Case Law Details
Intimate Fashions (India) Pvt Ltd Vs DCIT (ITAT Chennai)
ITAT Chennai held that assessee failed furnish any evidences to prove that there are negotiations between assessee and AEs with regard to marketing strategy, sales targets, credit period, etc. Accordingly, TPO/AO has rightly bench marked payment of agency commission as ‘nil’.
Facts- The assessee, M/s.Intimate Fashions India Pvt. Ltd., (M/s.IFIPL) is a joint venture between M/s.MAS Capital Pvt. Ltd., Sri Lanka (M/s.MAS, Sri Lanka), M/s.Triumph International Overseas Ltd., Liechtenstein (M/s.Triumph) and M/s.Mast Industries Inc., USA (M/s.Mast, USA). The company is engaged in the business of manufacturing and sale of intimate garments, lingerie, briefs, swimwear and other related items and primarily exports the manufactured garments to M/s.Mast, USA. The assessee had entered into international transactions, which were duly reported in the transfer pricing documentation.
During the course of scrutiny assessment proceedings, the TPO/AO made certain adjustments/disallowances to the assessee’s income, which was upheld by the DRP/Ld.CIT(A). Below is the summary of adjustments made by the AO/TPO and upheld by the DRP/Ld.CIT(A), against which, the assessee is in appeal before the Tribunal
Conclusion-Held that the assessee could not even furnish any evidences to prove that there are negotiations between the assessee and the AEs with regard to marketing strategy, sales targets, credit period, etc. In absence of any evidences with regard to rendering of services by the AEs, in our considered view, the TPO/AO has rightly bench marked payment of agency commission as ‘nil’, because, it is for the assessee to discharge its onus by filing necessary evidences to prove rendering of services, which is pre-requisite for making any payment.
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