O.C TANNER INDIA PRIVATE LIMITED ,MUMBAI V. DCIT, CIRCLE -2(3)(1), MUMBAI

ITA 5785/MUM/2024

AI Insights

The case involves O.C. Tanner India Pvt. Ltd., which appealed against the final assessment order concerning transfer pricing adjustments for the assessment year 2021-22. The adjustments were related to intra-group services amounting to INR 6,80,87,902 and an outstanding receivable of INR 2,97,647. The appeal followed a direction from the Dispute Resolution Panel (DRP) and was heard by the Income Tax Appellate Tribunal, which allowed the admission of additional evidence and remanded the case for re-evaluation by the Assessing Officer.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 712158 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-07-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Assessment Year: 2021-2022
• Other Referred Cases: EOS Power India (P.) Ltd. v. JCIT [2023] 154 taxmann.com 131 (Mumbai - Trib.)
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ASIF KAR MALI
• Assessee Lawyers: VIJAY MEHTA
• Keywords: Set aside; Additional evidence; Transfer pricing; International transaction; Depreciation; Unabsorbed depreciation
• Section: 92C

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “J” MUMBAI BEFORE SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) AND MS. KAVITHA RAJAGOPAL (JUDICIAL MEMBER) ITA No. 5785/MUM/2024 Assessment Year: 2021-22 O.C. Tanner India Pvt. Ltd., No. 2, Lave 7 Tower 2, Phase II, Raiaskaran Techpark Andheri Kurla Road, Andheri East, Sakinaka S.O. Mumbai, Mumbai-400072. Vs. Dy. CIT, Circle-2(3)(1), 552, 5th floor, Aayakar Bhavan, Maharishi Karve Road, Mumbai-400020. PAN NO. AABCO 1031 F Appellant Respondent Assessee by : Mr. Vijay Mehta, CA Revenue by : Mr. Asif Karmali, Sr. DR Date of Hearing : 10/07/2025 Date of pronouncement : 24/07/2025 ORDER PER OM PRAKASH KANT, AM This appeal by the assessee is directed against final assessment order dated 10.09.2022, passed by the Assessment Unit, Income-tax Department [in short ‘the Ld. Assessing Officer’] for assessment year 2021-22, pursuant to the direction dated 30.08.2024 of the Ld. Dispute Resolution Panel-2, Mumbai [in short ‘the Ld. DRP’]. In the grounds raised, the assessee is agitated with the addition of Transfer Pricing Adjustments, firstly, in relation to Printed from counselvise.com Intra Group Services of Rs.6,80,87,902/ outstanding receivable of Rs.2,97,647/ 2. Briefly stated, facts of the return of income for the year under consideration on 15.03.2022 declaring total income assessee was selected for scrutiny and statutory notices under the Income-tax Act, 1961 (in short ‘the Act’) were issued and complied with. In view of international transaction carried out by the assessee with its Associated E determination of arm’s length price (ALP) of those international transactions was referred to The ld. TPO proposed adjustment transaction of the Intra group services and interest receivables. The Ld. Assessing Officer after taking into consideration, transfer pricing adjustment proposed by the Ld. TPO passed draft assessment order on 28.11.2023. 2.1 Aggrieved by the variations proposed in the draft order, the assessee filed objections before the Dispute Resolution Panel (DRP), along with additional services from its AE. The DRP sought a remand report from the AO and, after considering the same along with the assessee’s rejoinder, issued directions under section 144C(5) those directions, the AO passed the O.C. Tanner India Pvt. Ltd ITA No. 5785/MUM/2024 Intra Group Services of Rs.6,80,87,902/- and secondly, outstanding receivable of Rs.2,97,647/-. Briefly stated, facts of the case are that the assessee filed its return of income for the year under consideration on 15.03.2022 declaring total income at Rs. Nil. The return of income filed by the assessee was selected for scrutiny and statutory notices under the 61 (in short ‘the Act’) were issued and complied with. In view of international transaction carried out by the ith its Associated Enterprises(AEs), t arm’s length price (ALP) of those international ferred to the ld. Transfer Pricing Officer (T proposed adjustments to the value of the international transaction of the Intra group services and interest . The Ld. Assessing Officer after taking into transfer pricing adjustment proposed by the Ld. TPO passed draft assessment order on 28.11.2023. Aggrieved by the variations proposed in the draft order, the assessee filed objections before the Dispute Resolution Panel (DRP), along with additional evidences relating to receipt of intra services from its AE. The DRP sought a remand report from the AO and, after considering the same along with the assessee’s rejoinder, issued directions under section 144C(5) of the Act ons, the AO passed the final assessment order O.C. Tanner India Pvt. Ltd 2 ITA No. 5785/MUM/2024 secondly, interest on case are that the assessee filed its return of income for the year under consideration on 15.03.2022 Rs. Nil. The return of income filed by the assessee was selected for scrutiny and statutory notices under the 61 (in short ‘the Act’) were issued and complied with. In view of international transaction carried out by the nterprises(AEs), the matter of arm’s length price (ALP) of those international the ld. Transfer Pricing Officer (TPO). to the value of the international transaction of the Intra group services and interest on outstanding . The Ld. Assessing Officer after taking into transfer pricing adjustment proposed by the Ld. TPO, Aggrieved by the variations proposed in the draft order, the assessee filed objections before the Dispute Resolution Panel (DRP), evidences relating to receipt of intra-group services from its AE. The DRP sought a remand report from the AO and, after considering the same along with the assessee’s rejoinder, of the Act. Pursuant to final assessment order under Printed from counselvise.com section 144C(13), upholding the transfer pricing adjustments in full. The additions made in the final assessment are as under: S. No. Particulars 1 Income as per return 2 Unabsorbed depreciation set off 3 TP Adjustments - Management Fee - Marketing Services - Interest on Receivables 4 Total Income (Loss) 3. Before us, the Learned Counsel for the assessee has raised an additional ground challenging the limitation for passing the final order. However, during hearing, it was submitted that the assessee primarily seeks admission of further documentary evidence to the intra-group services, and requested that the matter be restored to the lower authorities additional ground challenging limitation may be left open for adjudication at appropriate stage a sample set of emails was submitted before the DRP, which led to an adverse finding on receipt of services. To rebut the DRP’s findings and substantiate the claim of actual service rendition, the assessee now proposes to file an expanded set of evidence including: O.C. Tanner India Pvt. Ltd ITA No. 5785/MUM/2024 section 144C(13), upholding the transfer pricing adjustments in The additions made in the final assessment are as under: Particulars Amount (INR) Income as per return Nil depreciation set off (-) 11,78,16,880 TP Adjustments 6,83,85,549 Management Fee Marketing Services Interest on Receivables 5,29,72,345 1,51,15,557 2,97,647 Total Income (Loss) (-) 4,94,31,331 Learned Counsel for the assessee has raised an additional ground challenging the limitation for passing the final order. However, during hearing, it was submitted that the assessee admission of further documentary evidence group services, and requested that the matter be restored to the lower authorities for re-adjudication on merits additional ground challenging limitation may be left open for adjudication at appropriate stage. The assessee contends that only ple set of emails was submitted before the DRP, which led to an adverse finding on receipt of services. To rebut the DRP’s findings and substantiate the claim of actual service rendition, the assessee now proposes to file an expanded set of evidence O.C. Tanner India Pvt. Ltd 3 ITA No. 5785/MUM/2024 section 144C(13), upholding the transfer pricing adjustments in The additions made in the final assessment are as under: Amount (INR) ) 11,78,16,880 ) 4,94,31,331 Learned Counsel for the assessee has raised an additional ground challenging the limitation for passing the final order. However, during hearing, it was submitted that the assessee admission of further documentary evidence relating group services, and requested that the matter be adjudication on merits the additional ground challenging limitation may be left open for . The assessee contends that only ple set of emails was submitted before the DRP, which led to an adverse finding on receipt of services. To rebut the DRP’s findings and substantiate the claim of actual service rendition, the assessee now proposes to file an expanded set of evidence Printed from counselvise.com  Comprehensive email correspondences demonstrating scope and nature of services;  Sample invoices raised by the AE on other group entities;  Details of the assessee’s employees and their qualifications to establish commercial necessity of AE support. 4. The learned Departmental Representative opposed the admission of additional evidence, contending that sufficient opportunity had already been afforded to the assessee during proceedings before the DRP. 5. We have heard rival submissions of the parties and the relevant materials on record. intra-group services is concerned, we note that the DRP, after extensive analysis, held against the assessee primarily on the ground that the evidences were insufficient to demonstrat receipt and benefit of services rendered by the AE. The DRP upheld the ALP at nil using the \"Other Method\" under Rule 10AB, inter alia, citing the failure of the lack of third-party comparables or detailed c documentation. The relevant finding of the Ld. DRP is reproduced as under: “8.3.4. The findings of the Panel are as under: (i) Failure of Service Rendition and Receipt Test: O.C. Tanner India Pvt. Ltd ITA No. 5785/MUM/2024 Comprehensive email correspondences demonstrating scope and nature of services; Sample invoices raised by the AE on other group entities; Details of the assessee’s employees and their qualifications to establish commercial necessity of AE support. The learned Departmental Representative opposed the admission of additional evidence, contending that sufficient opportunity had already been afforded to the assessee during proceedings before the DRP. We have heard rival submissions of the parties and the relevant materials on record. Insofar as the claim regarding group services is concerned, we note that the DRP, after extensive analysis, held against the assessee primarily on the ground that the evidences were insufficient to demonstrat receipt and benefit of services rendered by the AE. The DRP upheld the ALP at nil using the \"Other Method\" under Rule 10AB, inter alia, citing the failure of the need, rendition, and benefit party comparables or detailed c The relevant finding of the Ld. DRP is reproduced “8.3.4. The findings of the Panel are as under: (i) Failure of Service Rendition and Receipt Test: O.C. Tanner India Pvt. Ltd 4 ITA No. 5785/MUM/2024 Comprehensive email correspondences demonstrating scope Sample invoices raised by the AE on other group entities; Details of the assessee’s employees and their qualifications to The learned Departmental Representative opposed the admission of additional evidence, contending that sufficient opportunity had already been afforded to the assessee during We have heard rival submissions of the parties and perused Insofar as the claim regarding group services is concerned, we note that the DRP, after extensive analysis, held against the assessee primarily on the ground that the evidences were insufficient to demonstrate actual receipt and benefit of services rendered by the AE. The DRP upheld the ALP at nil using the \"Other Method\" under Rule 10AB, inter benefit tests, and party comparables or detailed cost-benefit The relevant finding of the Ld. DRP is reproduced “8.3.4. The findings of the Panel are as under: (i) Failure of Service Rendition and Receipt Test: Printed from counselvise.com In this case, the Transfer Pricing Officer has meticulously analyzed the extent of the so AE to the Applicant Assessee. The Transfer Pricing Officer has also worked out the price of services actually rendered. Upon scrutiny, the T.P.O concluded that the services rendered did not yield any fur benefits to the Applicant, than what was determined as Arm's Length Price. Even, the Applicant assessee has failed to establish the threshold conditions of necessity, request, and rendition of services by the AE or r applicant. (ii) \"Other Method\" (chosen by TPO) as Most Appropriate Method: In the absence of concrete evidence demonstrating receipt as well as tangible benefits received by the assessee, the T.P.O arrived at the decision to set t at Rs. Nil/-. This decision has been based on the principle that transfer prices between related entities should be at arm's length to ensure absence of tax avoidance. The Panel finds that such a decision can be arrived at Method\". The Panel holds that the method to be applied on the impugned transactions undertaken by the Applicant can be fitted in the \"Other Method\" provided in Rule 10AB r.w.s.s. 92C (1) and in our opinion this is the Most Appropriate (MAM) in the peculiar facts of the Assessee. Accordingly, the Panel holds that \"Other Method\" is an appropriate substitute for TNMM as there is lack of service rendition and service receipt, and looking to the peculiar fact that the relevant payment is to be segregated for deeper examination. Therefore, Panel upholds adoption of \"Other method\" as the Most Appropriate Method on the facts of the case. (iii) Further, the Panel has examined the facts and \"evidence\" advanced by the applicant assessee. It the \"evidences\" comprise of e Working with invoice, Cost allocations, working of the Group Cost Allocations etc. There are no other documents for rendition or receipt of any services. The panel has examined all the