Sempertrans India Private Limited Vs ITO (ITAT Pune)
Intra-Group Services Allowed as Genuine – ITAT Holds Services Were Actually Received; Restores ALP Examination to TPO
Pune Tribunal examined disallowance of Rs.5,66,05,177/- relating to Intra-Group Services paid to AE ‘Semperit Aktiengesellschaft Holding (SAH)’. AO framed assessment u/s 144 r.w.s. 260 r.w.s. 144B based on TPO’s finding that the Assessee did not receive any real services & therefore ALP of the IGS was ‘Nil’. DRP upheld the TPO’s view, further directing alternate disallowance u/s 37 on the ground that no rendition of services or business nexus was proved. AO accordingly assessed income at Rs.5.66 crore.
Before Tribunal, Assessee demonstrated with voluminous evidence that services relating to IT, Procurement, HR, Quality, Engineering, Internal Audit, Treasury, Legal, Risk Management, Operational Excellence, Accounting & Group-wide technical functions were actually rendered at SAH level & allocated uniformly to all global group entities. Tribunal noted that these services were integral to day-to-day operations & not shareholder/ stewardship/ duplicative/ incidental or on-call activities as described in OECD guidelines. It also held that accounts showed no duplication of expenses & The company would have necessarily incurred higher third-party costs had these services not been availed from AE.
Tribunal therefore concluded that Assessee did receive Intra-Group Services, & DRP’s finding that no service existed was incorrect. However, since TPO never evaluated the ALP under any method after rejecting Assessee’s TNMM, Tribunal restored ALP determination to TPO to examine comparables & methodology as per s.92C. Grounds 6–15 were allowed for statistical purposes. Grounds on set-off of brought-forward losses (18–20) were also restored to AO. Grounds 1–3 were not pressed; Ground 5 was dismissed. Appeal was partly allowed for statistical purposes.
