PCIT Vs Willis Towers Waston India Private Limited (Punjab And Haryana High Court)
The Punjab and Haryana High Court dismissed the Revenue’s appeal against the order of the Income Tax Appellate Tribunal dated 11.09.2023 concerning the transfer pricing method applicable for Assessment Year 2018-19. The Revenue contended that the Tribunal erred in upholding the Comparable Uncontrolled Price (CUP) method adopted by the assessee and that the Transactional Net Margin Method (TNMM) adopted by the Assessing Officer was the most appropriate method.
The High Court noted that the Tribunal, in the assessee’s own case for Assessment Years 2011-12, 2013-14 and 2014-15, had held the CUP method to be the most appropriate method and binding on the Transfer Pricing Officer, particularly in view of the factual matrix. The High Court also referred to its decision in ITA No.85 of 2023, in which it had examined other aspects relating to Rule 10B(4) of the Income Tax Rules, 1962. For Assessment Year 2009-10, the method adopted was the same as that followed for Assessment Years 2011-12, 2013-14 and 2014-15, and the High Court had concurred with the Tribunal’s order.
The High Court reproduced the relevant findings of the Tribunal. The Revenue had argued before the Tribunal that the assessee had failed to submit invoices and details concerning independent contracts, functions and services rendered to Associated Enterprises and unrelated parties. According to the Revenue, the absence of these documents justified rejection of the CUP method and adoption of TNMM as the Most Appropriate Method.
The Tribunal, however, noted that the Dispute Resolution Panel had already allowed CUP as the Most Appropriate Method for Assessment Years 2011-12, 2013-14 and 2014-15. It also observed that the Transfer Pricing Officer sought an invoice-by-invoice comparison with a third party located in the same geographical location while rejecting the CUP method adopted by the assessee. The Tribunal considered these factors irrelevant where the amount or rate charged for hours incurred by an individual for a project was uniform and the services were provided by the same employee located in India to both the Associated Enterprise and third parties.
In reaching this conclusion, the Tribunal relied upon the judgment of the Supreme Court in CIT, Delhi-II Vs. Cargill Foods India Ltd. in CC No.19007/2016 dated 19.02.2016.
The High Court held that, given the consistent method followed by the assessee, there was no occasion for the Transfer Pricing Officer to adopt a new method for Assessment Year 2018-19 by treating TNMM as the Most Appropriate Method. The High Court therefore concurred with the Tribunal’s order.
The Court held that no question of law, much less a substantial question of law, arose in the appeal. Accordingly, the Revenue’s appeal was dismissed. Any pending miscellaneous applications were also directed to stand disposed of.
FULL TEXT OF THE JUDGMENT/ORDER OF PUNJAB AND HARYANA HIGH COURT
1. Present appeal has been filed by the Revenue against the order passed by the ITAT (for short ‘the Tribunal’) dated 11.09.2023, assailing that the Tribunal has erred in upholding the CUP method followed by the assessee, and submits that the TNMM was the most appropriate method adopted by the AO for the assessment year 2018-19.
2. We find that the Tribunal, in the case of the assessee for the assessment years 2011-12, 2013-14 and 2014-15, held the CUP method to be the most appropriate method, and binding on the TPO, more so as the factual matrix reveals the same.
3. In relation to the same assessee, we have decided ITA No.85 of 2023, wherein we had duly examined the other aspects, relating to Rule 10 B (4) of the Income Tax Rules, 1962. However, so far as the most appropriate method adopted for the year 2009-10 in the relevant case, was the same as adopted for the year 2011-12, 2013-14 and 2014-15 and we concurred with the order passed by the ITAT.
4. For the purpose of the present case, it would be apposite to quote the order passed by the ITAT in relation to the said aspect:-
“9.The Id. DR argued that based on the assessee’s non- submission of documents/details, the TPO has made upward adjustments by rejecting the assessee’s CUP method and adopted TNMM. The Id. DR argued that in earlier year, the assessee had established its case by submission of the invoices to AEs as well as non-AEs of the services rendered (as mentioned in the order of the Tribunal for AY 2011-12) and established comparison of the same. But in the instant case for F.Y. 2017-18, the assessee has not submitted invoices raised even after multiple opportunities were given to the assessee. It was further argued that the assessee company has failed to provide the details of the independent contracts/functions/ services rendered to different AEs and unrelated parties, hence, CUP method followed by the assessee was rejected by the TPO and instead TNMM was selected as Most Appropriate Method.
10. We find that the Id. DRP has already allowed the CUP as MAM in the A.Y. 2011-12, Α.Υ. 2013-14 and A.Y. 2014-15 and the TPO sought to undertake the comparison “invoice by invoice” with the third party located in the same “geographical location” while rejecting the CUP undertaken by the assessee however, these facts are of no relevance as long as the amount/rate charges for hours incurred by an individual for a project is uniform and the services were provided to its AE as well as to third party by same employee located in India. Reliance is being placed on the judgment of Hon’ble Supreme Court in the case of CIT, Delhi-II Vs. Cargill Foods India Ltd. in CC No.19007/2016 dated 19.02.2016.”
5. Keeping in view that the consistent method has to be followed by the assessee which it has continued, there was no occasion for the TPO to adopt a new method for the year 2018-19, treating the same as the most appropriate method.
6. Thus, we concur the order passed by the ITAT. No question of law, more to be substantial, arises in the present appeal.
7. Accordingly, present appeal stands dismissed.
8. Pending miscellaneous application(s), if any, shall stand disposed of.
