LANXESS INDIA PRIVATE LIMITED,THANE V. INCOME-TAX OFFICER, WAGLE INDUSTRIAL ESTATE

ITA 4632/MUM/2024

AI Insights

The case involves LANXESS India Private Limited appealing against the final assessment order passed by the Income Tax Department, which included significant transfer pricing adjustments. The primary contention was regarding the TPO's determination that the ALP of services provided by AEs was NIL, leading to an addition of INR 39,74,71,450 to the appellant's income. The Tribunal examined the evidence presented, including agreements, invoices, and emails, and found that the services were indeed rendered and beneficial to the appellant, thus overturning the TPO's decision.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 25748 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-01-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: K
• Assessment Year: 2020-2021
• Other Referred Cases: Eaton Fluid Power Ltd Vs. ACIT AY2008-09
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: KIRAN UNAVEKAR
• Assessee Lawyers: DARPAN KIRPALANI
• Keywords: Additional evidence; Transfer pricing; International transaction; Business expenditure
• Section: 143(3); 192; 153; 92CA; 37; 92C; 92D

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “K” BENCH, MUMBAI BEFORE SMT. BEENA PILLAI (JUDICIAL MEMBER) AND SHRI PRABHASH SHANKAR (ACCOUNTANT MEMBER) I.T.A. No.4632/Mum/2024 Assessment Year: 2020-21 LANXESS India Private Limited Plot No. A/162-164, LANXESS House, Road No. 27, Wagle Estate, Thane West PAN:AACCB3880A (Appellant) Vs . Assessment Commissioner of Income Tax, Circle1, Thane (Respondent) Appellant by Shri Darpan Kirpalani Respondent by Shri Kiran Unavekar, Sr. D.R. Date of Hearing 19/11/2024 Date of Pronouncement 20/01/2025 ORDER Per: Smt. Beena Pillai, J.M.: Present appeal filed by the assessee arises out of final assessment order passed by Income Tax Department CIT(DRP -1 ), Mumbai-2, for assessment year 2020-21 vide order dated 21/06/2024 on following grounds of appeal: ITA No.4632/Mum/2024 A.Y.2020-21 2 “GROUNDS OF APPEAL Based on the facts and circumstances of the case, LANXESS India Private Limited (hereinafter referred to as the 'Appellant') respectfully craves leave to prefer an appeal against the Final Assessment Order ('the order') passed by the Assessment Unit, Income Tax Department ('Ld. AO\") dated 17 July 2024 under section 143(3) read with section 144C(13) of the Income-tax Act, 1961 ('the Act') in pursuance of the directions issued by Hon'ble Dispute Resolution Panel ('DRP'), Mumbai, dated 21 June 2024 under section 144C(5) r.w.s 254/260A of the Act on the following grounds, which are independent of and without prejudice to each other: Legal Grounds: 1. On the facts and circumstances of the case and in law, the Technical Unit has erred making a reference u/s 92CA (1) of the Act without having any powers for making such a reference. Accordingly, the Transfer Pricing reference is bad in law, consequently the Transfer Pricing order issued u/s. 92CA, is bad in law and ought to be quashed. 2. On the facts and circumstances of the case and in law, the Learned Transfer Pricing Officer ('Ld. TPO) [Deputy Commissioner/Assistant Commissioner of Income Tax 3(1)(1)] has erred in passing the Transfer Pricing ('TP') order dated 28 July 2023 without having any powers of passing the said order. Accordingly, the TP order is bad in law and ought to be quashed. 3. On the facts and circumstances of the case and in law, the final assessment order dated 17 July 2024 is issued beyond the time limit as prescribed u/s 153 of the Act. Consequently, the final assessment order is time barred and deserves to be quashed. Factual Grounds: On the facts and circumstances of the case and in contrary to law, Ld. TPO/Ld. AO pursuant to the directions issued by the Hon'ble DRP, erred in: 4. Making an addition of INR 39,74,71,450 to the Appellant's income in connection with payments made by the Appellant to its Associated Enterprises ('AEs'), towards availing IT services, PTSE services and centralized services and thereby determining a total income of INR 2,15,68,35,660 in the order dated 17 July 2024. 5. Not stating any reasons to show that either of the conditions mentioned in clause (a) to (d) of section 92C(3) of the Act were satisfied before proposing an adjustment of INR 39,74,71,450/- to the total income of the Appellant. ITA No.4632/Mum/2024 A.Y.2020-21 3 6. Upholding/confirming the action of Ld. TPO, by determining the Arm's Length Price ('ALP\") of the payment for services as 'NIL' by disregarding the detailed benchmarking approach and the methodology adopted by the Appellant in its TP documentation maintained under section 92D of the Act read with Rule 10D of the Income Tax Rules, 1962 ('Rules'). 