Atotech India Pvt. Ltd. Vs DCIT (ITAT Delhi)
TP Adjustment: Payment made for management related activities under CSA- ITAT remanded the issue back to AO
We find that the only controversy involved in all the assessee’s appeals is with regard to payment made for management related activities under CSA which has been taken at ‘Nil’ by the TPO. This adjustment is a recurring issue in assessee’s own case right from the Assessment Years 2007-08, 2009-10 and Assessment Year 2012-13. The Tribunal has remanded this issue to the file of the Assessing Officer with certain directions. The relevant findings and observations of the Tribunal in the appeal for the Assessment Year 2012-13 is reproduced hereunder:
“Here, again, both the sides agree that the facts and circumstances of this appeal are similar to those of preceding years dealt with above except that in this year the TPO, apart from determining Nil ALP of the international transaction of payment of ‘Management group cost’, also recommended transfer pricing adjustment in respect of ‘R&D assistance ITA Nos.3419 & 6571/Del/2016 & 1112/Del/2014 15 cost.’ The Tribunal has passed an order for the immediately preceding year restoring the fresh determination of the ALP of `R&D assistance cost’ and `Management group cost’ to the file of the AO/TPO. Following the view taken in such an order of the immediately preceding year and the two earlier years dealt with hereinabove, we set aside the impugned order and remit the matter to the file of Assessing Officer/TPO for a fresh determination of the ALP of the international transaction of ‘Management group cost’ and ‘R&D assistance cost’ in accordance with the observations made in our detailed order for the assessment year 2008-09 above.”
Thus, in the same lines, we direct the TPO to carry out fresh analysis and determine the Arm’s Length Price and the payments relating to other R&D task and decide the issue fresh in accordance with law.
FULL TEXT OF THE ITAT JUDGEMENT
The aforesaid appeals have been filed by the assessee against the separate impugned final assessment orders u/s 144C/143(3) dated 11.10.2019 for the Assessment Year 2011-12; dated 16.10.2018 for the Assessment Year 2014-15; and dated 11.10.2019 for the Assessment Year 2015-16, passed in pursuance of direction of the ld. Dispute Resolution Panel-1. In all the appeals, common issue is involved relating to Transfer Pricing Adjustment on account of payment of Research and Development and other R&D related services, which has been held to be intra group services (IGS) by the TPO. In all the years under appeal, the ld. TPO has determined the ALP and the contribution made towards research and development activities at Nil.
2. The facts in brief are that Atotech India Pvt. Ltd. is a subsidiary of Atotech BV Netherlands engaged in the business of manufacturing and marketing of specialty chemicals and compounds used for general metal finishing and production of printed circuit boards. The ld. TPO has characterized payments made under cost sharing agreement (CSA) under IGS and has determined the arm’s length price at ‘Nil’. Ld. TPO also observed that assessee has paid Rs.2,23,93,98,692/-towards cost-sharing expenses to its AE as under:
