“management fees”

Transfer PricingSection 92BSection 92B344 judgments

The decision most relied on for management fees is J.K. (Bom.) Limited v. CBDT and Another (118 ITR 312), cited in 50 judgments on BharatTax.

Leading authorities on management fees

J.K. (Bom.) Limited v. CBDT and Another

118 ITR 312 · 1979 · High Court

citing judgments

The case elucidates the meaning of 'management services', detailing its components and considering whether such services qualify as 'technical services' for income tax purposes, particularly in relation to fees for technical services.

Commissioner of Income Tax v. Merck Ltd.

389 ITR 70 · 2016 · High Court

citing judgments

Ad-hoc transfer pricing adjustments are not justified if the Transfer Pricing Officer fails to apply one of the prescribed methods under Section 92C. The arm's length nature of international transactions, including intra-group services and management fees, should be determined through a detailed FAR analysis and benchmarking study.

DIT v. HCL Infosystems Ltd.

144 Taxmann 492 · 2005 · High Court

citing judgments

Reimbursement of salary costs of employees is not taxable as Fees for Technical Services (FTS) under the Act. Additionally, for a fixed place Permanent Establishment (PE) or place of management to exist, business premises must be made available or a right to use them must be established.

US Technology Resources (P) Ltd. v. CIT

97 Taxmann.com 642 · 2018 · High Court

citing judgments

Payments for advice on management, financial, or legal services, offered on a factual basis without transferring technical know-how, are not taxable in India as fees for technical services.

CIT v. Edward Keventer (P.) Ltd.

115 ITR 149 · 1978 · Supreme Court

citing judgments

When assessing expenses under Section 40A(2), tax authorities must consider the entire position judiciously from the viewpoint of a prudent businessman, not arbitrarily or capriciously. The revenue must demonstrate tax evasion and cannot disallow expenses if the recipient is taxed at the same or higher rate.

Gujarati Charitable Foundation Poona (2018) 402 ITR 441(SC) 4. CIT v. Sardarilal& Co.

266 CTR 181 · 2014 · Reported

citing judgments

The denial of exemption under Section 11 is justified if trustees manage the trust's finances as their personal business, collecting excess fees from students.

(v). Wockhardt Ltd. v. ACIT

10 Taxmann.com 208 · 2011 · Reported

citing judgments

Services rendered by employees of a non-resident company, which involve sharing management experiences and business strategies, are not considered technical services for the purpose of taxation as Fees for Technical Services (FTS).

Gemplus India (P) Ltd. v. ACIT

3 Taxmann.com 755 · 2010 · ITAT

citing judgments

The Assessing Officer (AO) may determine the Arm's Length Price (ALP) to be 'Nil' for intra-group services if the services were not actually rendered or if the payment is not commensurate with the benefits derived. This position aligns with the Gemplus India case where management fees were challenged.

Judgments citing management fees

Spark44 Demand Creation Partners Private Limited, Mumbai vs. Assistant Commissioner of Income Tax, Centralized Processing Cell, Ghaziabad

In the result, all the ground of appeal of the assesse is allowed for statistical purposes

ITA 1294/MUM/2023[2016-2017]Status: DisposedITAT Mumbai20 Jul 2023AY 2016-2017

Bench: Shri Aby T Varkey & Shri Amarjit Singhspark44 Demand Creation Vs. Assistant Commissioner Partners Private Limited Of Income Tax, 91 Springboard Business Centralized Processing Hub Pvt. Ltd., 175, Cell-Tds Kagalwala House, 2Nd Tds Cpc, Aayakar Floor, Vidyanagri Marg, Bhawan, Sector -3, Kalina, Santacruz (E) Vaishali, Ghaziabad, Mumbai – 400098 Up- 401010 स्थायी लेखा सं./जीआइआर सं./Pan/Gir No: Aawcs3113M Appellant .. Respondent [ Appellant By : Nimit Vora Respondent By : Ram Krishna Kedia Date Of Hearing 05.07.2023 Date Of Pronouncement 20.07.2023 आदेश / O R D E R Per Amarjit Singh (Am): This Appeal Filed By The Assesse Is Directed Against The Order Passed By The Ld. Cit(A) Nfac, Dated 17.02.2023 For A.Y. 2016-17. The Assessee Has Raised The Following Grounds Before Us: “1. The Ld. Cit(A) Has Erred In Upholding The Action Of The Assistant Commissioner Of Income Tax, Centralized Processing Cell Tds (Hereinafter Referred To As 'Ld. Ao') In Determining Tds Liability @ 20% On Amount Payable To Non-Resident Payee Towards Inter-Company Management Fees By Applying Provisions Of Section 206Aa R.W.S. 195 Of The Act In The Absence Of Pan Of Non-Resident Payee. 2. The Id. Cit(A) Has Erred In Not Appreciating The Following:

For Appellant: Nimit VoraFor Respondent: Ram Krishna Kedia

Section 115A(1)(b)Section 154Section 195Section 200ASection 206A

Processing Cell TDS (hereinafter referred to as 'ld. AO') in determining TDS liability @ 20% on amount payable to non-resident payee towards inter-company management fees by applying provisions of section 206AA r.w.s. 195 of the Act in the absence of PAN of non-resident payee ... debatable question. 4. Heard both the sides and perused the material on record. During the financial year 2015-16 the assesse recorded inter-company management fees of Rs.66,71,734/-payable to its group company Spark44 Limited, UK (Spark44

Lewek Altair Shipping Private Limited, Kakinada vs. DCIT, Circle-1, Kakinada

In the result, appeal filed by the assessee is allowed

ITA 41/VIZ/2022[2017-18]Status: DisposedITAT Visakhapatnam14 Jul 2023AY 2017-18

Bench: Shri Duvvuru Rl Reddy, Hon’Ble & Shri S Balakrishnan, Hon’Ble

For Appellant: Sri Jitendra Singh, ARFor Respondent: Sri ON Hari Prasada Rao

Section 115VSection 139(5)Section 143(2)Section 143(3)Section 144CSection 92CSection 92E

order. The Ld. DRP upheld the adjustment to the extent of Rs. 1,97,62,895/- with respect to Vessel Operating Cost and ship management fees. With regard to adjustment of Rs. 10,58,639/-, the Ld. DRP directed the Ld. TPO to verify the evidences and if found ... erred in selecting functionally dissimilar companies. 4. Erred in rejecting the benchmarking approach consistently followed by the appellant with respect to ship management fees paid to AE and accepted by Ld. TPO / Ld. AO. The Ld. TPO and Hon’ble DRP erred in not following the principle of consistency

Buro Happold Limited, Mumbai vs. Deputy Commissioner of Income Tax, International Taxation-1(3)(2), Mumbai

In the result, the appeal of the assessee is partly allowed

ITA 1006/MUM/2023[2020-2021]Status: DisposedITAT Mumbai13 Jul 2023AY 2020-2021

Bench: Shri S. Rifaur Rahman, Hon'Ble & Shri Rahul Chaudhary, Hon'Bleburo Happold Limited V. Acit (International Tax) C/O. Sudit K. Parekh & Co. Llp Circle – 1(3)(2) Urmi Estate – Tower A, 20Th Floor Room No. 1810, 18Th Floor 95, Ganpatrao Kadam Marg Air India Building Nariman Point, Mumbai – 400 021 Lower Parel (W), Mumbai – 400013 Pan: Aabcb9239Q (Appellant) (Respondent)

Section 144C(5)Section 234BSection 90(2)

technical services (FTS) as per Article 13 of India-UK Double Taxation Avoidance Agreement (DTAA"). 2. Ground No. II Taxability of amount received as management fees & common cost recharge as Royalty and Fees for technical services (FTS) 2.1 On the facts and in the circumstances of the case ... learned DRP (Dispute Resolution Panel') and DCIT have erred in considering management fees & common cost recharge amounting to INR 8.85,47,006/- as Royalty and Fees for technical services (FTS) as per Article 13 of India-UK Double Taxation Avoidance Agreement (DTAA). 3. Ground No. III-Erroneous rate

Icici Bank Limited, Mumbai vs. The Dy. Commissioner of Income-Tax 2(3)(1), Mumbai

In the result both appeals of the assessee and revenue are dismissed

ITA 158/MUM/2023[2001-02]Status: DisposedITAT Mumbai30 Jun 2023AY 2001-02

Bench: Shri Amit Shukla & Shri Amarjit Singhdcit Cir 3(1) Vs. Icici Bank Ltd. Room No. 607, 6 Th Floor, Icici Towers, Bkc, Aayakar Bhavan, Bandra(E) Mumbai-400020 Mumbai-400051 स्थायी लेखा सं./जीआइआर सं./Pan/Gir No: Aaact1398K Appellant .. Respondent Icici Bank Ltd. Vs. Dcit Cir. 2(3)(1) Icici Towers, North East Room No. 552, 5Th Floor, Wing, Ground Floor, Aayakar Bhavan, M.K. Bkc, Bandra(E) Road, Mumbai-400020 Mumbai-400051 स्थायी लेखा सं./जीआइआर सं./Pan/Gir No: Aaact1398K Appellant .. Respondent Appellant By : Ms. Aarti Visanji, Ar Respondent By : Shri. K.C. Selvamani, Dr Date Of Hearing 01.06.2023 Date Of Pronouncement .06.2023 आदेश / O R D E R Per Amarjit Singh (Am)

For Appellant: Ms. Aarti Visanji, ARFor Respondent: Shri. K.C. Selvamani, DR

Section 10Section 115JSection 143(3)Section 148Section 154Section 33Section 47

respect of exemption claim u/s 10(23G) of the Act. 9.1 During the Course of reassessment the AO has allocated proportionate investment management fees paid amounting to Rs.₹35,15,090/- in respect of investment and thereby reduced the claim of exemption

The DCIT Cir 3(1), Mumbai vs. M/S. Icici Bank Ltd, Mumbai

In the result both appeals of the assessee and revenue are dismissed

ITA 5765/MUM/2008[2001-2002]Status: DisposedITAT Mumbai30 Jun 2023AY 2001-2002

For Appellant: Ms. Aarti Visanji, ARFor Respondent: Shri. K.C. Selvamani, DR

Section 10Section 115JSection 143(3)Section 148Section 154Section 33Section 47

M/S Jaisu Shipping Co. Pvt. Ltd., Rajkot-Gujarat vs. The Assistant Commissioner of Income Tax, Gandhidham Circle, Gandhidham

In the result, the appeal filed by the Assessee is hereby dismissed

ITA 972/RJT/2010[2006-07]Status: HeardITAT Rajkot31 May 2023AY 2006-07

Bench: Smt. Annapurna Gupta (Accountant Member), Shri T.R. Senthil Kumar (Judicial Member)

Section 115Section 143(3)Section 68

appellant are dredging activities and the incidental income stated in the rule includes maritime consultancy charges, income from loading and unloading cargo, ship management fees and maritime fees. The appellant carried out various activities under the head 'Misc. Activities, like 'on shore repairs of tugs with the help of qualifying

The Deputy Commissioner of Income Tax, Circle 5(1)(1), Mumbai vs. Gabriel India Limited, 29Th Milestone

ITA 641/MUM/2023[2017-18]Status: DisposedITAT Mumbai19 May 2023AY 2017-18

Bench: Shri Kuldip Singh & Shri Om Prakash Kantassessment Year: 2017-18 The Dcit, Gabriel India Ltd, 29Th Circle-5(1)(1), Milestone Pune, Vs. Mumbai Nahik Highway, Village- Kuruli, Tal Khed, Pune (Appellant) (Respondent) Pan: Aaacg1994N

For Appellant: Ms. Dipika DingrejaFor Respondent: Shri Ajay Singh, Sr. AR

Section 143(3)

facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the disallowance being 20% of management fees ignoring the fact that management fees could be paid without knowing the cost of services and such management fees could not have been paid in terms ... failed to appreciating the fact that the assessee has failed to prove the business exigency of excess expenditure incurred on management fees and that 2 Gabriel India Ltd such expenditure is incurred wholly and exclusively for the purpose of the business.” 2. Briefly stated facts necessary for consideration and adjudication

Sulzer Pumps India P. Ltd., Navi Mumbai vs. Addl./Jt/Dy/ Asstt/ ITO, National E-Assessment Centre, Delhi

