Hammond Power Solutions Private Limited Vs DCIT (ITAT Hyderabad)
Transfer Pricing Quest – Intra-Group Services : Not Mere existence of agreement but robust evidence of receipt of services would be required: ITAT Hyderabad
Hammond Power Solutions Private Limited (the assessee) is a company engaged in the business of manufacturing and sale of electrical distribution and power transformers, including maintenance and installation services. The assessee filed its return of income for A.Y. 2017-18 on November 30, 2017, declaring a total income of Rs. 97,15,600/-.
Due to international transactions involved during the assessment year, the case was referred to the Transfer Pricing Officer (TPO) for determination of Arm’s Length Price (ALP). The TPO suggested an upward adjustment of Rs. 1,32,90,250/-, comprising:
- Rs. 25,12,410/- for Technical Services
- Rs. 1,07,77,840/- for Stewardship Services
The Assessing Officer (AO) passed a draft assessment order on March 30, 2021. Aggrieved by this, the assessee preferred objections before the Dispute Resolution Panel (DRP). Following the DRP’s directions dated December 28, 2021, the AO finalized the assessment on January 24, 2022, making a total addition of Rs. 1,32,90,250/-.
Issue
Whether the Transfer Pricing Officer was justified in determining the Arm’s Length Price (ALP) of technical and stewardship services as NIL, thereby making an adjustment of Rs. 1,32,90,250/- under Section 92CA of the Income Tax Act, 1961.
