Latest Expert Exchange Queries
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
 
 
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
 
 
 
 
Popular Search: due date for vat payment :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: Central Excise rule to resale the machines to a new company :: VAT Audit :: ARTICLES ON INPUT TAX CREDIT IN VAT :: ACCOUNTING STANDARDS :: TDS :: TAX RATES - GOODS TAXABLE @ 4% :: empanelment :: form 3cd :: ACCOUNTING STANDARD :: VAT RATES :: articles on VAT and GST in India :: list of goods taxed at 4% :: cpt
 
 
« From the Courts »
  Vatsala Shenoy vs. JCIT (Supreme Court)
  Vatsala Shenoy vs. JCIT (Supreme Court)
 M.K.Overseas Pvt. Ltd. Vs. Pr.Commissioner Of Income Tax-06
 Arshia Ahmed Qureshi Vs. Pr. Commissioner Of Income Tax-21
 CHAUDHARY SKIN TRADING COMPANY Vs. PR. COMMISSIONER OF INCOME TAX-21
  Sushila Devi vs. CIT (Delhi High Court)
  Vatsala Shenoy vs. JCIT (Supreme Court)
 Deputy Director Of Income Tax Vs. Virage Logic International
 Commissioner Of Income Tax-3 International Taxation Vs. Virage Logic International India
 Pr. Commissioner Of Income Tax-06 Vs. Moderate Leasing And Capital Services Pvt. Ltd.
 ITO vs. Vikram A. Pradhan (ITAT Mumbai)

GE Money Financial Services Pvt Limited vs. ACIT (ITAT Delhi)
May, 16th 2016

S. 92(2): Important principles of law laid down with regard to the “Need Test”, “Evidence Test” or “Rendition Test” to evaluate the ALP of intra-group services rendered by an Associated Enterprise and whether the TPO has the right to determine the ALP at ‘Nil’

The rendering of intra group services for which Assessee has paid Rs.21,20,48,533/- TPO determined ALP at NIL holding that the assessee did not obtained any benefit of such services and the services provided by the foreign AE were either not required, these are incidental or stewardship services or duplicate services and hence unwarranted. Since, in his opinion, the assessee failed to provide any evidence about the services rendered by the AE necessitating the payment of such charges, he computed the ALP of this international transaction at Rs. Nil. TPO has simply held that as there is no benefit from the services for which payments has been made in determined the ALP of this international transaction at Nil without carrying out any FAR analysis of this intra-group services. On appeal HELD by the Tribunal:

(i) Regarding the need test, it is apparent that looking to the size of the business of the assessee and also for the continuous growth of the services assessee has justified that such services are required. It is pertinent to note that requirement of the services should be judged from the viewpoint of the appellant as a businessman. Therefore in this regard we are of the view that assessee has substantiated that these services are required by it. As the company is one of the parties as service receiver of that agreement it proves that such services were required by the assessee. Further the assessee is part of the MNE organization, which has provided the service to many companies across the globe. As all other companies situated in all together different companies and operating in different geographies have also received and used these services which is evident from the allocation list submitted by the assessee therefore this itself proves that for the assessee to remain competitive in its business such services are required. Therefore the assessee satisfied the need test which is alleged by ld. TPO to have not been satisfied by the assessee.

(ii) Regarding the receipt of the services from AE, the assessee can be asked to maintain and produce the evidence of receipt of services, which a businessman keeps and maintains regarding services related from the third party. The burden cannot be higher on the assessee for evidencing the receipt of services of higher level merely because the services have been rendered by its AE. Against these overwhelming evidence placed by the assessee before the lower authorities ld. TPO has merely stated that assessee has not been able to provide any evidence n that the AE has provided such services to the assessee. We could not find any instances placed in the order of LD, TPO where it held that the evidence placed by the assessee are not substantiated by rendition of service by the AE.

(iii) Hence in view of the overwhelming evidence placed by the assessee for receipt of services and following the decision of coordinate bench respectfully, we are of the view that rendering of services must be seen from the view point of the assessee and further assessee cannot be asked to keep and maintain evidences of services rendered by AE higher than which is expected from a businessman receiving services from an unrelated provider. Therefore, we reject the view point of Ld. TPO and Ld. DRP that assessee has not shown the receipt of the services. In view of above we are of the view that assessee has justified the receipt of services and satisfied the rendition test.

(iv) From the above decision of Honourable High court it is apparent that the user of the services are concerned with the usefulness of its services which enhances the value thereof and consequently in furtherance of its commercial interest. Merely profitability cannot be the criteria for benefit, it is much more than what is determinable in monetary terms. Therefore while determining ALP of IA, usefulness, enhancement in value and furtherance of business interest is required to be seen.

 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2016 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
E-catalogue online catalogue E-brochure online brochure online product catalogue online product catalogue e-catalogue Indi

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions