CIT International Taxation -1 Vs A.T. Kearney Ltd. (Delhi High Court)
Delhi High Court held that it is impermissible for TPO to disregard the actual transaction unless it comes to the conclusion that an unrelated party would not have undertaken the same in usual course of business. Thus, TPO not permitted to engage in the restructuring of a transaction.
Facts- The respondent-assessee is a management consulting subsidiary engaged in providing consultancy services to industry and its activities extend to consultancy and advisory services being provided to diverse multinational enterprises. It established a branch office in India in 1997 (referred as ATK BO). ATK BO has two offices in India, in New Delhi and Mumbai, and has a client base which spreads across a wide spectrum of sectors, including automotive, engineering, energy, real estate, and others. It is stated to also extend its services to public sector entities, government companies, and other industry organizations. TPO had made adjustments principally in three segments, namely Intra Group Services, Receivables, and Provision of Management Consultancy Services.
Although aggrieved by the additions which were originally proposed by the TPO, ATKBO chose not to file any objections before the Dispute Resolution Panel; it however preferred an appeal before the CIT(A), which came to be partially allowed. It led to appeals being instituted before the Tribunal. Tribunal held that no TP adjustment is called for.
