DHL LOGISTICS PVT LTD, MUMBAI V. ASST CIT 9 (3)91), MUMBAI

ITA 7166/MUM/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 7329 (ITAT-MUMBAI)
• Duration Of Justice: 9 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-09-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: K
• Assessment Year: 2015-2016
• Appeal Filed On: 21-11-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Transfer pricing; International transaction
• Section: 92C; 143(3); 92; 92D; 92B; 92CA

Judgement Text

REGUS BUSINESS CENTRE PRIVATE LIMITED ITA NO.6847MUM/2018 ASSESSMENT YEAR: 2014-15 1 IN THE INCOME TAX APPELLATE TRIBUNAL J BENCH, MUMBAI , , BEFORE HONBLE SHRI SAKTIJIT DEY, JM AND HONBLE SHRI MANOJ KUMAR AGGARWAL, AM (HEARING THROUGH VIDEO CONFERENCING MODE) ./ I.T.A. NO.6847/MUM/2018 ( / ASSESSMENT YEAR: 2014-15) REGUS BUSINESS CENTRE PRIVATE L IMITED LEVEL-2, RAHEJA CENTRE POINT NEAR MUMBAI UNIVERSITY (OPP. BANDRA KURLA COMPLEX) SANTACRUZ EAST, MUMBAI 400 098 / VS. A CIT - 13(3)(1), 2 ND FLOOR, ROOM NO.229 AAYKAR BHAVAN, M.K. ROAD MUMBAI 400 020. PAN/GIR NO. AADC R - 1920 - Q ( '# /APPELLANT ) : ( $%'# / RESPONDENT ) ASSESSEE BY : SHRI KETAN VED LD. AR REVEN UE BY : MS. UODAL RAJ SINGH-LD. SR. DR / DATE OF HEARING : 31/08/2020 / DATE OF PRONOUNCEMENT : 01/09/2020 / O R D E R MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. AFORESAID APPEAL BY ASSESSEE FOR ASSESSMENT YEAR (AY) 2014-15 CONTEST CERTAIN TRANSFER PRICING (TP) ADJUSTMENTS M ADE BY LEARNED ASSESSING OFFICER (AO) IN FINAL ASSESSMENT ORDER DA TED 25/09/2018 PASSED U/S. 143(3) R.W.S. 144C(13) PURSUANT TO THE DIRECTIONS OF LEARNED DISPUTE RESOLUTION PANEL-2, MUMBAI [DRP] U/S 144C(5 ) DATED 24/08/2018. THE GROUNDS RAISED BY ASSESSEE READ AS UNDER: - REGUS BUSINESS CENTRE PRIVATE LIMITED ITA NO.6847MUM/2018 ASSESSMENT YEAR: 2014-15 2 1. RE.: ADJUSTMENT OF RS.36,04,932/- ON ACCOUNT OF PAY MENT REGIONAL HEADQUARTER CHARGES [INTRA GROUP SERVICES]- 1.1 THE LD. ASSESSING OFFICER[AO']/ THE LD. DISPUT E RESOLUTION PANEL [DRP]/ THE LD. TRANSFER PRICING OFFICER [ TPO] HAVE ERRE D IN MAKING AN UPWARD ADJUSTMENT OF RS.36,04,932/- TO THE TOTAL INCOME OF THE APPEL LANT BY DETERMINING THE ARMS LENGTH PRICE [ALP] OF THE INTRA GROUP SERVICE CHA RGES TO ITS ASSOCIATED ENTERPRISES [AE] AS NIL. 1.2 THE AO /DRP/TPO HAVE ERRED IN DETERMINING THE A LP OF THE INTRA-GROUP SERVICE CHARGES AS NIL BY APPLYING THE COMPARABLE U NCONTROLLED PRICE [CUP] METHOD WITHOUT ANY BASIS AND WITHOUT UNDERTAKING AN Y BENCHMARKING ANALYSIS. 