In the result, appeal filed by the assessee is partly allowed as indicated above

ITA 810/MUM/2021[2016-17]Status: DisposedITAT Mumbai12 May 2023AY 2016-17

Bench: Shri Aby T Varkey, Hon’Ble & Shri S. Rifaur Rahman, Hon'Blem/S. Sulzer Pumps India Pvt Ltd V. Addl./Joint/Dy./Acit/Ito Plot No. 9, Midc, Digha National E-Assessment Centre Delhi Thane-Belapur Road, Navi Mumbai- 400708 Pan: Aaack2238F (Appellant) (Respondent) M/S. Sulzer Pumps India Pvt Ltd V. National Faceless Assessment Centre Delhi Plot No. 9, Midc, Digha Thane-Belapur Road Navi Mumbai- 400708 Pan: Aaack2238F (Appellant) (Respondent)

Section 144C(5)Section 37(1)Section 40

Calculation of operating margin of Sulzer India for FY 2011-12, (v) Description of services and benefits received for payment of ASP management fees, (vi) Copy of agreement for ASP management fees, (vii) E-mail correspondences for payment of ASP management fees, (viii) Copy of inter-company agreement ... invoices and trail of correspondence for engineering services. The assessee had also filed before the TPO on 24.09.2015 (i) Show cause reply for ASP Management fees, (ii) Name of personnel, cost allocation and benefits received from ASP Management services, (iii) Description of services and cost allocation for payment

Thr Infrastructure Pte Ltd, Gurgaon vs. DCIT, Cir.-3(1)(1), Intl Tax, New Delhi

In the result, the appeal of the assessee is allowed

ITA 1915/DEL/2022[201-18]Status: DisposedITAT Delhi12 May 2023

Bench: Sh. Saktijit Deydr. B. R. R. Kumar

For Appellant: Sh. Ajay Vohra, Sr. AdvFor Respondent: Sh. Gangadhar Panda, CIT-DR

Section 143(3)

March September March 2015 2016 2016 Amount (SGD) 1. Employee Benefit 33,327 50,734 41,213 Expenses 2. Trustee Manager fees 34,31,098 41,89,711 (Refer Note 1) 3. Professional fees 83,887 18,50,089 7,91,692 4. Realized foreign ... accounts are also maintained in Singapore. (iv) The Assessee has appointed Trustee Manager to advice and manage the investments, to whom substantial Trustee Manager fees is paid. (v) The Assessee is filing tax returns in Singapore. (vi) The Assessee has made necessary filing with the Accounting and Corporate Regulatory Authority

ACIT, Circle- 4(1), Gurgaon vs. Lemon Tree Land and Developers Pvt. Ltd., New Delhi

In the result, the appeal of the assessee is partly allowed

ITA 3749/DEL/2018[2014-15]Status: DisposedITAT Delhi12 May 2023AY 2014-15

Bench: Shri N.K. Billaiya & Ms. Astha Chandra

For Appellant: Shri Percy Pardiwala, Sr.AdvFor Respondent: Shri H.K. Choudhary, CIT- DR

Section 3Section 36Section 37Section 37(1)Section 40A(2)

entitled to receive the following as and by way of compensation for services rendered a) 6% of construction cost of the project as project management fees ("PMC Fees"). All taxes and levies on the PMC Fees shall be charged. extra as applicable from time to time: The PMC Fees shall

Lemon Tree Land and Developers Pvt. Ltd., New Delhi vs. DCIT, Circle- 2, Gurgaon

In the result, the appeal of the assessee is partly allowed

ITA 3087/DEL/2018[2014-15]Status: DisposedITAT Delhi12 May 2023AY 2014-15

Bench: Shri N.K. Billaiya & Ms. Astha Chandra

For Appellant: Shri Percy Pardiwala, Sr.AdvFor Respondent: Shri H.K. Choudhary, CIT- DR

Section 3Section 36Section 37Section 37(1)Section 40A(2)

