Case Law Details
Intercontinental Hotels Group (India) Pvt. Ltd. Vs DCIT (ITAT Delhi)
Hon’ble High Court in Philip Morris had directed that M/s. Apitco Ltd. was not good comparable of concerns providing business support services, on the ground that in case of Government enterprises, profit motive is not relevant consideration and the Government company worked for public undertakings.
Further, GPCL has been held to be not comparables by the Hon’ble Delhi High Court in Philips Morris (supra) itself on the ground that the company was established by the Government to provide Ancillary Management Support Services to Government Departments or their agencies.
The assessee before us is engaged in providing support services to its AE in the nature of marketing and other support services. The assessee is reimbursed on cost plus basis for rendering the said services to its AE i.e. Continent Hotels INC. The assessee had applied Transactional Net Margin Method for benchmarking its international transaction for Provision of Ancillary Management Support Services to its AE being the most appropriate method and had computed its margin at 10.28% by applying OP/OC as PLI. The assessee in the transfer pricing study report has selected six comparable companies as functionally comparable, whose mean margins worked to 9.84 % and had claimed the international transaction to be at arm’s length. However, the TPO applied filters selected by the assessee but also used additional filters and drew list of nine comparables as finally selected to benchmark the international transaction of Provision of Ancillary Management Support Services by the assessee to its AEs.
FULL TEXT OF THE ITAT JUDGEMENT
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