ITAT Mumbai Deletes Rs. 93.23 Crore Management Fee TP Adjustment & Allows Related Grounds

NTT India Private Limited Vs Assessment Unit/NFAC/DCIT (ITAT Mumbai)

Summary: The appeal concerned a transfer pricing adjustment arising from management services availed by NTT India Private Limited from its associated enterprise. The assessee, formerly known as Dimension Data India Private Limited, is part of the NTT Group and is engaged in trading networking products and providing services including training, maintenance, installation, consultancy, facility management, outsourcing and systems integration. For AY 2018-19, it filed its return on 29.11.2018 declaring total income of Rs.115,84,69,830/-. The assessment was selected for scrutiny and the international transactions were referred to the Transfer Pricing Officer. The TPO proposed an ALP adjustment of Rs.99,09,31,854/- relating to management services. The DRP directed exclusion of the corporate guarantee component, following which the final TP adjustment was revised to Rs.93,23,73,143/-.

The assessee had benchmarked the management-fee transaction at entity level using TNMM and contended that the overall margin was at arm’s length. The TPO rejected the approach, applied CUP, and questioned the evidence of services, cost allocation, benefit received and the absence of detailed time records and actual costs incurred by the AE. The DRP substantially upheld the adjustment, while granting relief relating to the corporate guarantee. The assessee challenged the treatment of management fees as a separate transaction and the rejection of its TNMM analysis.