- The revenue raised the ground of appeal that the Dispute Resolution Panel erred in allowing the relief on account of Transfer Pricing Adjustment in respect of the intra group services to the Assessee as it failed to submit evidence of receipt of services and by holding that the said adjustment was double addition without appreciating the fact that each transaction was required to be benchmarked separately.
- In the present facts of the case, the Assessee had entered into an integrated service agreement with its U.S. parent. This agreement was a shared service cost arrangement on centralised basis. The Assessee was remunerated on cost plus percentage basis.
- The Dispute Resolution Panel deleted the adjustment as it amounted to double addition for the reason that Assessee was operating on a cost-plus arrangement with its Associated Enterprise for intra group services. Therefore, whatever payment was made by the Assessee to its Associated Enterprises formed part of its cost base. On that, cost along with mark up was recovered from the Associated Enterprise.
- Further, for assessment year 2008-09 on similar circumstances, the Dispute Resolution Panel accepted the same holding that it led to double adjustment. For the same reason for this year the Dispute Resolution Panel held that it led to a double addition.
- Hence, the direction of the Dispute Resolution Panel was proper and adjustment made must be deleted.
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