ALP of Intra-group Services Cannot be Considered Nil If Services Were Backed by Agreement & Evidence | ITAT

Case Details: Pall India (P.) Ltd. v. DCIT - [2023] 157 taxmann.com 238 (Mumbai-Trib.)

Judiciary and Counsel Details

• • Pavan Kumar Gadale, Judicial Member & Prashant Maharishi, Accountant Member
  • Dhanesh Bafna & Manish Garg for the Assessee.
  • Amol Mahajan, ARs & Shyam Prasad, DR for the Respondent.

Facts of the Case

Assessee-company had entered into a multi-lateral service agreement with its Associated Enterprises for various intra-group services. These services are related to strategic inputs such as product information, marketing field engineering services, scientific and laboratory services, logistics, administrative, etc.

The Transfer Pricing Officer (TPO) held that the evidence submitted by the assessee was only data excel sheets of cost allocation. Further, these were duplicative in nature and a shareholder’s activity. Therefore, he determined the ALP of such services to be nil.

The matter was reached before the Mumbai Tribunal.

ITAT Held

The Tribunal held that the assessee had submitted an agreement showing the description of services and benefits received therefrom. Various email correspondences were also submitted, which said that services had been rendered by AE and received by the assessee.

Further, certificates of various AE were produced to show the basis of allocation and exact cost allocation to assessee and employee wise cost sheet which showed distribution and allocation of such cost. Assessee had reasonably substantiated benefit, need, and rendition tests for said intra-group services. Thus, there was no justification for determining ALP as nil.