Facts:
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- [2015]
58 taxmann.com 372 (Mumbai - Trib.)