documents related to Management Service Fees and Marketing fees, etc. These documents are general in nature, and there is no evidence of actual rendition or specific services O.C. Tanner India Pvt. Ltd ITA No. 5785/MUM/2024 In this case, the Transfer Pricing Officer has meticulously the extent of the so-called services provided by the AE to the Applicant Assessee. The Transfer Pricing Officer has also worked out the price of services actually rendered. Upon scrutiny, the T.P.O concluded that the services rendered did not yield any further discernible economic or commercial benefits to the Applicant, than what was determined as Arm's Length Price. Even, the Applicant assessee has failed to establish the threshold conditions of necessity, request, and rendition of services by the AE or receipt of services by the (ii) \"Other Method\" (chosen by TPO) as Most Appropriate In the absence of concrete evidence demonstrating receipt as well as tangible benefits received by the assessee, the T.P.O arrived at the decision to set the ALP for the so-called services . This decision has been based on the principle that transfer prices between related entities should be at arm's length to ensure absence of tax avoidance. The Panel finds that such a decision can be arrived at by using the \"Other Method\". The Panel holds that the method to be applied on the impugned transactions undertaken by the Applicant can be fitted in the \"Other Method\" provided in Rule 10AB r.w.s.s. 92C (1) and in our opinion this is the Most Appropriate (MAM) in the peculiar facts of the Assessee. Accordingly, the Panel holds that \"Other Method\" is an appropriate substitute for TNMM as there is lack of service rendition and service receipt, and looking to the peculiar fact that the relevant is to be segregated for deeper examination. Therefore, Panel upholds adoption of \"Other method\" as the Most Appropriate Method on the facts of the case. (iii) Further, the Panel has examined the facts and \"evidence\" advanced by the applicant assessee. It is found that mostly the \"evidences\" comprise of e-mails, Invoices, Agreement, Working with invoice, Cost allocations, working of the Group Cost Allocations etc. There are no other documents for rendition or receipt of any services. The panel has examined all the documents related to Management Service Fees and Marketing fees, etc. These documents are general in nature, and there is no evidence of actual rendition or specific services O.C. Tanner India Pvt. Ltd 5 ITA No. 5785/MUM/2024 In this case, the Transfer Pricing Officer has meticulously called services provided by the AE to the Applicant Assessee. The Transfer Pricing Officer has also worked out the price of services actually rendered. Upon scrutiny, the T.P.O concluded that the services rendered did ther discernible economic or commercial benefits to the Applicant, than what was determined as Arm's Length Price. Even, the Applicant assessee has failed to establish the threshold conditions of necessity, request, and eceipt of services by the (ii) \"Other Method\" (chosen by TPO) as Most Appropriate In the absence of concrete evidence demonstrating receipt as well as tangible benefits received by the assessee, the T.P.O called services . This decision has been based on the principle that transfer prices between related entities should be at arm's length to ensure absence of tax avoidance. The Panel finds by using the \"Other Method\". The Panel holds that the method to be applied on the impugned transactions undertaken by the Applicant can be fitted in the \"Other Method\" provided in Rule 10AB r.w.s.s. 92C (1) and in our opinion this is the Most Appropriate Method (MAM) in the peculiar facts of the Assessee. Accordingly, the Panel holds that \"Other Method\" is an appropriate substitute for TNMM as there is lack of service rendition and service receipt, and looking to the peculiar fact that the relevant is to be segregated for deeper examination. Therefore, Panel upholds adoption of \"Other method\" as the (iii) Further, the Panel has examined the facts and \"evidence\" is found that mostly mails, Invoices, Agreement, Working with invoice, Cost allocations, working of the Group Cost Allocations etc. There are no other documents for rendition or receipt of any services. The panel has examined all the documents related to Management Service Fees and Marketing fees, etc. These documents are general in nature, and there is no evidence of actual rendition or specific services Printed from counselvise.com to the Applicant or, receipts of the specific services by the Applicant. (iv) Inter-company Service Agreement: The Inter-company services agreement is broad and vague. It is not exclusively between the assessee and the AE but between the AE OC Tanner Co. USA and various group companies spread out across Europe (UK), Asia, Ameri (Mexico) and the Far East. (Japan) A large no. of services have been listed in it, and it has no bearing to the current A.Y. of the exact set of claimed services. Further, the Agreement, as entered between AEs as per Group Policy, does not carry any independent value. Further, the copy of methodology and calculation of the allocation of management fees and marketing fees is also a theoretical document. The inter company agreement, entered between Associated Enterprises, do not carry the force of convict party agreement. The Inter-Company Agreement submitted by the assessee (8 pages) is also incomplete and outdated. It claims to be effective for 10 years effective from January 1st, 2010 viz till December 31st, 2019. It is unclea applicant is using the same agreement to benchmark transactions taking place in Financial Year 2020 April 2020 to March 2021. (v) The invoices provided by the applicant as evidence of payment for 'services; also refer to Service Agreement January 1, 2010, which has expired before the current financial year. No evidence of any extension of the Inter Company agreement has been provided before the TPO or the Panel. (vi) Allocation Keys are not Evidence of Receipt: The Group has solely re charge of group cost to noteworthy that the applicant has contended that the Allocation of group cost across different departments or entities have been made as per varied parameters. For example, in the IT department, costs have been allocated based on the number of users/units/headcount available. O.C. Tanner India Pvt. Ltd ITA No. 5785/MUM/2024 to the Applicant or, receipts of the specific services by the company Service Agreement: company services agreement is broad and vague. It is not exclusively between the assessee and the AE but between the AE OC Tanner Co. USA and various group companies spread out across Europe (UK), Asia, Ameri (Mexico) and the Far East. (Japan) A large no. of services have been listed in it, and it has no bearing to the current A.Y. of the exact set of claimed services. Further, the Agreement, as entered between AEs as per Group Policy, does not carry any ependent value. Further, the copy of methodology and calculation of the allocation of management fees and marketing fees is also a theoretical document. The inter company agreement, entered between Associated Enterprises, do not carry the force of conviction, as compared to a third party agreement. Company Agreement submitted by the assessee (8 pages) is also incomplete and outdated. It claims to be effective for 10 years effective from January 1st, 2010 viz till December 31st, 2019. It is unclea applicant is using the same agreement to benchmark transactions taking place in Financial Year 2020 April 2020 to March 2021. (v) The invoices provided by the applicant as evidence of payment for 'services; also refer to Service Agreement January 1, 2010, which has expired before the current financial year. No evidence of any extension of the Inter Company agreement has been provided before the TPO or the (vi) Allocation Keys are not Evidence of Receipt: The Group has solely relied on the Allocation Keys for charge of group cost to the Applicant. Further, it is noteworthy that the applicant has contended that the Allocation of group cost across different departments or entities have been made as per varied parameters. For e, in the IT department, costs have been allocated based on the number of users/units/headcount available. O.C. Tanner India Pvt. Ltd 6 ITA No. 5785/MUM/2024 to the Applicant or, receipts of the specific services by the company services agreement is broad and vague. It is not exclusively between the assessee and the AE but between the AE OC Tanner Co. USA and various group companies spread out across Europe (UK), Asia, America (Mexico) and the Far East. (Japan) A large no. of services have been listed in it, and it has no bearing to the current A.Y. of the exact set of claimed services. Further, the Agreement, as entered between AEs as per Group Policy, does not carry any ependent value. Further, the copy of methodology and calculation of the allocation of management fees and marketing fees is also a theoretical document. The inter- company agreement, entered between Associated Enterprises, ion, as compared to a third Company Agreement submitted by the assessee (8 pages) is also incomplete and outdated. It claims to be effective for 10 years effective from January 1st, 2010 viz till December 31st, 2019. It is unclear how the applicant is using the same agreement to benchmark transactions taking place in Financial Year 2020-21 viz (v) The invoices provided by the applicant as evidence of payment for 'services; also refer to Service Agreement dated January 1, 2010, which has expired before the current financial year. No evidence of any extension of the Inter- Company agreement has been provided before the TPO or the (vi) Allocation Keys are not Evidence of Receipt: lied on the Allocation Keys for Further, it is noteworthy that the applicant has contended that the Allocation of group cost across different departments or entities have been made as per varied parameters. For e, in the IT department, costs have been allocated based on the number of users/units/headcount available. Printed from counselvise.com These are methods for determination of \"payment\", but not evidence of receipt of services. The proceedings focus on actual \"receipt\" of services; the not relevant. Further, as per the Applicant/common agreement, costs for differing services have been allocated to applicant on basis of allocation formulae and keys, as determined and apportioned by the parent entity, OC questioned / enquired into the allocation formulae. This reflects and establishes that the applicant has no role in the determination of the allocations, and it is just a cost imposed by the Associated Enterprise without (vii) No detailed information or Expenditures / Valuation: The applicant has not provided detailed service information regarding the costs incurred by the AEs, along with corroborating evidence of these expenses being used for cost allocation or direct expense allocation purportedly incurred on behalf of the applicant, as well as proof of specific requests made for each service provided by the AE to the applicant. The Applicant has stated that the Associated Enterprises have worked out the costs on basis of Allocation Tables (That allude to head-count, etc.), and the applicant has paid it. This is a typical case of un assessee has made the payment without any need receipt-benefit an (viii) Failure of Need Test: Attention is drawn to Clause 2.1 'Rendition of Services' of the Inter-Company Agreement (dated 1.1.2010). The said clause states that \" Provider companies (i.e the AE) agree to render t group benefit services to recipient companies(applicant) on a continuing basis without any further specific request from Recipient Companies.\" (emphasis supplied) O.C. Tanner India Pvt. Ltd ITA No. 5785/MUM/2024 These are methods for determination of \"payment\", but not evidence of receipt of services. The proceedings focus on actual \"receipt\" of services; the issues of allocation key etc. are not relevant. Further, as per the Applicant/common agreement, costs for differing services have been allocated to applicant on basis of allocation formulae and keys, as determined and apportioned by the parent entity, OC Tanner, USA. The applicant has not questioned / enquired into the allocation formulae. This reflects and establishes that the applicant has no role in the determination of the allocations, and it is just a cost imposed by the Associated Enterprise without any Arm's length basis. (vii) No detailed information or Expenditures / The applicant has not provided detailed service information regarding the costs incurred by the AEs, along with corroborating evidence of these expenses being used for cost allocation or direct expense allocation purportedly incurred on behalf of the applicant, as well as proof of specific requests made for each service provided by the AE to the The Applicant has stated that the Associated Enterprises have rked out the costs on basis of Allocation Tables (That allude count, etc.), and the applicant has paid it. This is a typical case of un-benchmarked IGS, where the Applicant assessee has made the payment without any need benefit analysis, at the instruction of the HO/AES. (viii) Failure of Need Test: Attention is drawn to Clause 2.1 'Rendition of Services' of the Company Agreement (dated 1.1.2010). The said clause states that \" Provider companies (i.e the AE) agree to render t group benefit services to recipient companies(applicant) on a continuing basis without any further specific request from Recipient Companies.