7. Upholding/confirming the action of Ld. TPO, in applying Other Method inappropriately and further erred by not bringing on record any comparable data as mandated by section 92C of the Act read with Rule 10B and Rule 10C of the Rules. 8. Determining the ALP of the international transaction of availing of IT services, PTSE services and centralized services as NIL, without appreciating the fact that as per provisions of the Act, the Ld. TPO's role is merely to determine the arm's length nature of the transaction referred to him by the Ld. AO. 9. Stating that Ld. TPO rightly rejected the Appellant's approach by applying Comparable Uncontrolled Price ('CUP') Method which is grossly incorrect as there was no mention of the same in the Ld. TPO order. 10. Upholding/confirming the action of Ld. TPO, in going beyond the scope under section 92CA in questioning the commercial rationale of the legitimate business expenses incurred by the Appellant and further erred in determining the ALP of payment of services to be NIL. 11. Rejecting the detailed documentary evidences submitted by the Appellant before the Ld. TPO and Hon'ble DRP during the course of proceedings, to substantiate the need-benefit-evidence test of the services availed, without providing cogent reasons and erred in concluding that the Appellant is not able to discharge the onus of proving that the services have been availed by the AEs without acknowledging substantial information submitted by the Appellant. 12. Not appreciating that the Appellant duly withheld the taxes on payment made to the AE and that the AE has also duly filed a return of income in India offering such services to taxes, and that disallowing payments made by the Appellant would lead to double taxation. 13. Not appreciating that the services availed by the Appellant are not in the nature of shareholder services nor stewardship, duplicative or incidental services for which no independent entity would agree to make any payment. 14. Not appreciating that the said payment for the services are technical and has a direct nexus with the business of the appellant. The Ld. ITA No.4632/Mum/2024 A.Y.2020-21 4 AO/Ld. TPO without appreciating the services under dispute have direct nexus with the business of the appellant. 15. The Ld. AO/Hon'ble DRP have further erred in disallowing the said payment u/s 37 of the Act. 16. Levying the consequential interest under Section 234B/234C/234D of the Act.” Brief facts of the case are as under: 2. The Assessee is engaged in manufacturing and trading of various commercial and chemical intermediates and its subsidiary Lanxess Deutschland GmbH. The assessee filed its return of income on 05/02/2021 declaring total income of Rs.1,75,93,64,210/- under normal provision of the act and book profit of Rs. 98,85,38,455/-. The case was selected for scrutiny. The Ld.AO observed that the assessee had international transaction exceeding threshold limit. Thus a reference was made to the Transfer pricing officer (Ld.TPO) for determining the arms length price(ALP) of such transactions. 2.1. On receipt of the reference, the Ld.TPO called for economic analysis of the international transactions in form 3CED. The assessee furnished all relevant details called for in respect of the same. The Ld.TPO during transfer pricing assessment observed that following were the international transaction entered into by the assessee with its AE’s during the year under consideration : Sr. No. Nature of Transaction Amount (in Rs.) Method used 1. Import of raw materials for manufacturing 200,30,78,091 CPM ITA No.4632/Mum/2024 A.Y.2020-21 5 2. Export of manufactured finished goods 3,247,492,804 RPM 3. Export of manufactured finished goods (ION exchange) 1,260,651,026 TNMM 4. Speciality chemical distribution segment 292,16,51,166 TNMM 5. Marketing support services segment 953,88,492 TNMM 6. Provision of technical support services 203,444,144 TNMM 7. Availing of support services 211,259,383 TNMM 8. Payment of royalty 788,79,091 CUP 9. Other Transactions 61,080,514 Other Method 10. Cost Allocations 186,212,066 Other Method 11. Corporate Guarantee Expense 5,550,363 Other Method 12. Deemed international transactions 606,556,960 Other Method 13. Purchase of raw material 109,424 Other Method 14. Purchase of capital goods 972,798 Other Method 15. Purchase of packing goods 840,615 Other Method 16. Recovery of expenses 8,527,808 Other Method 17. Reimbursement of expense 3,813,226 Other Method 18. Repatriation of money in relation to the suo-moto adjustment of 69,958,369 Other Method ITA No.4632/Mum/2024 A.Y.2020-21 6 F.Y. 2018-19 Total 11,064,705,675 2.2 The Ld.TPO noted that, the assessee received various intra- group services from its AE’s, against which charges were paid by the assessee as under: Sr. No. Particulars Value of International Transaction (INR) Most appropriate method Tested party 1 IT Services 15,67,15,332/- Other method NA 2 IEA Services 13,13,850/- 3 Atrion Services 37,06,075/- 4 Centralized Services 2,44,76,809/- 5 Accounting Services 1,52,45,103/- TNMM Method ΑΕ 6 General Support Services 12,01,26,842/- 7 PTSE charges 7,53,54,211/- 8 HAZOP charges 5,33,228/- 2.3. The Ld.TPO noted that, intra-group services being IT services, IEA services, Atrion services, Centralized services was aggregated by the assessee together under the head cost allocation and ITA No.4632/Mum/2024 A.Y.2020-21 7 benchmarked the transactions under the head other method. The transactions being, accounting services, general support services, PTSE charges and HAZOP charges, were also aggregated under the head ‘support services’ and was bench marked together by using TNMM method, considering AE as the testing party. It was noted by the Ld. TPO that, assessee identified comparable companies engaged in business of support services in European Regina. The Ld.TPO objected to the aggregration of transactions by the assessee. Ld.TPO called upon assessee to justify payment made to the AE’s for the services rendered by the AE’s and why it should not be treated as ‘nil’. Assessee was issued various notices in response to which replies were furnished which forms part of the paper book before this Tribunal at page 1570-4382. 2.4. The Ld.TPO on examination of the submission of the assessee held that, the intra group services are independent transaction required to be analyzed under the Comparable Uncontrolled Price (CUP) method. He also referred to OECD guidelines and held that no charge should be paid for the intra group services which the AE’s render, as an independent third party would not have made payment for such service. He further, held that the assessee failed to prove that the services rendered commensurate benefits derived there from. 2.5. The Ld.TPO while benchmarking the transaction, was of the opinion that the assessee did not establish the need for such services during the year under consideration. The Ld.TPO held that, no proof of rendering of services as well as benefit derived by the ITA No.4632/Mum/2024 A.Y.2020-21 8 assessee was furnished by the assessee. It was also observed that the assessee did not file financials of the AE. Accordingly, he treated the Arm's Length Price of Intra group services paid by the assessee as ‘nil’ by using CUP method. The Ld.TPO thus proposed adjustment of Rs.39,74,71,450 vide order dated 24/01/2014. 2.6. On receipt of the order under section 92CA(3), draft assessment order dated 25/09/2023 was issued by making transfer pricing adjustment in respect of inter company charges paid by the assessee. Aggrieved by the variation proposed in the draft assessment order, the assessee filed objection before the DRP. 3. The Ld.DRP noted that an order under 92CA(3) was passed proposing adjustment of Rs.39,74,71,450/- in respect of services availed by the assessee from its AE’s. It was noted that, transfer pricing officer concluded and determined the ALP of the said services as Nil. The assessee placed reliance on plethora of evidences by way of additional evidences before the DRP in support of the services rendered by the AE’s. 3.1. The Ld.DRP called for remand report from the transfer pricing officer on the additional evidence filed by the assessee. A copy of the remand report by the Ld.TPO is placed at page 1555-1561 of the factual paper book, scanned and reproduce as under : ITA No.4632/Mum/2024 A.Y.2020-21 9 ITA No.4632/Mum/2024 A.Y.2020-21 10 ITA No.4632/Mum/2024 A.Y.2020-21 11 ITA No.4632/Mum/2024 A.Y.2020-21 12 ITA No.4632/Mum/2024 A.Y.2020-21 13 ITA No.4632/Mum/2024 A.Y.2020-21 14 ITA No.4632/Mum/2024 A.Y.2020-21 15 3.2. The sum and substance of aforesaid remand report is that, the Ld. TPO sustained the addition merely on presumption that, though ITA No.4632/Mum/2024 A.Y.2020-21 16 some of the services would have been utilise. He also observed that, however, the services would not have so much of utility as being projected by the assessee. The Ld.TPO in the remand report was of the opinion that many of the services would not have much relevance and it may be a tool to profit shifting as identified by the Ld.TPO by the present facts. 3.3. The assessee in rejoinder to the remand report submitted that Copies of invoices and various other evidences furnished before the Ld.TPO shows rendering of services. It was submitted that, details of basis of allocation based on time from the group was also furnished. The assessee thus objected to the observations of the Ld.TPO in the remand report to be incorrect and contrary to the facts. Various submissions filed before the DRP dated 23/10/2023, 22/04/2024, were relied to establish that assessee provided all necessary details like, basis of cost allocation, certificate from the AE regarding the same in respect of each services rendered by the AE’s. 3.4. The DRP rejected the contention of the assessee and upheld the addition proposed by the Ld.TPO by observing as under: 9.3 Directions of the DRP: The applicant has not been able to demonstrate what actual services has been delivered by the AE. Email correspondences are not a proof of any service, they are just correspondences between two parties which in imperative in a group company. Actual service in the form of some actual work, research, or any such technical service etc. from which some benefit would have accrued to the assessee has not been produced. ITA No.4632/Mum/2024 A.Y.2020-21 17 For the determination of ALP of Intra Group Services, the assessee has to demonstrate that the services were not only rendered by the AE but also that the assessee had paid charges as per the arm's length. Now, the test to decide whether chargeable intragroup services have been provided under the arm's length principle is whether the activity is one for which the independent enterprise would have been willing to pay or perform itself. The independent enterprise would never pay for any service from which it does not benefit. Hence, the 'Benefit Test' determines whether the associate enterprise derives any benefit from the payment of service charges and is essential part of determination of arm's length principle. It does not question the need or necessity of incurring the expenditure but only seeks to determine the price to be paid for services in uncontrolled situations by carrying out cost-benefit analysis. As regards the arguments that it was commercially expedient for the assessee to avail these services, following discussion is due: The Hon'ble Pune bench of ITAT in cases like Eaton Fluid Power Ltd Vs. ACIT AY2008-09 held that TPO cannot sit in the judgment of business module of assessee and its intention to avail or not to avail any services from its associated enterprise. However, this view of the tribunal is not accepted by the department. This is because the TPO was anly seeking justification for the price paid so as to determine whether it is in line with the ALP price. The only intention behind carrying out the cost-benefit analysis was to determine whether in a related party situation the cost of services should be commensurate and not outweigh the economic and commercial value from such services. Thus, in such a situation, it was incumbent upon the TPO to look into the cost-benefit analysis. No independent third party would pay for the kind of alleged services rendered by the N AE. Thus the TPO has rightly determined the ALP as Nil. ………….. 10.3 Discussion of the issue by This ground is related to PTSE services availed by the assessee. The services are related to production, technology, safety and environment. These services are also intra group services. The TPO benchmarked the same using need benefit test and determined the ALP as Nil. ITA No.4632/Mum/2024 A.Y.2020-21 18 The panel has considered the submissions of the assessee, order of the TΡΟ, additional evidences, remand report and rejoinder of the assessee. The issue on the facts and circumstances of the case is examined as under: For allowing payment for central services, three things are required to be seen: 1) Whether the assessee required it ii) Whether services were actually provided ii) Whether any benefit is derived from such services. The assessee failed to prove any of the above. Much of the discussion in ground no 3 holds good for this ground also. Further, the assessee has submitted that these expenses are towards engineering and design for construction a plant in India for the production of chemicals 4-ADPA, CALD and Benzyl Benzoate. The assessee has submitted e-mails, meeting plans and has stated that employees of the Foreign Co. have visited the construction site and therefore, payment is due as a specific case. The Panel understands that the lay out, design, plans etc. of the manufacturing facility has been designed by Professionals, even the contractor has been assigned with the construciton process in India. In such a sceanrio, if at all the employees have visited, that is for supervision on behalf of the AE to check whether the construction or upgradation of the manufacturing facility is as per AE's norms. This is not a benefit to the Indian applicant, but undertaken on account of the AE's own SOP. There cannot be any benefit to the Indian company (assessee). Furthrer, there is no evidence that the employees have suggested any modifications/changes etc to the structural or process lay out. Hence, the specific case of visit does not confer any benefit to the payer Co. Also that, the Foreign AE has not shown any income attributed to its Supervision PE on this account. Hence, the claims are not acceptable. In view of the above, the adjustment proposed by TPO is upheld. ……………….. 11.2 Discussion of issue by DRP: ITA No.4632/Mum/2024 A.Y.2020-21 19 This ground of objection is with regard to availing of Support Services (IEA, Atrion, Accounting, General Support, HAZOP) amounting to INR 97,681,878/- These services are also intra group services. The TPO benchmarked the same using need-benefit test and determined the ALP as Nil. The panel has considered the submissions of the assessee, order of the TPO, additional evidences, remand report and rejoinder of the assessee. The issue on the facts and circumstances of the case is examined as under: For allowing payment for central services, three things are required to be seen. i) Whether the assessee required it ii) Whether services were actually provided iii)Whether any benefit is derived from such services. The assessee failed to prove any of the above. Discussion in ground no 3 holds good for this ground also. In view of the above, the adjustment proposed by TPO is upheld” 4. Upon receipt of the DRP direction the Ld. AO passed the impugned order by making addition in the hands of the assessee amounting to Rs.39,74,71,450/- Aggrieved by the order of the Ld. AO assessee in appeal before the Tribunal. 5. Before us the Ld.AR submitted that, only issue contested on merits in the present appeal is challenging the addition made by the Ld.AO in respect of the payments made to the AE’s towards availing IT services, PTSE services, and centrelized services by determining ITA No.4632/Mum/2024 A.Y.2020-21 20 ALP of the transaction to be Nil by disregarding the bench marking approach and methodology adopted by the assessee in the TP study report. 5.1. The Ld.AR relied on voluminous evidence to establish the need benefit test. The Ld.AR submitted that, evidence were furnished to establish rendition of services by the AE’s. The Ld.AR submitted that, considering the facts and circumstances of its case and the law prevailing on the subject, the international transaction relating to payment of the management charges entered into by the assessee with its AEs could not be regarded as NIL and, therefore, the stand taken by the Ld.AO/DRP/TPO in this regard is misconceived, erroneous and incorrect. 5.2. The Ld.AR drew our attention to the factual Paper Book filed by the assessee containing pages from 1570 to 4382. Another Paper Book was relied by him for remand report by the Ld.AO on the additional evidences and rejoinder of the assessee were placed on record. The Ld.AR submitted that, the assessee had submitted invoices, agreement, emails, cost allocation keys and its basis, for each services rendered by the AE’s. Before this Tribunal, the details of evidences filed by the assessee during the remand proceedings are summarized by the Ld.AR as under: “Services Availed and Documents submitted A) Production, Technology, Safety and Environment (‘PTSE') Descriptions of services (Page No. 167 of the Paper-book) ITA No.4632/Mum/2024 A.Y.2020-21 21 LANXESS India has entered into an agreement with LANXESS GmbH for availing certain project-based services to the Company in the field of production, technology, safety and environment. This includes services in the nature of conceptual process design and benchmarking, process modelling and process control, fluid and solid processing, operation support and safety, reaction technology including experimental investigations, catalysis, global information services, etc. ITA No.4632/Mum/2024 A.Y.2020-21 22 B) IT services Descriptions of services (Page No. 192 of the Paper-book) LANXESS India receives certain Information Technology related technical services in the nature of IT support services from LANXESS GmbH. These services are in the nature of IT support services which involve mainly provision, installation, removal, upgrade, replacement, management and maintenance of the equipment/software. ITA No.4632/Mum/2024 A.Y.2020-21 23 ITA No.4632/Mum/2024 A.Y.2020-21 24 C) Centralized services (including IEA, Atrion, Accounting, Hazop and GSS Services) Descriptions of services LANXESS India has entered into an agreement with the AE wherein the AE will be providing the following services to LANXESS India: − Accounting − Controlling − Global Procurement and Logistics − Human Resource ITA No.4632/Mum/2024 A.Y.2020-21 25 5.3. Referring to page no.1573 of the Paper Book to show that vide letter dated 20/06/2023, complete details were filed before the Ld.TPO. He thus submitted that, the assessee provided all details which proves the rendition of services, need of the services, and benefit arising from the service and further, that these services are ITA No.4632/Mum/2024 A.Y.2020-21 26 cannot not considered to be duplicative or shareholders activity as these are . The Ld.AR submitted that, despite the above details, the Ld.DRP/TPO observed that no details were furnished by the assessee and determined/upheld the ALP of the international transactions at ₹Nil. 5.4. He further submitted that, in determining the ALP, the Ld.TPO/DRP has not adopted any method. It was also submitted that, the additional evidence submitted by the assessee showing rendition of the services as well as the benefit derived by the assessee were completely ignored by the Ld.TPO/DRP. He therefore submitted that the determination of the arm's-length price at Rs.Nil of the intragroup services is not proper. 5.6. On the contrary, the Ld.DR supported the order of the Ld.TPO/DRP and submitted that, if the assessee does not satisfy the need test, the rendition test, benefit test, duplicative test and shareholder activity test, the ALP deserves to be treated at ₹ Nil. He submitted that CUP method adopted by the Ld.TPO is the specific method to be applied in the such circumstances as nobody would have paid any sum to a third party. 5.6.1. As the entire premise of addition in on the fact that no details were furnished by the assessee to establish the rendition of services, need and benefit, this Tribunal granted some time to the Ld.DR to go through the evidences filed by the assessee and to bring out any thing to support the observations of the authorities below. However, nothing was submitted by him in this regard and ITA No.4632/Mum/2024 A.Y.2020-21 27 he submitted that the matter may be remanded to the Ld.TPO for further verification. We have considered the rival submissions of both sides in the light of records placed before us. 7. The assessee entered into agreement with Lanxess GmbH for availing these services, placed at pages 2090, 3886, 4902, 4935 and 4952 of the paper book. The assessee also explained that how the charges are raised on the assessee by providing the time cost allocation working placed at pages 2102, 3930, 4907 of the paperbook. The payments towards services rendered by the AE’s, grouped under three category of PTSE services, IT Services and Centralised Services was as per the terms of the agreement with AE’s. 7.1. With respect to the rendition of the services, assessee submitted the details of emails/ correspondences between the AE’s and the assessee received. Thus, the claim of the assessee is that based on agreement, emails and invoices of the associated enterprises proves that assessee has received those services were also submitted as per the summarized chart reproduces herein above. Before the DRP, the assessee filed these voluminous evidences for all services rendered by the AE to demonstrate the services which was subjected to remand to the Ld.TPO. Hoever the Ld.TPO in the remand held that these evidences are not sufficient to show that assessee received any services and the benefits are not ITA No.4632/Mum/2024 A.Y.2020-21 28 derived out of it. It is noted that in the remand order the Ld.TPO reiterated his observations same as in the original TP order. 7.2. It is noted that, in rejoinder submitted by the assessee reproduced in the DRP direction, the assessee rebutted each and every observations of the Ld.TPO. Clearly this leads us not note that, the authorities have not considered the evidences and has denied the claim on pure surmises and conjunctures. It noted that, the assessee also obtained certificate from the AE’s for the cost allocations and the financials of the AE’s in the additional evidences filed during the DPR proceedings. However that Ld.TPO in the remand took a contrary view. There is nothing on record brought by the Ld.TPO/DRP or the Ld.DR to establish that any of the services rendered by the AE’s are duplicative services and can be catagorised as a shareholders activity. 