Bosch Automotive Electronics Indi Private Limited Vs DCIT (ITAT Bangalore)
ITAT Bangalore held that merely because the assessee has failed to prove any benefit from services received the disallowance of transfer pricing cannot be made. Accordingly, one more opportunity granted to assessee to prove the case.
Facts- During scrutiny assessment, reference was made to TPO for computation of arm’s length price in relation to the international transactions. TPO passed the TP order under section 92CA (3) of the Act dated on 14 July 2023 (‘TP Order’) proposing an adjustment of INR 130,495,777 to the transfer price of the international transactions undertaken by the Assessee with its AEs during the AY 2020-21.
Further, AO after considering the service agreement with the secondment employees, took a view that the payments made by the assessee was in the nature of FTS and hence, the assessee ought to have deducted TDS u/s 195 of the Act instead of 192 of the Act. Therefore, AO made an addition of Rs.4,45,16,242/- by disallowing the payments made to secondment employees, invoking the provisions of section 40(a)(i) of the Act.
Conclusion- Held that these are merely email correspondence between the employees of the assessee as well as the employees of its AE. When the bench has asked about the documentary evidences in respect of the software/other tools received by assessee from its AE, utilized by assessee in its manufacturing unit. The counsel for the assessee contended that assessee will file each and every document before the lower authorities. Therefore, we remit this issue to the file of AO for examining it afresh. So far as the argument of the assessee that the AE has paid taxes on the receipts received from Indian entity is concerned, we are of the view that it would be a guiding factor but not a sacrosanct factor to prove the rendition of services by the AE. Similarly, the contention of the assessee that when the adjustments are already done by applying the aggregation principle, then no further adjustment qua international transaction can be made is also supportive argument. However, when the basic fact as to whether any services has actually been received by the assessee from its AE, is not established, these arguments would have no applicability. These arguments do have force, provided the factum of rendition of services by the AE is proved by the assessee with documentary evidences.