\" (emphasis supplied) O.C. Tanner India Pvt. Ltd 7 ITA No. 5785/MUM/2024 These are methods for determination of \"payment\", but not evidence of receipt of services. The proceedings focus on issues of allocation key etc. are Further, as per the Applicant/common agreement, costs for differing services have been allocated to applicant on basis of allocation formulae and keys, as determined and apportioned Tanner, USA. The applicant has not questioned / enquired into the allocation formulae. This reflects and establishes that the applicant has no role in the determination of the allocations, and it is just a cost imposed any Arm's length basis. (vii) No detailed information or Expenditures / The applicant has not provided detailed service-wise information regarding the costs incurred by the AEs, along with corroborating evidence of these expenses being used for cost allocation or direct expense allocation purportedly incurred on behalf of the applicant, as well as proof of specific requests made for each service provided by the AE to the The Applicant has stated that the Associated Enterprises have rked out the costs on basis of Allocation Tables (That allude count, etc.), and the applicant has paid it. This is a benchmarked IGS, where the Applicant assessee has made the payment without any need-rendition- alysis, at the instruction of the HO/AES. Attention is drawn to Clause 2.1 'Rendition of Services' of the Company Agreement (dated 1.1.2010). The said clause states that \" Provider companies (i.e the AE) agree to render to group benefit services to recipient companies(applicant) on a continuing basis without any further specific request from Printed from counselvise.com Thus it is apparent that the applicant has not eve even requested for the services, which clearly demonstrates a failure of the 'Need' Test on this count. (ix) Absence of Arm's length Valuation of Services, if any: Moreover, notwithstanding certain activities being centralized at the group level, unless such services requested for and also rendered, and then utilised; those cannot be invoiced. The applicant has failed to furnish adequate evidence regarding (a) whether such services were indeed requested, (b) the manner and timing of service provision by (c) utilisation of the services, and (d) the prevailing market rate for these services and Arm's length valuation. Consequently, without specific details, it is impossible to ascertain the costs incurred by the AEs for payments made. (x) Furthermore, the applicant has not furnished details of the exact expenditures incurred by the AE in providing the services. Mere descriptions of various services rendered by the AE are insufficient to justify the prices charged for intra services. The app disclosing the actual amounts expended by the AE for each of these services. (xi) No Valid Comparables: Moreover, the applicant has not presented any valid comparable cases to justify why any party would make su payments without evidence of services being rendered or benefits accruing. The applicant has mentioned 7 foreign companies as comparables which it claims are engaged in provision of similar services as the AE, but has not demonstrated comparability, fur companies or audited financials. Hence, the applicant's case suffers from absence of application of any method prescribed under the Income Tax Act, 1961/ the Income Tax Rules, 1962. O.C. Tanner India Pvt. Ltd ITA No. 5785/MUM/2024 Thus it is apparent that the applicant has not eve even requested for the services, which are being billed to it. It clearly demonstrates a failure of the 'Need' Test on this count. (ix) Absence of Arm's length Valuation of Services, if Moreover, notwithstanding certain activities being centralized at the group level, unless such services are explicitly requested for and also rendered, and then utilised; those cannot be invoiced. The applicant has failed to furnish adequate evidence regarding (a) whether such services were indeed requested, (b) the manner and timing of service provision by (c) utilisation of the services, and (d) the prevailing market rate for these services and Arm's length valuation. Consequently, without specific details, it is impossible to ascertain the costs incurred by the AEs for payments made. rmore, the applicant has not furnished details of the exact expenditures incurred by the AE in providing the services. Mere descriptions of various services rendered by the AE are insufficient to justify the prices charged for intra services. The applicant has outlined various services without disclosing the actual amounts expended by the AE for each of these services. (xi) No Valid Comparables: Moreover, the applicant has not presented any valid comparable cases to justify why any party would make su payments without evidence of services being rendered or benefits accruing. The applicant has mentioned 7 foreign companies as comparables which it claims are engaged in provision of similar services as the AE, but has not demonstrated comparability, further details of those companies or audited financials. Hence, the applicant's case suffers from absence of application of any method prescribed under the Income Tax Act, 1961/ the Income Tax Rules, 1962. O.C. Tanner India Pvt. Ltd 8 ITA No. 5785/MUM/2024 Thus it is apparent that the applicant has not eve even are being billed to it. It clearly demonstrates a failure of the 'Need' Test on this count. (ix) Absence of Arm's length Valuation of Services, if Moreover, notwithstanding certain activities being centralized are explicitly requested for and also rendered, and then utilised; those The applicant has failed to furnish adequate evidence regarding (a) whether such services were indeed requested, (b) the manner and timing of service provision by the AE, and (c) utilisation of the services, and (d) the prevailing market rate Consequently, without specific details, it is impossible to ascertain the costs incurred by the AEs for payments made. rmore, the applicant has not furnished details of the exact expenditures incurred by the AE in providing the services. Mere descriptions of various services rendered by the AE are insufficient to justify the prices charged for intra-group licant has outlined various services without disclosing the actual amounts expended by the AE for each of Moreover, the applicant has not presented any valid comparable cases to justify why any party would make such payments without evidence of services being rendered or benefits accruing. The applicant has mentioned 7 foreign companies as comparables which it claims are engaged in provision of similar services as the AE, but has not ther details of those companies or audited financials. Hence, the applicant's case suffers from absence of application of any method prescribed under the Income Tax Act, 1961/ the Income Tax Rules, 1962. Printed from counselvise.com (xii) The applicant has not been able to provide sufficient evidence demonstrating that the payments made correspond only to the benefits received or align with prices charged between independent parties dealing at arm's length. details about the actual costs incurred for the na services rendered by the AE to the applicant. In an arm's length scenario, payment is determined not only by the service provider's willingness to accept a certain price but also by the service recipient's willingness to pay. The Applicant has referenced various services to support the aforementioned invoices without presenting sufficient evidence that such services were actually rendered. (xiii) Thus, the Applicant has challenged the Arm's Length Price determined by the Transfer Pricing Officer, mere sample documents / communications etc. to claim that Applicant has received services from Foreign AEs. The Panel is of considered opinion that a sample cannot determine the Arm's Length Price of other, extra transactions (xiv) The applicant has to establish that tangible benefit has been derived from services and such service have led to overall benefit and the cost savings. Perusal of the submitted \"Benefit Analysis\" (carried out for management services) reveals that the benefits na respective column are highly exaggerated and disproportionate to the actual communication itself which is in the nature of basic routine correspondence like sharing of the Indian entity's Annual Holidays List, Sharing of Quarterly Newsletter (of AE), Press Releases issued by the AE etc. There is absolutely no possibility that an independent entity would pay an unrelated party for sharing this kind of information. Further, under Transfer Pricing provisions, the Applicant is required to establis appropriate and would have been paid by a third For this, the Applicant was to establish the nature, volume, quality of services and the market rates thereof. O.C. Tanner India Pvt. Ltd ITA No. 5785/MUM/2024 The applicant has not been able to provide fficient evidence demonstrating that the payments made correspond only to the benefits received or align with prices charged between independent parties dealing at arm's length. The evidence provided lacks details about the actual costs incurred for the na services rendered by the AE to the applicant. In an arm's length scenario, payment is determined not only by the service provider's willingness to accept a certain price but also by the service recipient's willingness to pay. The Applicant has renced various services to support the aforementioned invoices without presenting sufficient evidence that such services were actually rendered. (xiii) Thus, the Applicant has challenged the Arm's Length Price determined by the Transfer Pricing Officer, mere sample documents / communications etc. to claim that Applicant has received services from Foreign AEs. The Panel is of considered opinion that a sample cannot determine the Arm's Length Price of other, extra transactions. pplicant has to establish that tangible benefit has been derived from services and such service have led to overall benefit and the cost savings. Perusal of the submitted \"Benefit Analysis\" (carried out for management services) reveals that the benefits na respective column are highly exaggerated and disproportionate to the actual communication itself which is in the nature of basic routine correspondence like sharing of the Indian entity's Annual Holidays List, Sharing of Quarterly (of AE), Press Releases issued by the AE etc. There is absolutely no possibility that an independent entity would pay an unrelated party for sharing this kind of information. Further, under Transfer Pricing provisions, the Applicant is required to establish that the payment for claimed services are appropriate and would have been paid by a third For this, the Applicant was to establish the nature, volume, quality of services and the market rates thereof. O.C. Tanner India Pvt. Ltd 9 ITA No. 5785/MUM/2024 The applicant has not been able to provide fficient evidence demonstrating that the payments made correspond only to the benefits received or align with prices charged between independent parties The evidence provided lacks details about the actual costs incurred for the nature of services rendered by the AE to the applicant. In an arm's length scenario, payment is determined not only by the service provider's willingness to accept a certain price but also by the service recipient's willingness to pay. The Applicant has renced various services to support the aforementioned invoices without presenting sufficient evidence that such (xiii) Thus, the Applicant has challenged the Arm's Length Price determined by the Transfer Pricing Officer, relying on mere sample documents / communications etc. to claim that Applicant has received services from Foreign AEs. The Panel is of considered opinion that a sample cannot determine the Arm's Length Price of other, extra-sample pplicant has to establish that tangible benefit has been derived from services and such service have led to Perusal of the submitted \"Benefit Analysis\" (carried out for management services) reveals that the benefits narrated in the respective column are highly exaggerated and disproportionate to the actual communication itself which is in the nature of basic routine correspondence like sharing of the Indian entity's Annual Holidays List, Sharing of Quarterly (of AE), Press Releases issued by the AE etc. There is absolutely no possibility that an independent entity would pay an unrelated party for sharing this kind of information. Further, under Transfer Pricing provisions, the Applicant is h that the payment for claimed services are appropriate and would have been paid by a third-party also. For this, the Applicant was to establish the nature, volume, Printed from counselvise.com (xiv) The Ld. TPO has examined the facts examined the claimed nature and extent of the so services. Hon'ble ITAT in EOS Power India (P.) Ltd. v. JCIT [2023] 154 taxmann.com 131 (Mumbai for purposes of determination of ALP of intra assessee must demonstrate need test, benefit test and rendition test. Hence, upon careful examination of the \"evidences\", the Panel is of the considered opinion that the Applicant has not received any service form the Associated Enterprises for which a third 5.1 Before us, the assessee has invoked tax (Appellate Tribunal) Rules, 1963, for admission of additional evidence. The Ld. Counsel for the assessee submitted that during the course of the assessment proceedings before the Ld. TPO and the Ld. DRP, the assessee had submitted a sample contemporaneous e rendering of services by Ld. TPO and the Ld. DRP observed that the evidences ‘sample based’ and failed to were rendered by the assessee. The Ld. Counsel further submitted that counter the aforesaid conclusion and continuous and active seeks to submit additional evidence for consideration: “a. Larger Set of Email Correspondences: The Appellant is submitting a significantly expanded set of email correspondences that demonstrate nature, and scope of interactions between the Appellant and its AE. These O.C. Tanner India Pvt. Ltd ITA No. 5785/MUM/2024 (xiv) The Ld. TPO has examined the facts of the case, examined the claimed nature and extent of the so services. Hon'ble ITAT in EOS Power India (P.) Ltd. v. JCIT [2023] 154 taxmann.com 131 (Mumbai - Trib.) has held that for purposes of determination of ALP of intra-group services, ee must demonstrate need test, benefit test and rendition test. Hence, upon careful examination of the \"evidences\", the Panel is of the considered opinion that the Applicant has not received any service form the Associated Enterprises for which a third-party, unrelated person would pay Before us, the assessee has invoked Rule 18(4) tax (Appellate Tribunal) Rules, 