7.3. On one hand, the stand of the authorities below is that no services are rendered, and, on the other hand, there are categorical findings that the services rendered are general in nature that even an employee of the assessee could have rendered the same Observation of the Ld.TPO in the remand report). On the one hand, it is held that arm's length price of these services is zero value, and, in the same breath, it is held that there would hardly be any substantial payment\" for these services. There is sufficient material on record to show that the assessee was, under the agreement, entitled to receive a package of services on as and when required basis. The emails and other documentary evidences show that the ITA No.4632/Mum/2024 A.Y.2020-21 29 assessee was in receipt of these services. Further in our view, legitimate business needs of the company must be judged from the view point of the company itself and must be viewed from the point of view of a prudent businessman and that the Ld.AO/TPO cannot dictate what these needs are. 7.4. Just because these services were too general, or just because the assessee did not need these services from the outside agencies in the perception of the authorities below, cannot be the reason enough to hold that the services were not rendered at all. We have perused the material before us, and, in our considered view, the assessee reasonably established rendition of services. The assessee may not have received all the services under the agreement but essentially the assessee had right to receive all these services, as and when required, under the agreement. The payments are made by the assessee for all the services agreed to be provided by the AE under the agreements. We also note that the assessee had filed the financials of the AE’s to establish that the payment received from assessee were subjected to taxation in their respective jurisdiction which has not been looked into by the authorities. The observations of the Ld.TPO/DRP are therefore without any basis and de hors any analysis of the activities or evidences 7.5. Further, there are various decisions that observed that, benefit test do have much relevance in determining the ALP of such transactions. While determining the ALP of a service, it is wholly irrelevant, as to whether, the assessee benefits from such services ITA No.4632/Mum/2024 A.Y.2020-21 30 or not. The real question to be determined is whether the price of this service is what an independent enterprise would have paid for the same. 7.6. Coming to application of CUP, depends on the market value of the arrangement under which the payments are made. Unless the Ld.TPO can identify a comparable uncontrolled case in which such similar services, are rendered and also find out consideration for the same, the CUP method cannot have any application. In the present facts, the assessee has furnished third party invoices as is evident from the chart reproduced herein above, which has not been refuted by the authorities in the remand report or in the DRP directions. There is nothing on record by the authorities to establish that the price charged by the AE’s for services rendered are over prices vis-à-vis any other third party invoices. 7.7. We thus note that the assessee has satisfied elaborately to demonstrate the cost allocations well as detailed analysis of benchmarking of the transactions for the bundled group of serviced. The assessee has sufficiently demonstrated the services are rendered by the AE’s under agreements and substantiated the need of such services. Without there being anything contrary to the evidenced filed by the assessee, we do not find any reason to justify the TP adjustment made based on wrong premises and adhoc estimation. ITA No.4632/Mum/2024 A.Y.2020-21 31 Accordingly, the ground no. 4-15 raised by the assessee stands allowed. 8. The Ld.AR also submitted that the assessee intends to withdraw Ground No.1-3. Accordingly Ground no. 1-3 is dismissed as withdrawn. In the result, the appeal filed by the assessee stands partly allowed. Order pronounced in the open court on 20/01/2025 Sd/- Sd/- (PRABHASH SHANKAR) (BEENA PILLAI) Accountant Member Judicial Member Mumbai: Dated: 20/01/2025 Poonam Mirashi,/Dragon Stenographer Copy of the order forwarded to: (1)The Appellant (2) The Respondent (3) The CIT (4) The CIT (Appeals) (5) The DR, I.T.A.T. True Copy By order "