1.3 THE AO /DRP/TPO ERRED IN QUESTIONING THE NEED A ND UTILITY OF THE INTRA-GROUP SERVICES AVAILED BY THE APPELLANT FROM ITS AES, THE REBY QUESTIONING THE COMMERCIAL RATIONALE OF THE APPELLANT IN AVAILING THE SERVICES . 1.4 THE APPELLANT SUBMITS THAT CONSIDERING THE FACT S AND CIRCUMSTANCES OF ITS CASE AND THE LAW PREVAILING ON THE SUBJECT, THE INT RA-GROUP SERVICES AVAILED BY IT FROM ITS AES WERE WHOLLY AND EXCLUSIVELY FOR THE PURPOSE S OF ITS BUSINESS AND THE CHARGES PAID FOR THE SAME WERE AT AN ARMS LENGTH AND THE S TAND TAKEN BY THE TPO/AO /DRP IN THIS REGARD IS INCORRECT, ERRONEOUS AND HENCE TH E ADJUSTMENT MADE OUGHT TO BE DELETED. 2. RE.: ADJUSTMENT OF RS.1,86,73,820/- BY CONSIDERI NG SUPPORT SERVICES RENDERED AND INTERCOMPANY LOANS PROVIDED TO DOMESTIC RELATED PARTIES AS DEEMED INTERNATIONAL TRANSACTION. 2.1 THE AO /DRP/TPO HAVE ERRED IN CONSIDERING THE S ERVICES RENDERED BY APPELLANT TO ITS DOMESTIC RELATED PARTY AND THE LOA NS GRANTED BY THE APPELLANT TO ITS DOMESTIC RELATED PARTY AS A DEEMED INTERNATIONAL TR ANSACTION. 2.2 THE APPELLANT SUBMITS THAT CONSIDERING THE FACT S AND CIRCUMSTANCES OF ITS CASE AND THE LAW PREVAILING ON THE SUBJECT, THE SUP PORT SERVICES PROVIDED BY THE APPELLANT AND THE LOANS GRANTED BY THE APPELLANT TO ITS DOMESTIC RELATED PARTY DO NOT FALL WITHIN THE PURVIEW OF DEEMED INTERNATIONAL TRA NSACTION AND THE STAND TAKEN BY THE AO /DRP/TPO IN THIS REGARD IS INCORRECT, ERRONEOUS AND HENCE THE ADJUSTMENT MADE OUGHT TO BE DELETED. 2.3 WITHOUT PREJUDICE TO THE AFORESAID THE AO/DRP/T PO ERRED IN DETERMINING THE ALP OF SUPPORT SERVICES BY APPLICATION OF TRANSACTI ON NET MARGIN METHOD [TNMM] AND SELECTING COMPANIES WHICH ARE NOT COMPARABLE TO THE APPELLANT. 2.4 THE AO/DRP/TPO ERRED IN NOT GRANTING THE WORKI NG CAPITAL ADJUSTMENT WHILE DETERMINING THE ALP OF SUPPORT SERVICES BY APPLICAT ION OF TNMM. 2.5 THE AO/ DRP/TPO ERRED IN LAW AND FACTS OF THE C ASE BY CONSIDERING INTERCOMPANY LOAN PROVIDED BY THE APPELLANT TO ITS DOMESTIC RELATED PARTY AS DEEMED INTERNATIONAL TRANSACTION AND IMPUTED NOTIONAL INTE REST ON THE SAME. 3. RE.: OTHERS 3.1 THE APPELLANT SUBMITS THAT THE AO/DRP/TPO HAVE ERRED IN ARRIVING VARIOUS UNWARRANTED AND ERRONEOUS CONCLUSIONS UNSUPPORTED B Y ANY RELEVANT MATERIAL IN DECIDING THE CASE. 3.2 THE APPELLANT SUBMITS THAT EACH GROUNDS OF APPE ALS ARE WITHOUT PREJUDICE TO ONE ANOTHER. REGUS BUSINESS CENTRE PRIVATE LIMITED ITA NO.6847MUM/2018 ASSESSMENT YEAR: 2014-15 3 GROUND NO.-3 IS GENERAL IN NATURE WHICH DO NOT REQU IRE ANY SPECIFIC ADJUDICATION. IN GROUND NOS. 1 & 2, THE ASSESSEE IS AGGRIEVED BY TRANSFER PRICING (TP) ADJUSTMENT ON ACCOUNT OF (I) INTRA-GROUP SERVICES ADJUSTMENT OF RS.36,04,932/-; (II) SUPPORT SERVICES AND INTER CORPORATE LOANS ADJUSTMENT OF RS.1,86,73,820/-. 2. THE LEARNED AUTHORIZED REPRESENTATIVE FOR ASSESS EE (AR), SHRI KETAN VED, AT THE OUTSET, SUBMITTED THAT BOTH THE I SSUES ARE COVERED BY THE ORDER OF TRIBUNAL IN ASSESSEES OWN CASE FOR AY 2012-13, ITA NO.1110/MUM/2017 ORDER DATED 16/07/2020. A COPY OF THE ORDER HAS BEEN PLACED BEFORE US. THE LD. AR SEEK SIMILAR DIRE CTION AS WELL AS ADJUDICATION IN THIS YEAR. ALTHOUGH LD. DR RELIED U PON THE ORDERS OF LOWER AUTHORITIES BUT COULD NOT CONTROVERT THE STATED POS ITION. NO DISTINGUISHING FACTS OR FEATURES HAVE BEEN DEMONSTRATED BEFORE THE BENCH IN THIS YEAR. IN THE SAID BACKGROUND, OUR ADJUDICATION TO THE SUB JECT MATTER OF APPEAL WOULD BE AS GIVEN IN SUCCEEDING PARAGRAPHS. 3.1 THE MATERIAL ON RECORD WOULD SHOW THAT THE ASSE SSEE BEING RESIDENT CORPORATE ASSESSEE IS STATED TO BE ENGAGED IN PROVIDING SERVICED OFFICES, CYBER CAFES AND PROVIDER OF ANCIL LARY BUSINESS SERVICES. THE ASSESSEE CARRIED OUT CERTAIN INTERNATIONAL TRAN SACTIONS WITH ITS ASSOCIATED ENTERPRISES (AE) WHICH WERE SUBJECT MATT ER OF DETERMINATION OF ARMS LENGTH PRICE (ALP) BEFORE LD. TRANSFER PRI CING OFFICER (TPO) VIDE ORDER U/S 92CA (3) DATED 31/10/2017. THESE TRA NSACTIONS WERE, INTER-ALIA, IN THE NATURE OF PAYMENT OF RS.36.04 LACS BY ASSESS EE TO ITS AES AS REGIONAL MANAGEMENT FEES AND GSC MANAGEMENT FEES (COLLECTIVELY REFERRED TO AS INTRA-GROUP SERVICES ). THESE TRANSACTIONS WERE BENCHMARKED USING RESIDUARY METHOD. HOWEVER, L D. TPO OPINED REGUS BUSINESS CENTRE PRIVATE LIMITED ITA NO.6847MUM/2018 ASSESSMENT YEAR: 2014-15 4 THAT SUCH PAYMENT WOULD BE AT ARMS LENGTH ONLY WHE N IT WAS SUBSTANTIALLY PROVED THAT THE SERVICES WERE ACTUALL Y RECEIVED BY THE ASSESSEE AND THE SAME BENEFITTED THE ASSESSEE. THIS FACT, IN THE OPINION OF LD. TPO, COULD NOT BE ESTABLISHED BY THE ASSESSE E AND THE ASSESSEE COULD NOT SUBMIT PROOF WITH RESPECT TO ACTUAL COST INCURRED BY THE AES. FINALLY, FOLLOWING LD. DRPS DIRECTIONS FOR AY 2012 -13, THE ALP OF THESE TRANSACTIONS WAS DETERMINED AS NIL AND AN ADJUSTMENT OF RS.36.04 LACS WAS PROPOSED BY LD. TPO IN THIS RESPECT. 3.2 THE SECOND ADJUSTMENT PROPOSED WAS ON ACCOUNT O F COST-ALLOCATION AND INTER-COMPANY LOANS. THE ASSESSEE ALLOCATED COS TS IN RELATION TO EMPLOYEES, MARKETING AND IT COSTS, THE BENEFIT OF W HICH WAS STATED TO BE GIVEN TO VARIOUS DOMESTIC COMPANIES OF THE GROUP. S IMILARLY, THE ASSESSEE PROVIDED INTRA-COMPANY LOANS TO ITS DOMEST IC RELATED PARTIES. THE ASSESSEE PLEADED THAT TP PROVISIONS, IN TERMS O F SEC. 92B, WERE NOT APPLICABLE TO SUCH TRANSACTIONS ENTERED INTO BY THE ASSESSEE WITH ITS INDIAN GROUP ENTITIES. HOWEVER, IT WAS NOTED BY LD. TPO THAT THE HOLDING COMPANY OF THE ASSESSEE I.E. REGUS INDIA HOLDINGS L TD, MAURITIUS WAS ALSO THE HOLDING COMPANY OF ALL THE DOMESTIC ENTITI ES AND THEREFORE, THE SAID PROVISIONS WERE APPLICABLE. THE HOLDING COMPAN Y WOULD BE IN A POSITION TO CONTROL ALL TRANSACTIONS BETWEEN THE AS SESSEE AND OTHER ENTITIES BY VIRTUE OF ITS BEING A CONTROLLING SHARE HOLDER IN ALL THE COMPANIES. ON SIMILAR FACTS ON AY 2012-13, THE SAID TRANSACTIONS WERE TREATED AS DEEMED INTERNATIONAL TRANSACTIONS AND TH EREFORE, LD. TPO PROCEEDED TO DETERMINE THE ALP OF THESE TRANSACTION S. AFTER CONSIDERING ASSESSEES SUBMISSIONS, LD. TPO PROPOSED AN ADJUSTM ENT OF RS.181.93 REGUS BUSINESS CENTRE PRIVATE LIMITED ITA NO.6847MUM/2018 ASSESSMENT YEAR: 2014-15 5 LACS ON ACCOUNT OF SUPPORT SERVICES AND ANOTHER ADJ USTMENT OF RS.4.80 LACS ON ACCOUNT OF INTEREST ON LOAN. 3.3 THE ADJUSTMENT, THUS PROPOSED BY LD. TPO, WERE INCORPORATED IN DRAFT ASSESSMENT ORDER DATED 20/12/2017 WHICH WERE SUBJECTED TO ASSESSEES OBJECTIONS BEFORE LEARNED DRP. THE LD. D RP DISPOSED-OFF ASSESSEES OBJECTION VIDE ITS DIRECTIONS U/S 144C(5 ) DATED 24/08/2018. PURSUANT TO THE SAME, FINAL ASSESSMENT ORDER WAS PA SSED BY LD. AO ON 25/09/2018. 4. UPON PERUSAL OF LD. DRPS DIRECTIONS, WE FIND TH AT TP ADJUSTMENT UNDER BOTH THE HEADS I.E. (I) INTRA-GROUP SERVICES; (II) SUPPORT SERVICES AND INTER CORPORATE LOANS ADJUSTMENT; HAS BEEN CONF IRMED FOLLOWING LD. DRPS DIRECTIONS FOR AY 2012-13. AGGRIEVED, THE ASSESSEE IS UNDER FURTHER APPEAL BEF ORE US. 5. AS RIGHTLY POINTED OUT BY LD. AR, THE ASSESSEES APPEAL FOR AY 2012-13 CAME UP FOR CONSIDERATION BEFORE COORDINATE BENCH OF THIS TRIBUNAL VIDE ITA NO. 1110/MUM/2017 ORDER DATED 16/ 07/2020 WHEREIN BOTH THE ISSUE HAVE BEEN DEALT WITH BY THE BENCH. T HE TP ADJUSTMENT ON ACCOUNT OF INTRA-GROUP SERVICES HAVE BEEN RESTORED BACK TO THE FILE OF LD. AO WITH FOLLOWING DIRECTIONS: - 6. THE FIRST ISSUE IN APPEAL IS IN RESPECT OF ADJUS TMENT MADE ON ACCOUNT OF INTRA- GROUP SERVICES. THE ASSESSEE HAS PURPORTEDLY RECEIV ED SUPPORT SERVICES FROM ITS REGIONAL HEADQUARTER PRIMARILY IN THE AREAS OF MANA GEMENT OF HUMAN RESOURCES, SALE, DEBT MANAGEMENT AND COLLECTION, ADVERTISEMENT AND MARKETING, LEGAL SERVICES, ETC. THE TPO APPLIED BENEFIT TEST ON THE INTRA-GR OUP SERVICES RECEIVED BY THE ASSESSEE AND DETERMINED THE ALP OF SUCH SERVICES AT NIL. WE FIND THAT THE TPO HAS FAILED TO PROPERLY ANALYSE THE SUPPORT SERVICES RECEIVED BY THE ASSESSEE FROM ITS REGIONAL HEADQUARTER. FURTHER, THE SETTLED LEGAL PO SITION NOW IS THAT THE ALP OF INTRA GROUP SERVICES CANNOT BE DETERMINED AT NIL. THE BENEFIT TEST ANALYSIS WHICH WAS EARLIER ACCEPTED HAS NOW BEEN HELD TO BE REDUNDANT. THE TRIBUNAL IN THE CASE OF MERCK LTD. V. DY. CIT 179 TTJ 121 HAS HELD THE CONC EPT OF BENEFIT TEST AS IRRELEVANT. THE TRIBUNAL HELD THAT BY APPLYING BEFI T TEST ALP OF INTRA-GROUP SERVICES REGUS BUSINESS CENTRE PRIVATE LIMITED ITA NO.6847MUM/2018 ASSESSMENT YEAR: 2014-15 6 CANNOT BE DETERMINED AT NIL. THEREAFTER, IN VARIO US DECISIONS BY THE TRIBUNAL THE APPLICATION OF BENEFIT TEST ANALYSIS HAS BEEN REJEC TED. THUS, WE DEEM IT APPROPRIATE TO RESTORE THE ISSUE BACK TO THE FILE OF TPO FOR FR ESH ADJUDICATION AND FOR DETERMINATION OF ALP OF INTRA-GROUP SERVICES BY APP LYING MOST APPROPRIATE METHOD SPECIFIED IN SECTION 92C OF THE ACT. GROUND NO.1 OF THE APPEAL IS THUS, ALLOWED FOR STATISTICAL PURPOSES. FURTHER, THE TP ADJUSTMENT ON ACCOUNT OF SUPPORT SE RVICES AND INTRA- COMPANY LOANS HAS BEEN DELETED BY OBSERVING AS UNDE R: - 8. THE GROUND NO.3 OF THE APPEAL IS AGAINST ADJUSTM ENT MADE IN RESPECT OF LOANS EXTENDED BY THE ASSESSEE TO DOMESTIC GROUP COMPANIE S, HELD AS DEEMED INTERNATIONAL TRANSACTION. IT IS AN UNDISPUTED FAC T THAT THE ASSESSEE HAD ENTERED INTO TRANSACTIONS FOR EXTENDING LOANS AND PROVIDING SERVICES TO THE GROUP ENTITIES BASED IN INDIA. BEFORE PROCEEDING FURTHER, IT WOULD BE RELEVANT TO REFER TO THE MEANING OF INTERNATIONAL TRANSACTION AS DEFINED U NDER THE ACT. THE EXPRESSION INTERNATIONAL TRANSACTION HAS BEEN DEFINED IN SEC TION 92B OF THE ACT. THE PROVISIONS OF THE SECTION AS THEY WERE APPLICABLE I N AY 2012-13 ARE REPRODUCED HEREIN BELOW: - SECTION 92B (1) FOR THE PURPOSES OF THIS SECTION AND SECTIONS 9 2, 92C, 92D AND 92E, INTERNATIONAL TRANSACTION MEANS A TRANSACTION BET WEEN TWO OR MORE ASSOCIATED ENTERPRISES, EITHER OR BOTH OF WHOM ARE NON-RESIDENTS, IN THE NATURE OF PURCHASE, SALE OR LEASE OF TANGIBLE OR IN TANGIBLE PROPERTY, OR PROVISION OF SERVICES, OR LENDING OR BORROWING MONE Y, OR ANY OTHER TRANSACTION HAVING A BEARING ON THE PROFITS, INCOME, LOSSES OR ASSETS OF SUCH ENTERPRISES, AND SHALL INCLUDE A MUTUAL AGREEMENT OR ARRANGEMENT BETWEEN TWO OR MORE ASSOCIATED ENTERPRISES FOR THE ALLOCATION OR APPORT IONMENT OF, OR ANY CONTRIBUTION TO, ANY COST OR EXPENSE INCURRED OR TO BE INCURRED IN CONNECTION WITH A BENEFIT, SERVICE OR FACILITY PROVIDED OR TO BE PROVIDED TO ANY ONE OR MORE OF SUCH ENTERPRISES. (2) A TRANSACTION ENTERED INTO BY AN ENTERPRISE WIT H A PERSON OTHER THAN AN ASSOCIATED ENTERPRISE SHALL, FOR THE PURPOSES OF SU B-SECTION (1), BE DEEMED TO BE A TRANSACTION ENTERED INTO BETWEEN TWO ASSOCIATE D ENTERPRISES, IF THERE EXISTS A PRIOR AGREEMENT IN RELATION TO THE RELEVAN T TRANSACTION BETWEEN SUCH OTHER PERSON AND THE ASSOCIATED ENTERPRISE, OR THE TERMS OF THE RELEVANT TRANSACTION ARE DETERMINED IN SUBSTANCE BETWEEN SUC H OTHER PERSON AND THE ASSOCIATED ENTERPRISE THE SUB-SECTION (2) TO SECTION 92B WAS AMENDED BY T HE FINANCE (NO.2) ACT, 2014 W.E.F. 1-4-2015. BY WAY OF AMENDMENT THE WORDS DEE MED TO BE A TRANSACTION WERE REPLACED WITH DEEMED TO BE AN INTERNATIONAL TRANSA CTION. AFTER THE AMENDMENT, THE TRANSACTIONS THAT ESCAPED DEEMING PROVISIONS HITHER TO WERE BROUGHT WITHIN THE REALM OF DEEMED INTERNATIONAL TRANSACTION. THE INSTANT CASE PERTAINS TO PERIOD PRIOR TO AMENDMENT. THUS, THE PROVISIONS OF SECTION 92B (2) AS THEY WERE APPLICABLE IN THE IMPUGNED ASSESSMENT YEAR, WOULD BE RELEVANT. REGUS BUSINESS CENTRE PRIVATE LIMITED ITA NO.6847MUM/2018 ASSESSMENT YEAR: 2014-15 7 9. A BARE PERUSAL OF THE MEANING OF INTERNATIONAL TRANSACTION DEFINED IN SECTION 92B (1) WOULD SHOW THAT A TRANSACTION WOULD FALL WITHIN THE AMBIT OF INTERNATIONAL TRANSACTION IF, EITHER OR BOTH THE ASSOCIATED