1963, for admission of additional The Ld. Counsel for the assessee submitted that during the course of the assessment proceedings before the Ld. TPO and the Ld. DRP, the assessee had submitted a sample contemporaneous e-mails correspondences to substantiate rendering of services by the AE. The Ld. Counsel submitted that the Ld. TPO and the Ld. DRP observed that the evidences and failed to conclusively demonstrate rendered by the assessee. The Ld. Counsel further submitted aforesaid conclusion and substantiates active involvement of the AE, the assessee now additional evidence containing following documents a. Larger Set of Email Correspondences: The Appellant is submitting a significantly expanded set of email correspondences that demonstrate nature, and scope of interactions between the Appellant and its AE. These O.C. Tanner India Pvt. Ltd 10 ITA No. 5785/MUM/2024 of the case, examined the claimed nature and extent of the so-called services. Hon'ble ITAT in EOS Power India (P.) Ltd. v. JCIT Trib.) has held that group services, ee must demonstrate need test, benefit test and Hence, upon careful examination of the \"evidences\", the Panel is of the considered opinion that the Applicant has not received any service form the Associated Enterprises for the sums.” Rule 18(4) of the Income- tax (Appellate Tribunal) Rules, 1963, for admission of additional The Ld. Counsel for the assessee submitted that during the course of the assessment proceedings before the Ld. TPO and the Ld. DRP, the assessee had submitted a sample set off to substantiate the AE. The Ld. Counsel submitted that the Ld. TPO and the Ld. DRP observed that the evidences were only demonstrate that services rendered by the assessee. The Ld. Counsel further submitted substantiates the , the assessee now following documents The Appellant is submitting a significantly expanded set of email correspondences that demonstrate nature, and scope of interactions between the Appellant and its AE. These Printed from counselvise.com communications pertain to strategic business decisions, financial reviews, marketin support. While the intangible nature of management and marketing services inherently makes it difficult to document every instance of service provision, the additional emails now placed on record capture substantive engagemen sustained period of time. These records highlight not only strategic advice, but also functional execution inputs from the AE, benefiting the appellant in its day operations. The Hon’ble Members may appreciate that in cases involvi intra-group services, especially of managerial and advisory nature, tangible outputs may not always be available in documentary form, and hence, the cumulative evidentiary value of regular, topic The Appellant subm now being submitted cover key aspects of the Appellant’s operations and provide strong corroboration of actual service delivery. b. Sample Invoices Raised by the AE on Other Group Entities: To further reinforce the b the Appellant is submitting sample invoices issued by the AE to other operating group companies for similar services. This demonstrates that the AE follows a uniform, group service model, and that the Appellant is o entities availing such centralised support. The consistency in invoicing pattern supports the contention that the arrangement is not isolated, contrived, or selectively applied. c. List of Appellant’s Employees with Qualifications and Experience: The Appellant is also placing on record a detailed list of its employees, along with their educational backgrounds and number of years’ experience. The objective of submitting this information is to demonstrate that the Appellant’s in team is relatively lean, both in terms of headcount and skill composition, and would not be in a position to handle the full scale and complexity of business operations independently. O.C. Tanner India Pvt. Ltd ITA No. 5785/MUM/2024 communications pertain to strategic business decisions, financial reviews, marketing initiatives, and operational support. While the intangible nature of management and marketing services inherently makes it difficult to document every instance of service provision, the additional emails now placed on record capture substantive engagemen sustained period of time. These records highlight not only strategic advice, but also functional execution inputs from the AE, benefiting the appellant in its day-to-day business The Hon’ble Members may appreciate that in cases involvi group services, especially of managerial and advisory nature, tangible outputs may not always be available in documentary form, and hence, the cumulative evidentiary value of regular, topic-specific email trails becomes crucial. The Appellant submits that the additional correspondences now being submitted cover key aspects of the Appellant’s operations and provide strong corroboration of actual service b. Sample Invoices Raised by the AE on Other Group To further reinforce the bona fide nature of the arrangement, the Appellant is submitting sample invoices issued by the AE to other operating group companies for similar services. This demonstrates that the AE follows a uniform, group service model, and that the Appellant is one of several group entities availing such centralised support. The consistency in invoicing pattern supports the contention that the arrangement is not isolated, contrived, or selectively applied. c. List of Appellant’s Employees with Qualifications and xperience: The Appellant is also placing on record a detailed list of its employees, along with their educational backgrounds and number of years’ experience. The objective of submitting this information is to demonstrate that the Appellant’s in is relatively lean, both in terms of headcount and skill composition, and would not be in a position to handle the full scale and complexity of business operations independently. O.C. Tanner India Pvt. Ltd 11 ITA No. 5785/MUM/2024 communications pertain to strategic business decisions, g initiatives, and operational support. While the intangible nature of management and marketing services inherently makes it difficult to document every instance of service provision, the additional emails now placed on record capture substantive engagement over a sustained period of time. These records highlight not only strategic advice, but also functional execution inputs from the day business The Hon’ble Members may appreciate that in cases involving group services, especially of managerial and advisory nature, tangible outputs may not always be available in documentary form, and hence, the cumulative evidentiary specific email trails becomes crucial. its that the additional correspondences now being submitted cover key aspects of the Appellant’s operations and provide strong corroboration of actual service b. Sample Invoices Raised by the AE on Other Group ona fide nature of the arrangement, the Appellant is submitting sample invoices issued by the AE to other operating group companies for similar services. This demonstrates that the AE follows a uniform, group-wide ne of several group entities availing such centralised support. The consistency in invoicing pattern supports the contention that the arrangement c. List of Appellant’s Employees with Qualifications and The Appellant is also placing on record a detailed list of its employees, along with their educational backgrounds and number of years’ experience. The objective of submitting this information is to demonstrate that the Appellant’s in-house is relatively lean, both in terms of headcount and skill composition, and would not be in a position to handle the full scale and complexity of business operations independently. Printed from counselvise.com This underscores the commercial rationale for seeking and availing AE suppor 5.2 Further submitted that there was no intention on the part of the assessee to withhold or delay submission of those documents, rather , the earlier sample was believe experience and judicial understanding evidence required in such cases. 