Rehau Polymers Pvt. Ltd.(‘the assessee’) paid approximately ₹10.63 crore to its Associated Enterprises towards Product, Marketing and Corporate Support Services. The TPO determined the ALP of the intra-group services at Nil, alleging that the assessee had failed to furnish cogent evidence to establish actual receipt of the services and the benefit derived therefrom. The TPO made the adjustment under the Other Method as the Most Appropriate Method.
Assessee’s Contentions | Revenue’s Contentions | Tribunal’s Judgment |
The assessee submitted agreements with its AEs, an independent Chartered Accountant's cost allocation certificate, emails and invoices to substantiate the actual receipt of Product, Marketing and Corporate Support Services and the costs incurred by the AEs. | The Revenue argued that the assessee had failed to establish the actual receipt of the intra-group services and the corresponding benefit derived from them. | The ITAT noted that although the TPO acknowledged the submission of invoices and emails, it still held that the services were not sufficiently substantiated. The Tribunal also observed that identical issues had already been decided in the assessee's favour for AYs 2009-10 to 2013-14, with no distinguishing facts for the year under consideration. |
It contended that the intra-group services had been appropriately aggregated with other international transactions and benchmarked under TNMM. It also relied on the ITAT's earlier decisions in its own case for AYs 2009-10 to 2013-14, where similar adjustments had been deleted. | It therefore supported the TPO's determination of the ALP at Nil and relied on the orders of the AO and DRP. | Following the earlier ITAT decisions in the assessee's own case, the Tribunal deleted the TP adjustment of ₹10.63 crore relating to intra-group services. It also directed the AO/TPO to delete the duplicate addition of ₹13.15 lakh that had inadvertently been considered twice. |
Ruling Summary -
Pune ITAT held that the ALP of intra-group services cannot be determined at Nil where the assessee has furnished sufficient evidence establishing the actual rendition of services.
Following its earlier rulings in the assessee's own case on identical facts, the ITAT deleted the TP adjustment of ₹10.63 crore.
