M/S ENDEMOL INDIA PVT LTD.,MUMBAI vs. ASST CIT 16 (1), MUMBAI

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ITA 6780/MUM/2019Status: DisposedITAT Mumbai18 February 2022AY 2012-1311 pages

In favour of the Revenue: the assessee's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal upheld the CIT(A)'s decision, finding that the emails provided sufficient proof of service rendition and benefit to the assessee. The TPO's findings were considered contradictory, and the CIT(A)'s direction to benchmark under TNMM was deemed appropriate.

What were the facts?

The assessee company availed intra-group support services from its associated enterprises. The Transfer Pricing Officer (TPO) determined the Arm's Length Price (ALP) for these services at Nil, holding they were shareholder activities or duplicative. The CIT(A) directed the AO to re-evaluate using the Transactional Net Margin Method (TNMM) based on email evidence of service rendition.

What were the issues?

Whether intra-group services were actually rendered and provided benefit to the assessee, and if the CIT(A) had the power to remand the matter for re-evaluation under TNMM.

Which sections of the Income-tax Act were involved?

Section 92CA,Section 143(3),Section 251,Section 153

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “K” BENCH, MUMBAI

For Appellant: Shri Madhur Agrawal, AR
For Respondent: Shri Satya Pinisetty, DR
Hearing: 15.02.2022Pronounced: 18.2.2022
1.

These are the cross appeals filed by Endemol India Pvt. Ltd, Mumbai (Assessee / Appellant) and Asst. Commissioner of income-tax, Circle 16(1), Mumbai [ The Ld Assessing Officer ] against the order passed by the Commissioner of Income Tax (Appeals)-56, Mumbai [ The

2.

The learned Assessing Officer has raised the following grounds in ITA No.6819/Mum/2019:-

Revenue’s ground

1. On the facts and circumstances of the case and in law, the CIT(A) erred in holding that as ALP cannot be held at nil, "other method fail to survive" without appreciating the fact that the same was done by the TPO by giving a clear finding that no services were provided by the AE ?"

2. On the facts and circumstances of the case and in law, the CIT(A) erred in holding that "it cannot be said that no services were rendered" only on the basis of email exchanges between the assessee and the AEs without any cogent proof of service rendered by the AE'?'

3. On the facts and circumstances of the case and in law, the CIT(A) erred in accepting the emails as sufficient proof for service provision by the AE, without appreciating that the assessee has not provided any new proof and the emails had been perused by the TPO giving specific finding that there was no service provision?"

4. The appellant prays that the order of Ld. CIT(A) on the above grounds be set- aside and that of the assessing officer be restored.”

“Assessee’s ground

1. On the facts and in the circumstances of the case and in law, the Learned Transfer Pricing Officer (TPO)/ the learned Assessing Officer (AO) and learned Commissioner of Income Tax (Appeals)-56 [CIT(A)] have erred in determining the total income of the Appellant at INR 8,42,07,306 as against the total income of INR 6,21,49,420/- returned by the Appellant.

2. On the facts and circumstances of the case and in law, the Learned CIT(A) has erred in directing the learned AO / learned TPO to compute adjustment if any under TNMM inspite of accepting TNMM as applied by the appellant as the most appropriate method.

3.

On the facts and in the circumstances of the case and in law, the Learned CIT(A) ought to have deleted the adjustment made by the TPO on ad-hoc basis and without following any of the prescribed methods in light of the judicial rulings of the Hon'ble Bombay High Court.

4.

The Appellant prays that the additions made by the learned TPO/ learned AO deleted and consequential relief be granted.

5.

Assessee filed its return of income on 24.09.2012 at ₹6,21,49,420/-. The case of the assessee was picked up for scrutiny. As the assessee has entered into an several international transactions and amongst those one for availing supports services of ₹2,20,57,886/- from its associated enterprises (in short AE) and services which are in nature of general management, strategic operations, legal, tax, HR and other services. This international transaction was required to be examined and therefore, same was referred to the Transfer Pricing Officer (in short TPO) for determining of Arm’s Length Price. The learned TPO noted that the impugned support services have been connected with four different other international transactions , so aggregated, benchmarked by adopting Transactional Net Margin method [TNMM] as most appropriate method [ MAM]. It was stated that the same are at Arm’s Length.

6.

The learned Transfer Pricing Officer accepted the other transactions but looked at payment of support services of ₹2,20,57,886/-. He perused the agreement and held that

7.

Based on this, the learned Assessing Officer passed a draft assessment order on 29th February, 2016 determining the total income of the assessee at ₹8,42,07,310/-, where the above transfer pricing adjustments were made. As the assessee did not file any objection before the learned Dispute Resolution Panel, he passed a final order under section 143(3) of the Act on 30th March, 2016 at ₹8,42,07,310/-.

8.

The assessee is aggrieved with the order of the learned Assessing Officer preferred the appeal before the learned

9.

The learned Assessing Officer is aggrieved with the order of the learned CIT(A), where learned TPO is directed by him to adopt Transactional net Margin Method and where the CIT(A) has also held that services have been rendered on basis of emails as evidence. Greivance is also that ld CIT (A) and could not have remanded the matter back to the file of the Assessing Officer/ TPO.

10.

The assessee is aggrieved for the reason that the CIT(A) should have deleted the addition and could not have remanded the matter back to the file of the Assessing Officer.

11.

The learned Departmental Representative submitted that the CIT(A) does not have power to remand the matter back to the file of the learned Assessing Officer. She further submitted that merely on the basis of the emails it cannot be stated that the services were required to be rendered, rendered and resulted into benefit to the assessee. She, further referred to the nature of services and stated that these Intragroup services are merely shareholder services and duplicate in nature.

12.

The learned Authorised Representative referred to the consequent order passed by the learned Assessing Officer pursuant to the order passed by the learned CIT(A) on 3rd January 2021, wherein he has granted the TP adjustment relief of ₹2,20,57,886/- to the assessee and accepted the return of income of ₹6,21,49,420/-. He also supported the order of the learned CIT(A), so far as the ALP determined by the TPO at ₹ nil was directed to be considered as to be benchmarked under TNMM method. He otherwise submitted that the assessee does not have any grievance, now, in view of the order dated 3rd January, 2021 of the learned Assessing Officer where the above TP adjustment considered under TNMM method has been deleted.

14.

Coming to the ground of the, we find that in view of the appeal effect order passed by the learned ACIT-16(1), Mumbai on 03.06.2021 all the grounds of the appeal of the assessee becomes infructuous.

15.

Accordingly, we dismiss the appeal filed by both the parties and confirm the order of the learned Commissioner of Income Tax (Appeals).

16.

In the result, both the appeals of assessee as well as Revenue are dismissed.

Order pronounced in the open court on 18.02.2022.

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