5.3 In our opinion, the detailed examined by the lower authorities for determination of receipt of the services by the assessee. services, which are often intangible and advisory in nature, and the fact that the evidences now sought to be produced directly go to the root of the matter, we are satisfied that these documents merit admission. Accordingly, th evidence is allowed. 5.4 As regards the request of the learned counsel for remanding the matter to the DRP, we are two reasons. Firstly, the additional evidence filed by the a need to be verified at the end of the Assessing Officer. Secondly, once the DRP has issued its directions under section 144C(5), it becomes functus officio in the matter. The Tribunal derives its jurisdiction under section 253, which empowers it to adjudicate appeals against final assessment orders passed by the AO. The DRP not being an O.C. Tanner India Pvt. Ltd ITA No. 5785/MUM/2024 This underscores the commercial rationale for seeking and availing AE support on a regular basis.” Further submitted that there was no intention on the part of to withhold or delay submission of those documents, sample was believed to sufficient judicial understanding regarding the standard og required in such cases. In our opinion, the detailed e-mail correspondences need examined by the lower authorities for determination of receipt of the services by the assessee. Considering the nature of intra services, which are often intangible and advisory in nature, and the fact that the evidences now sought to be produced directly go to the root of the matter, we are satisfied that these documents merit admission. Accordingly, the application for admission of additional As regards the request of the learned counsel for remanding the matter to the DRP, we are unable to accede to such prayer for two reasons. Firstly, the additional evidence filed by the a need to be verified at the end of the Assessing Officer. Secondly, nce the DRP has issued its directions under section 144C(5), it functus officio and ceases to have any further jurisdiction in the matter. The Tribunal derives its jurisdiction under section 253, which empowers it to adjudicate appeals against final assessment orders passed by the AO. The DRP not being an O.C. Tanner India Pvt. Ltd 12 ITA No. 5785/MUM/2024 This underscores the commercial rationale for seeking and Further submitted that there was no intention on the part of to withhold or delay submission of those documents, to sufficient based on past regarding the standard og correspondences need to be examined by the lower authorities for determination of receipt of the g the nature of intra-group services, which are often intangible and advisory in nature, and the fact that the evidences now sought to be produced directly go to the root of the matter, we are satisfied that these documents merit admission of additional As regards the request of the learned counsel for remanding unable to accede to such prayer for two reasons. Firstly, the additional evidence filed by the assessee need to be verified at the end of the Assessing Officer. Secondly, nce the DRP has issued its directions under section 144C(5), it and ceases to have any further jurisdiction in the matter. The Tribunal derives its jurisdiction under section 253, which empowers it to adjudicate appeals against final assessment orders passed by the AO. The DRP not being an Printed from counselvise.com appellate authority, but mer mechanism, is not a body to which the Tribunal can remand matters. 5.5 In view of the above, we and restore the matter to the file of the Assessing Officer adjudication of the tran group services as well as duly considering the additional evidence now admitted. The AO shall afford due opportunity to the assessee to present its case and pass a fresh order in accordance with law. 5.6 As the matter has been remanded, the left open and are not adjudicated at this stage. The ground challenging limitation required, at the appropriate st 6. In the result the appeal is, accordingly, purposes. Order pronounced in the open Court on Sd/ (KAVITHA RAJAGOPAL JUDICIAL MEMBER Mumbai; Dated: 24/07/2025 Rahul Sharma, Sr. P.S. O.C. Tanner India Pvt. Ltd ITA No. 5785/MUM/2024 appellate authority, but merely a part of the assessment mechanism, is not a body to which the Tribunal can remand In view of the above, we set aside the final assessment order restore the matter to the file of the Assessing Officer adjudication of the transfer pricing adjustment relating to as well as interest on outstanding receivables duly considering the additional evidence now admitted. The AO shall afford due opportunity to the assessee to present its case and rder in accordance with law. As the matter has been remanded, the grounds on merit are and are not adjudicated at this stage. The ground challenging limitation is also left open to be adjudicated, if required, at the appropriate stage. he appeal is, accordingly, allowed for statistical nounced in the open Court on 24/07/2025. Sd/- (KAVITHA RAJAGOPAL) (OM PRAKASH KANT JUDICIAL MEMBER ACCOUNTANT MEMBER O.C. Tanner India Pvt. Ltd 13 ITA No. 5785/MUM/2024 ely a part of the assessment mechanism, is not a body to which the Tribunal can remand set aside the final assessment order restore the matter to the file of the Assessing Officer for fresh sfer pricing adjustment relating to intra- interest on outstanding receivables, after duly considering the additional evidence now admitted. The AO shall afford due opportunity to the assessee to present its case and grounds on merit are and are not adjudicated at this stage. The additional is also left open to be adjudicated, if allowed for statistical /07/2025. Sd/- OM PRAKASH KANT) ACCOUNTANT MEMBER Printed from counselvise.com Copy of the Order forwarded to 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. //True Copy// O.C. Tanner India Pvt. Ltd ITA No. 5785/MUM/2024 Copy of the Order forwarded to : BY ORDER, (Assistant Registrar) ITAT, Mumbai O.C. Tanner India Pvt. Ltd 14 ITA No. 5785/MUM/2024 BY ORDER, (Assistant Registrar) ITAT, Mumbai Printed from counselvise.com "