DCIT Vs Knorr Bremse India Pvt. Ltd. (ITAT Delhi)
TNMM is the Most Appropriate Method to benchmark the international transactions entered into by the taxpayer with its AE qua professional consultancy services (information technology) and fee for management support services but TPO, for the reasons best known to him and to our mind to generate unnecessary litigation, proceeded to apply the CUP method by applying same reasoning applied in the earlier years.
So, ld. CIT (A) has rightly deleted the additions by following the orders passed by the Tribunal and Hon’ble Punjab & Haryana High Court (supra) passed in taxpayer’s own case. Consequently, the appeal filed by the Revenue is dismissed.
FULL TEXT OF THE ITAT JUDGEMENT
Appellant, DCIT, Circle 1, Faridabad (hereinafter referred to as ‘the Revenue’) by filing the present appeal sought to set aside the impugned order dated 09.03.2018 passed by the Commissioner of Income-tax (Appeals), Faridabad qua the AY 2014-15 on the grounds inter alia that :-
“On the facts and in the circumstances of the case, the Ld. CIT (A) has erred on facts and in law in deleting the addition of Rs.6,97,61,263/- made by the AO rejecting the TNMM method applied by the assessee and used cup method for benchmarking the transaction of Intra Group Services (professional consultancy services and management fee for support services).”
3. Briefly stated the facts necessary for adjudication of the controversy at hand are : Knorr Bremse India Pvt. Ltd. (KB India), the taxpayer is a wholly owned subsidiary of Knorr Bremse Asia Pacific (Holding) Limited (KB Hongkong). The taxpayer is into manufacturing of airbrake sets of passenger cars and wagon coaches, shock absorbers for passenger cars and locomotives, distributor valves, computer control brake system, tread break unit, brake accessories and other related products. The manufacturing facility is located at Faridabad, Haryana and main customer of its products is Indian Railways. During the year under assessment, the taxpayer entered into international transactions with its Associated Enterprises (AEs) as reported in Form 3CEB as under:-