ENTER PRISES ARE NON- RESIDENT. IN THE PRESENT CASE NONE OF THE AES I.E. NEITHER THE ASSES SEE NOR THE DOMESTIC GROUP COMPANIES WITH WHICH THE ASSESSEE HAD ENTERED INTO TRANSACTION ARE NON-RESIDENTS. ALL THE COMPANIES ARE DOMESTIC ENTITIES AND ARE SUB JECT TO TAX UNDER THE PROVISIONS OF THE ACT. SECTION 92B (2) OF THE ACT DEALS WITH THE DEEMING P ROVISIONS. THE SUBSECTION WOULD GET ATTRACTED IF: - THE TRANSACTION IS BETWEEN AN ENTERPRISES AND NON-A E; AND - THERE IS PRIOR AGREEMENT IN RELATION TO THE TRANS ACTION OR THE TERMS OF THE TRANSACTION ARE DETERMINED IN SUBS TANCE BETWEEN THE NON-AE AND AE. FOR INVOKING DEEMING PROVISIONS, SUBSECTION (2) HAS TO BE READ IN CONJUNCTION WITH SUBSECTION (1) OF SECTION 92B OF THE ACT. THUS, FOR SUBSECTION (2) TO GET ATTRACTED, THE PRIMARY CONDITION WOULD BE THAT AT LEAST ONE OF THE ENTITY WITH WHICH THE ASSESSEE HAS ENTERED INTO TRANSACTION SHOULD BE NON -RESIDENT. IN THE PRESENT CASE, THE AUTHORITIES BELOW HAVE FAILED TO TAKE NOTE OF T HE FACT THAT THE TRANSACTIONS IN QUESTION ARE WITHIN DOMESTIC ENTITIES ONLY. NO OVER SEAS ENTITY IS INVOLVED IN THE TRANSACTION. UNLESS THE CONDITIONS SET OUT IN SUBSE CTION (1) ARE SATISFIED, THE PROVISIONS OF SUBSECTION (2) CANNOT BE INVOKED. THE AUTHORITIES BELOW IN THE PRESENT CASE HAVE ERRED IN INVOKING DEEMING FICTION SOLELY ON THE PREMISE THAT SINCE SHAREHOLDERS OF OVERSEAS HOLDING COMPANY ARE HOLDIN G SHARES OF THE ASSESSE AND AES, IN SUBSTANCE THE TRANSACTION BETWEEN THE ASS ESSE AND THE DOMESTIC GROUP ENTITIES WOULD FALL WITHIN THE AMBIT OF DEEMED INT ERNATIONAL TRANSACTION. DEEMING PROVISIONS CANNOT BE INVOKED BY EXPANDING THE LATIT UDE OF EXPRESSIONS USED IN THE SECTION. THE AUTHORITIES BELOW HAVE FAILED TO TAKE INTO CONSIDERATION THE FACT THAT ALL GROUP ENTITIES ARE COMPANIES INCORPORATED IN INDIA HAVING SEPARATE LEGAL EXISTENCE. EXCEPT FOR COMMON SHAREHOLDING, NO MATERIAL HAS BEE N RELIED ON BY THE TPO/DRP TO SUBSTANTIATE THAT THE TRANSACTION BETWEEN THE EN TITIES WAS INFLUENCED BY THE OVERSEAS HOLDING COMPANY. 