Case Law Details
Firemenich Aromatics Production (India) Pvt. Ltd. Vs ACIT (ITAT Mumbai)
We find that IS charges were paid by the assessee for obtaining access to ERP software and for regular recurrent services and such charges were paid in earlier years also. In AY 2012-13, similar adjustment proposed by Ld. TPO was deleted by coordinate bench on the premises that Ld. TPO was duty bound to determine ALP by following any one of the prescribed methods and determination of ALP on adhoc basis could not be sustained. It was also observed that the assessee had submitted substantial evidences in support of the claim. This order was followed subsequently in AY 2013-14. In AY 2014-15, Ld. TPO allowed external cost but did not allow cost allocated to the assessee on the ground that the claim was unsubstantiated. This adjustment was also deleted by the Tribunal. Therefore, we find that this issue is recurring in nature. The charges have been paid pursuant to the agreement and the assessee has already placed on record third part audit certificate along with sample third party invoices raised by the vendors on its AE. In support of benefits, the assessee submitted a flowchart of the manufacturing operations, depicting the inter-linkage between the manufacturing operation and application provided /services received as part of IS and S3 services. Therefore, Ld. TPO, in our opinion, was not justified in denying this cost to the assessee. Respectfully following earlier view of Tribunal, we delete this adjustment and allow the relevant grounds of appeal.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
1 Aforesaid appeal by assessee for Assessment Year 2015-16 arises out of final assessment order passed by Ld. AO u/s 143(3) r.w.s. 144C(13) on 25/10/2019 pursuant to the directions of Ld. Dispute Resolution Panel-1, WZ, Mumbai (DRP) u/s 144C(5) dated 22/08/2019. The grounds raised by the assessee read as under: –
i. Ground No. i: Transfer Pricing (‘TP’) adjustment in relation to export of finished products
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