ng the "Other pplied on the icant can be 0AB r.w.s.s.
priate Method cordingly, the ate substitute and service the relevant examination.
ethod" as the nd "evidence"
d that mostly
Agreement, of the Group ocuments for as examined ice Fees and ral in nature, ecific services to the Appli
Applicant.
(iv) Inter-com
The Inter-com is not exclu between the companies s
(Mexico) and been listed i the exact se entered betw independent calculation marketing f company ag do not carry party agreem
The Inter-Co
(8 pages) is be effective
2010 viz til applicant i transaction
April 2020
(v) The invo payment for January 1, financial ye
Company ag
Panel.
(vi) Allocati
The Group charge of noteworthy
Allocation of entities hav example, in based on th
O.C
ITA icant or, receipts of the specific ser mpany Service Agreement:
mpany services agreement is broad a usively between the assessee and e AE OC Tanner Co. USA and va spread out across Europe (UK), As d the Far East. (Japan) A large no. of s in it, and it has no bearing to the cu et of claimed services. Further, the Ag ween AEs as per Group Policy, does n t value. Further, the copy of meth of the allocation of managemen fees is also a theoretical document reement, entered between Associated y the force of conviction, as compare ment.
ompany Agreement submitted by t s also incomplete and outdated. I e for 10 years effective from Ja ll December 31st, 2019. It is uncle is using the same agreement to ns taking place in Financial Year to March 2021. oices provided by the applicant as r 'services; also refer to Service Agre
2010, which has expired before ear. No evidence of any extension greement has been provided before th ion Keys are not Evidence of Receip has solely relied on the Allocatio group cost to the Applicant. F that the applicant has contende of group cost across different dep ve been made as per varied para the IT department, costs have be he number of users/units/headcoun
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rvices by the and vague. It the AE but arious group sia, America services have urrent A.Y. of greement, as not carry any odology and nt fees and t. The inter- d Enterprises, ed to a third the assessee
It claims to anuary 1st, ear how the benchmark
2020-21 viz evidence of eement dated the current of the Inter- he TPO or the pt:
on Keys for Further, it is ed that the partments or ameters. For een allocated nt available.

These are m evidence of actual "receip not relevant.
Further, as differing ser allocation fo by the paren questioned reflects and determinatio by the Assoc
(vii)
No d
Valuation:
The applica information with corrobo cost allocat incurred on b requests ma applicant.
The Applican worked out t to head-coun typical case assessee ha receipt-benef
(viii) Failure
Attention is Inter-Compa states that "
group benef continuing b
Recipient Co

O.C
ITA methods for determination of "payme f receipt of services. The proceedin pt" of services; the issues of allocation per the Applicant/common agreeme vices have been allocated to applican rmulae and keys, as determined and nt entity, OC Tanner, USA. The appli
/ enquired into the allocation for establishes that the applicant has n on of the allocations, and it is just a c ciated Enterprise without any Arm's le detailed information or Expe ant has not provided detailed regarding the costs incurred by the orating evidence of these expenses be tion or direct expense allocation behalf of the applicant, as well as pro ade for each service provided by th nt has stated that the Associated Ente the costs on basis of Allocation Tables nt, etc.), and the applicant has paid e of un-benchmarked IGS, where th as made the payment without any ne fit analysis, at the instruction of the H e of Need Test:
drawn to Clause 2.1 'Rendition of Se any Agreement (dated 1.1.2010). The " Provider companies (i.e the AE) agree fit services to recipient companies(app basis without any further specific r ompanies." (emphasis supplied)
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ent", but not ngs focus on n key etc. are ent, costs for nt on basis of d apportioned icant has not rmulae. This no role in the cost imposed ength basis.
enditures
/
service-wise e AEs, along eing used for purportedly oof of specific he AE to the erprises have s (That allude it. This is a he Applicant eed-rendition-
HO/AES.
ervices' of the e said clause e to render to plicant) on a request from Thus it is requested fo clearly demo
(ix) Absence any:
Moreover, no at the grou requested fo cannot be in The applica regarding (a (b) the mann
(c) utilisation for these ser
Consequentl ascertain the (x) Furtherm exact expen services. Me
AE are insuf services. The disclosing th these service
(xi) No Valid
Moreover, t comparable payments w benefits acc companies a provision of demonstrate companies o suffers from under the In O.C
ITA apparent that the applicant has n or the services, which are being bi onstrates a failure of the 'Need' Test on e of Arm's length Valuation of otwithstanding certain activities being up level, unless such services a or and also rendered, and then ut voiced.
ant has failed to furnish adequa a) whether such services were indee ner and timing of service provision by n of the services, and (d) the prevailing rvices and Arm's length valuation.
ly, without specific details, it is im e costs incurred by the AEs for payme more, the applicant has not furnished d nditures incurred by the AE in p re descriptions of various services ren fficient to justify the prices charged fo e applicant has outlined various serv he actual amounts expended by the A es.
d Comparables:
the applicant has not presented cases to justify why any party would without evidence of services being cruing. The applicant has mentione as comparables which it claims are f similar services as the AE, b ed comparability, further details or audited financials. Hence, the app absence of application of any metho come Tax Act, 1961/ the Income Tax R
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not eve even illed to it. It n this count.
Services, if g centralized are explicitly tilised; those ate evidence ed requested, y the AE, and g market rate mpossible to ents made.
details of the providing the ndered by the or intra-group vices without
AE for each of any valid d make such rendered or ed 7 foreign e engaged in but has not s of those plicant's case od prescribed
Rules, 1962. (xii) The a sufficient e made corre with price dealing at details abou services ren length scena provider's w service recip referenced v invoices wit services wer
(xiii) Thus,
Price determ mere samp that Applic
The Panel i determine t transaction
(xiv) The app been derive overall benef
Perusal of t managemen respective disproportion the nature of Indian entity
Newsletter (o is absolutely pay an unre
Further, und required to e appropriate
For this, the quality of se

O.C
ITA applicant has not been able evidence demonstrating that the espond only to the benefits receiv es charged between independe t arm's length. The evidence pro ut the actual costs incurred for th ndered by the AE to the applicant.
ario, payment is determined not only b willingness to accept a certain price bu pient's willingness to pay. The Ap various services to support the afo thout presenting sufficient evidence re actually rendered.
the Applicant has challenged the A mined by the Transfer Pricing Officer, le documents / communications e cant has received services from F is of considered opinion that a sam the Arm's Length Price of other, ex ns.
plicant has to establish that tangible ed from services and such service fit and the cost savings.
the submitted "Benefit Analysis" (ca t services) reveals that the benefits na column are highly exagger nate to the actual communication itse of basic routine correspondence like s ty's Annual Holidays List, Sharing of AE), Press Releases issued by the A y no possibility that an independent lated party for sharing this kind of inf der Transfer Pricing provisions, the establish that the payment for claimed and would have been paid by a thir e Applicant was to establish the nat rvices and the market rates thereof.
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to provide e payments ved or align ent parties ovided lacks he nature of In an arm's by the service ut also by the pplicant has orementioned e that such Arm's Length
, relying on etc. to claim
Foreign AEs.
mple cannot xtra-sample e benefit has have led to arried out for arrated in the rated and lf which is in haring of the of Quarterly
AE etc. There entity would formation.
Applicant is d services are rd-party also.
ture, volume,

(xiv) The Ld examined th services. Ho
[2023] 154 t for purposes assessee m rendition tes
Hence, upon is of the c received an which a third
5.1 Before us, the a tax (Appellate Tribun evidence. The Ld. Co the course of the as the Ld. DRP, the contemporaneous e rendering of services
Ld. TPO and the Ld
‘sample based’ and f were rendered by the that counter the a continuous and acti seeks to submit addi for consideration:
“a. Larger S
The Appella email corresp interactions
O.C
ITA d. TPO has examined the facts o he claimed nature and extent of t on'ble ITAT in EOS Power India (P.) taxmann.com 131 (Mumbai - Trib.) h s of determination of ALP of intra-gro must demonstrate need test, benef st.
n careful examination of the "evidence considered opinion that the Applica ny service form the Associated En d-party, unrelated person would pay assessee has invoked Rule 18(4
nal) Rules, 1963, for admissio ounsel for the assessee submit sessment proceedings before th assessee had submitted a e-mails correspondences to by the AE. The Ld. Counsel sub d. DRP observed that the evide failed to conclusively demonstra e assessee. The Ld. Counsel fu aforesaid conclusion and sub ive involvement of the AE, the tional evidence containing follow
Set of Email Correspondences:
ant is submitting a significantly expa pondences that demonstrate nature, between the Appellant and its C. Tanner India Pvt. Ltd
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of the case, the so-called
Ltd. v. JCIT has held that oup services, fit test and es", the Panel ant has not nterprises for the sums.”
4) of the Income- on of additional tted that during he Ld. TPO and sample set off o substantiate bmitted that the ences were only ate that services rther submitted bstantiates the e assessee now wing documents anded set of and scope of AE. These communicati financial re support. Wh marketing s every instan placed on r sustained p strategic adv
AE, benefiti operations.
The Hon’ble intra-group nature, tang documentary value of reg
The Appella now being operations a delivery.
b. Sample
Entities:
To further re the Appellan to other ope demonstrate service mode entities avai invoicing pat is not isolate c. List of Ap
Experience:
The Appella employees, number of y information team is rela composition, scale and c
O.C
ITA ions pertain to strategic business eviews, marketing initiatives, and hile the intangible nature of mana ervices inherently makes it difficult nce of service provision, the additiona record capture substantive engagem period of time. These records highlig vice, but also functional execution inp ing the appellant in its day-to-da
Members may appreciate that in cas services, especially of managerial a gible outputs may not always be y form, and hence, the cumulative gular, topic-specific email trails beco ant submits that the additional corr submitted cover key aspects of the and provide strong corroboration of a Invoices Raised by the AE on O einforce the bona fide nature of the a nt is submitting sample invoices issue erating group companies for similar s es that the AE follows a uniform, el, and that the Appellant is one of s iling such centralised support. The co ttern supports the contention that the ed, contrived, or selectively applied.
ppellant’s Employees with Qualific
:
nt is also placing on record a detail along with their educational backg years’ experience. The objective of su is to demonstrate that the Appellan atively lean, both in terms of headcou and would not be in a position to ha complexity of business operations ind
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s decisions, operational agement and to document al emails now ment over a ght not only puts from the ay business ses involving and advisory available in e evidentiary omes crucial.
respondences e Appellant’s actual service
Other Group arrangement, ed by the AE services. This group-wide several group onsistency in arrangement cations and led list of its grounds and ubmitting this nt’s in-house unt and skill andle the full dependently.

This unders availing AE s
5.2 Further submit the assessee to withh rather , the earlier sa experience and judic evidence required in 5.3 In our opinion, examined by the lowe services by the asse services, which are o fact that the evidence root of the matter, admission. According evidence is allowed.
5.4 As regards the the matter to the DR two reasons. Firstly, need to be verified a once the DRP has is becomes functus offic in the matter. The T
253, which empow assessment orders
O.C
ITA scores the commercial rationale for support on a regular basis.”
ted that there was no intention hold or delay submission of th ample was believed to sufficien cial understanding regarding t such cases.
the detailed e-mail corresponde er authorities for determination essee. Considering the nature often intangible and advisory in es now sought to be produced d we are satisfied that these do gly, the application for admissi request of the learned counse
RP, we are unable to accede to the additional evidence filed b at the end of the Assessing Of ssued its directions under sec cio and ceases to have any furt
Tribunal derives its juri iction wers it to adjudicate appeals passed by the AO. The DRP
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seeking and n on the part of hose documents, nt based on past the standard og ences need to be of receipt of the e of intra-group nature, and the directly go to the ocuments merit on of additional l for remanding such prayer for by the assessee fficer. Secondly, ction 144C(5), it ther juri iction n under section s against final
P not being an appellate authority, mechanism, is not matters.
5.5 In view of the a and restore the matt adjudication of the group services as we duly considering the shall afford due oppo pass a fresh order in 5.6 As the matter h left open and are n ground challenging l required, at the appro
6. In the result th purposes.
Order pronoun (KAVITHA RA
JUDICIAL M
Mumbai;
Dated: 24/07/2025
Rahul Sharma, Sr. P.S.

O.C
ITA

, but merely a part of th a body to which the Tribun above, we set aside the final as ter to the file of the Assessing transfer pricing adjustment re ell as interest on outstanding re e additional evidence now adm ortunity to the assessee to prese accordance with law.
has been remanded, the groun not adjudicated at this stage.
imitation is also left open to be opriate stage.
he appeal is, accordingly, allowe nced in the open Court on 24
d/-
AJAGOPAL)
(OM PRAK
MEMBER
ACCOUNTA
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he assessment nal can remand ssessment order
Officer for fresh elating to intra- eceivables, after mitted. The AO ent its case and ds on merit are The additional e adjudicated, if ed for statistical
/07/2025. KASH KANT)
ANT MEMBER

Copy of the Order forward
1. The Appellant
2. The Respondent.
3. CIT
4. DR, ITAT, Mumbai
5. Guard file.

////

O.C
ITA ded to :

BY ORDER

(Assistant Re

ITAT, Mu

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R, gistrar) umbai