10. IN THE CASE OF CIT VS. KODAK INDIA (P) LTD. (SU PRA), THE ASSESSEE HAD SOLD ITS IMAGING BUSINESS TO M/S. CARESTREAM HEALTH INDIA LT D. DURING THE PERIOD RELEVANT TO AY 2007-08. THE TRANSACTION WAS BETWEEN TWO DOMESTI C NON ASSOCIATED ENTERPRISES. THE TPO HELD THAT THE TRANSACTION IS I NTERNATIONAL TRANSACTION WITHIN THE MEANING OF SECTION 92B (2) AS THE OVERSEAS HOLD ING COMPANY OF THE ASSESSEE AND CARESTREAM HEALTH INDIA LTD. HAD ENTERED INTO G LOBAL AGREEMENT FOR SALE OF BUSINESS PRIOR TO SALE OF IMAGING BUSINESS BY THE A SSESSEE TO CARESTREAM HEALTH INDIA LTD. THE TRIBUNAL OBSERVED THAT THE TRANSACTI ON IS NOT COVERED BY THE DEFINITION OF INTERNATIONAL TRANSACTION AND HENCE, THE PROVI SIONS OF SECTION 92B (2) WOULD NOT GET ATTRACTED. THE TRIBUNAL INTER ALIA HELD THAT PR IOR TO AMENDMENT TO SECTION 92B (2) OF THE ACT W.E.F. 1-4- 2015 SUCH A TRANSACTION WAS NOT DEEMED TO BE AN INTERNATIONAL TRANSACTION. THE FINDINGS OF THE TRIBUNAL WERE UPHE LD BY THE HONBLE HIGH COURT. 11. IN OUR CONSIDERED VIEW THE FINDINGS OF THE LOWE R AUTHORITIES ARE BASED ON CONJECTURES AND SURMISES. THE AUTHORITIES BELOW HAV E TRAVELLED TOO FAR TO BRING THE TRANSACTIONS BETWEEN THE ASSESSEE AND DOMESTIC ENTI TIES WITHIN THE DOMAIN OF REGUS BUSINESS CENTRE PRIVATE LIMITED ITA NO.6847MUM/2018 ASSESSMENT YEAR: 2014-15 8 DEEMED INTERNATIONAL TRANSACTION UNDER SECTION 92 B (2) OF THE ACT (PRIOR TO AMENDMENT). WE FIND MERIT IN GROUND NO.3 OF THE APP EAL, ACCORDING THE SAME IS ALLOWED. IT WAS HELD THAT THE PROVISIONS OF SECTION 92B (2) WOULD NOT GET ATTRACTED TO SUCH TRANSACTIONS PRIOR TO 01/04/2015 AND THESE TRANSACTIONS WOULD NOT BE DEEMED TO BE INTERNATIONAL TRANSACTIONS . THERE BEING NO CHANGE IN FACTS OR CIRCUMSTANCES, WE SEE NO REASON TO DEVIATE FROM THE SAME. HENCE, RESPECTFULLY FOLLOWIN G THE SAME, THE ISSUE OF TP ADJUSTMENT ON ACCOUNT OF INTRA-GROUP SERVICES STAND RESTORED BACK TO THE FILE OF LD. AO / TPO ON SIMILAR LINES. THE T P ADJUSTMENT ON ACCOUNT OF SUPPORT SERVICES AND INTRA-COMPANY LOANS STAND DELETED SINCE THE SAME WOULD NOT CONSTITUTE DEEMED INTERNATIONAL TRANSACTION PRIOR TO 01/04/2015. 6. RESULTANTLY, THE APPEAL STANDS PARTLY ALLOWED IN TERMS OF OUR ABOVE ORDER. ORDER PRONOUNCED ON 01 ST SEPTEMBER, 2020. SD/- SD/- (SAKTIJIT DEY) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 01/09/2020 SR.PS:-JAISY VARGHESE '# $# / COPY OF THE ORDER FORWARDED TO : 1. '# / THE APPELLANT REGUS BUSINESS CENTRE PRIVATE LIMITED ITA NO.6847MUM/2018 ASSESSMENT YEAR: 2014-15 9 2. $%'# / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT CONCERNED 5. $ , , / DR, ITAT, MUMBAI 6. ./0 / GUARD FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI.