a) Assessee reimbursed certain costs and expenses to its associated enterprises (‘AEs’) for coordination and liaison works.
b) Transfer Pricing Officers (TPO) determined the ALP of transactions relating to “reimbursement of Head office overheads” as NIL.
c) The assessee argued that he had claimed expenditure as per the certificate issued by auditors which spelled out Head office overheads as a percentage of revenues.
d) TPO rejected the claim of assessee and made additions, which was further confirmed by CIT(A). Aggrieved-assessee filed the instant appeal before Tribunal.
Tribunal held in favour of Revenue as under:
1) Assessee had not conducted any transfer pricing study forbenchmarkingof head officer expenditure. He had benchmarked this transaction on basis of certificate issued by the auditors.
2) Under transfer pricing study, what is required to be seen is whether any other independent entity would have charged or the independent entity receiving the services would have paid to the extent that were charged by the AEs.
3) This kind of study had not been carried out by the assessee as he was under the impression that the certificate issued by the auditors would satisfy the tests of Transfer Pricing study.
4) In transfer pricing study, what is required to be done is to validate the claimwith an external comparable. Certificate issued by the auditors only spelled out the percentage of overheads over the revenue and, hence, it was only a factual aspect of internal figures.
5) Accordingly,certificate issued by auditorscould not be used as a substitute for Transfer Pricing study to benchmark international transaction. - Metro Tunneling Group v. JCIT-  58 taxmann.com 372 (Mumbai - Trib.)