Skg Engineering Pvt Ltd., New Delhi vs. DCIT, Circle 23(2), New Delhi

In the result, the appeal of the assessee is allowed

ITA 1293/DEL/2021[2017-18]Status: DisposedITAT Delhi09 May 2023AY 2017-18

Bench: Shri Saktijit Dey & Shri M. Balaganeshassessment Year: 2017-18 Skg Engineering Pvt. Ltd., Vs Dcit, Gripwel House, Block-5, Circle 23(2), Sector-C 6&7, New Delhi. Lsc Vasant Kunj, New Delhi – 110 070. Pan: Aaacs3743F (Applicant) (Respondent) Assessee By : Shri A.T. Panda, Advocate Revenue By : Ms Sapna Bhatia, Cit-Dr Date Of Hearing : 02.05.2023 Date Of Pronouncement : 09.05.2023 Order Per M. Balaganesh, Am: This Appeal In Ita No.1293/Del/2021 For Ay 2017-18 Arises Out Of The Order Of The National Faceless Appeal Centre (Nfac), Delhi, In Din & Order No.Itba/Nfac/S/250/2021-22/1034916910(1) Dated 17.08.2021 [Hereinafter Referred To As ‘Ld. Cit(A)’, In Short] Against The Order Of Assessment Passed U/S 143(3) Of The Income-Tax Act, 1961 (Hereinafter Referred To As ‘The Act’) Dated 12.12.2019 By The Ld. Income-Tax Officer, Circle 23(2), Delhi (Hereinafter Referred To As ‘Ld. Ao’).

For Appellant: Shri A.T. Panda, AdvocateFor Respondent: Ms Sapna Bhatia, CIT-DR

Section 143(3)Section 14ASection 14A(3)

deduction under the head ‘Other sources’ against the taxable interest income and redemption premium from Reliance. This sum of Rs.8,74,348/- represents management fees of 2 Rs.7,78,022/- and other expenses – RYM – amounting to Rs.96,327/-. The ld. DR submitted that this sum would certainly have

I.A.R. Systems Aktiebolag, Mumbai vs. DCIT(It)-2(2)(1), Mumbai

In the result, appeals filed by the assessee are allowed

ITA 598/MUM/2022[2018-19]Status: DisposedITAT Mumbai02 May 2023AY 2018-19

Bench: Shri Amit Shukla, Hon'Ble & Shri S. Rifaur Rahman, Hon'Ble

Section 144C(5)Section 9(1)(vi)

directions of the Ld.DRP. We observe that in that case there is an issue of determination of arm’s length price of payment towards management fees, global sales and marketing activities fees. We do not intend to follow this decision of the ITAT Bengaluru bench for the simple reason that

Ingredion India Private Limited, Navi Mumbai vs. ACIT, Circle-15(1)(2), Mumbai

In the result, the appeal by the assessee is partly allowed for statistical purposes

ITA 2532/MUM/2022[2018-19]Status: DisposedITAT Mumbai28 Apr 2023AY 2018-19

Bench: Shri Amarjit Singh & Shri Sandeep Singh Karhail

For Appellant: Shri Ketan K. Ved a/wFor Respondent: Dr. Samuel Pitta

Section 143(1)Section 143(3)Section 144C(13)Section 144C(5)Section 92CSection 92C(1)Section 92D

assessee has listed six kind of services which were provided for by the Singapore office to the assessee. Further, assessee has also incurred headqarter management fees amounting to ₹18,60,449/- to its AE which performs central corporate and administrative services for the benefit of all its foreign affiliates

Cameron (Singapore) Pte Ltd, Coimbatore vs. DCIT, International Taxation, Circle-1(2)(1), New Delhi

In the result, all the appeals are partly allowed

ITA 7960/DEL/2018[2015-16]Status: DisposedITAT Delhi24 Mar 2023AY 2015-16

Bench: Shri G.S. Pannu, Hon’Ble & Shri Saktijit Deyassessment Year: 2013-14 M/S. Cameron (Singapore) Vs. Deputy Commissioner Of Pte. Ltd., Income Tax, C/O- Schlumberger Asia International Taxation, Services Limited, Khasra Room No. 313, Ncr Building, No.2481/838, Village Bhagwan Das Road, Murtala Gala, Nh-15, Jaipur Ahmedabad Road, Barmer, Rajasthan -344001 Pan :Aadcc5259P (Appellant) (Respondent)

Section 44B

agreement with Camaron India the assessee is required to provide the following services: S. Particulars Description of Remarks No. service 1. International Assists in Management fees would 19 | P a g e ITA Nos.1/JPR/2017; 6/JPR/2017 & 7960/Del/2018 purchasing procurement of goods not make available in International technical knowledge, market. This includes ... experience, skill, know- reference to the how or process to service vendors receiver (CMI) 2. International Assists the group Management fees would marketing and companies to identify not make available sales potential business technical knowledge, opportunities and experience, skill, know- customers for the how or process to service products

ITO Ward-7(1), New Delhi vs. Developer Group India Private Limited, New Delhi

In the result, the appeal of the Revenue stands dismissed

ITA 9248/DEL/2019[2016-17]Status: DisposedITAT Delhi22 Mar 2023AY 2016-17

Bench: The Ld. Cit (A), Assessee Made Elaborate Submissions. Ld.

For Appellant: Shri Salil Kapoor, AdvocateFor Respondent: Ms. Indu Bala Saini, Sr. DR

with the developers and during the year, the appellant had earned interest of Rs. 5,50,68,761/- from such deposits in addition to management fees of Rs.6.92 crores. It has been contended that the interest income has been shown as business income and not under the head income from

Magnum International Trading Company Pvt. Ltd., New Delhi vs. DCIT, Circle-16(1), New Delhi

In the result appeal filed by assessee for A

ITA 6346/DEL/2018[2014-15]Status: DisposedITAT Delhi03 Mar 2023AY 2014-15

Bench: Dr. B. R. R. Kumarsh. Yogesh Kumar Us

For Appellant: Sh. Anil Bhalla, CAFor Respondent: Sh. Ajay Kumar Arora, Sr. DR

consultancy expenses by holding as follows: “35. It is observed that consultancy expenses paid by assessee were towards legal and professional charges, project management fees supervisory charges etc. Looking into nature of business carried on, the assessee needs consultants for handling various issues of projects. Assessee is carrying on with

Ceva Logistics India P.Ltd, Gurgaon vs. DCIT, Circle-1(1), Gurgaon

In the result, appeal of the assessee is partly allowed

ITA 8124/DEL/2018[2014-15]Status: DisposedITAT Delhi19 Jan 2023AY 2014-15

Bench: Sh. G.S. Pannu & Sh. Saktijit Dey

Section 143

length. After verifying the TP study report the TPO accepted the arm’s length nature of all transactions, except, payment made towards management fees amounting to Rs. 15,05,26,398/-. Accordingly, he issued a show cause notice to the assessee to furnish necessary details to A 3 demonstrate that ... copy of the agreement with AE and all other details including allocation key, invoices raised etc. to support its claim that payment made towards management fee is at arm’s length. However, the TPO did not accept assessee’s contention. Ultimately, he concluded that neither the assessee could establish that

M/S. Buro Happold Ltd, Mumbai vs. Dy.CIT (Int Tax) -1(3) (2), Mumbai

In the result, assessee's appeal is allowed

ITA 1690/MUM/2022[2019-20]Status: DisposedITAT Mumbai19 Dec 2022AY 2019-20

Bench: Us:-

Section 143(3)Section 144C(5)Section 234B

facts and in the circumstances of the case and in law, the leamed DRP (Dispute Resolution Panel) and DCIT have erred in considering management fees & common cost recharge amounting to INR 5,67 33.937/- as Royalty and Fees for technical services (FTS) as per Article 13 of India-UK Double ... brought to tax the same as per Article 13(2)(a)(ii) of the India UK DTAA in the hands of the assessee. b) Management Fees & Common Cost recharge – Rs 5,67,33,937/- This is the amount charged to Buro India towards various costs incurred. The same

3A Composites India P. Ltd, Mumbai vs. ITO 11(3)(1), Mumbai

In the result, the appealof the assessee for A

ITA 1112/MUM/2017[2012-13]Status: DisposedITAT Mumbai12 Dec 2022AY 2012-13

Bench: Shri Prashant Maharishi, Am & Shri Rahul Chaudhary, Jm

For Appellant: Shri Mihir Naniwadekar, DR

Section 143Section 143(3)Section 144CSection 37(1)Section 92Section 92C

expenditure. The learned Assessing Officer may examine the same and if finds that there is no expenditure claimed by the assessee on account of management fees, the disallowance deserves to be deleted. With respect to the interest expenditure the issue needs to be verified about the liability of interest expenditure ... Composites India Pvt. Ltd.; A.Y.2011-12, 2012-13 learned Transfer Pricing Officer to determine the Arm’s Length Price of the international transaction of management fees. Accordingly, ground no.1 to 7, are allowed for statistical purposes with above direction. 018. No arguments were advanced on ground no.8 and therefore, same