SEMPERTRANS INDIA PRIVATE LIMITED,ROHA V. INCOME-TAX OFFICER, PANVEL

ITA 1778/PUN/2024

AI Insights

Sempertrans India Private Limited appealed against the final assessment order for the Assessment Year 2020-21, which included adjustments for international transactions with its Associated Enterprise (AE), Semperit Aktiengesellschaft Holding (SAH). The primary contention was the disallowance of INR 5,66,05,177 for Intra Group Services, which the TPO deemed to have no Arm's Length Price (ALP) as no services were substantiated to have been rendered. The Tribunal examined the submissions, including the Transfer Pricing Study Report and various documents, and found merit in the assessee's arguments that the services were indeed received and necessary for business operations. Consequently, the Tribunal restored the matter to the TPO to determine the ALP if the services were confirmed to have been rendered.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 784141 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 2 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-11-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: misc
• Appeal Filed On: 23-08-2024
• Other Referred Cases: CLSA India (P) Ltd. VS. DCIT, Gemplus India Private Limited, Deloitte Consulting India Pvt. Ltd., Knorr-Bremse India Pvt. Ltd., Cushman and Wakefield
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: PRAKASH L. PATHADE
• Assessee Lawyers: AJIT JAIN; BEING
• Keywords: Business income; Transfer pricing; International transaction; Business expenditure; Depreciation; Commercial expediency; Unabsorbed depreciation; Wholly owned subsidiary
• Section: 143(3); 234B; 37; 37(1); 10B; 92C; 92D

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCHES “C”, PUNE BEFORE DR.MANISH BORAD, ACCOUNTANT MEMBER AND MS. ASTHA CHANDRA, JUDICIAL MEMBER आयकर अपील सं. / ITA No.1778/PUN/2024 Assessment Year : 2020-21 Sempertrans India Private Limited, 21/1, MIDC Industrial Area, Post Dhatav Taluka Roha, Raigad District – 402116 Maharashtra PAN : AAECS9279E Vs. Income Tax Officer, Panvel Circle, Panvel Appellant Respondent आदेश / ORDER PER DR. MANISH BORAD, ACCOUNTANT MEMBER : The captioned appeal at the instance of assessee pertaining to Assessment Year 2020-21 is directed against the order dated 27.06.2024 passed by Ld. Assessing Officer u/s.144 r.w.s.260 r.w.s.144B of the Income Tax Act, 1961. 2. Assessee has raised following legal as well as Factual grounds of appeal : “Legal Grounds: 1. On the facts and circumstances of the case and in law, the Hon'ble DRP has erred in issuing directions in violation to provisions of section 144C(8), read with the explanation thereto, by directing the AO to make additional disallowance under section 37(1). Accordingly, the directions of the Hon'ble DRP are bad in law and ought to be quashed. Consequently, the final assessment order dated 27 June 2024, is bad in law and ought to be quashed. Appellant by : Shri Ajit Jain and Shri Siddhesh Chaugule Respondent by : Shri Prakash L. Pathade Date of hearing : 08.09.2025 Date of pronouncement : 14.11.2025 Printed from counselvise.com ITA No.1778/PUN/2024 Sempertrans India Private Limited 2 2. On the facts and circumstances of the case and in law, the Ld. AO has erred in not passing the final assessment order dated 27 June 2024 as per the directions of the Hon'ble DRP Panel as prescribed in section 144C (13), thereby rendering the assessment order being null & void and liable to be quashed. 3. On the facts and circumstances of the case and in law, the final assessment order dated 27 June 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. 4. The Hon'ble DRP erred in confirming the action of the AO / TPO ignoring the fact that there was no intention by the Appellant to shift profits outside India. 5. The Hon'ble DRP erred in 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 D 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: 6. Making an addition of INR 5,66,05,177 to the Appellant's income in connection with payment by the Appellant to its Associated Enterprises ('AEs'), for availing intra group services and thereby determining a total income of INR 5,66,75,610 in the order dated 27 June 2024. 7. 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'). 8. 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. 9. Rejecting the detailed documentary evidences including cost allocation workings, as 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 findings and in concluding that the Printed from counselvise.com ITA No.1778/PUN/2024 Sempertrans India Private Limited 3 Appellant is not able to discharge the onus of proving that the services have been rendered by the AE. 10. Making an adjustment without considering the fact that the cost allocation methodology is uniformly and consistently followed by the Semperit Group for charging intra group charges to all the group companies globally. 11. Summarily rejecting the voluminous evidence subinitted by the Appellant to justify provision of services and the benefit derived by the Appellant, without disputing/rebutting or without providing an explicit findings/observation on the voluminous/plethora of evidence filed by the Appellant. Further, the learned DRP has erred in summarily rejecting the contentions of the Appeliant against the Remand Report provided by the Learned TPO. 12. 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. 13. 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. 14. Not appreciating that the said payment for intra group services of INR 5,66,05,177 has a direct nexus with the business of the appellant. Accordingly, the Ld. AO/Hon'ble DRP have erred in disallowing the said payment u/s 37 of the Act. 15. Initiating penalty proceedings under section 274 read with section 270A of the Act, without appreciating the fact that the additions made by the Ld. AO are not in accordance with the law. Without prejudice to the above grounds 16. On the facts and circumstances of the case and in law, the AO has erred in passing the impugned Assessment Order under Section 143(3) read with Section 144C (13) of the Act determining total income at Rs. 5,66,75,610 as against INR Nil income as per the return of income filed by the Appellant. 17. On the facts and in the circumstances of the case and in law, the AO has erred, in raising dermand of INR 2,11,57,400 on the Appellant. Set-off of brought business loss and unabsorbed depreciation not granted Printed from counselvise.com ITA No.1778/PUN/2024 Sempertrans India Private Limited 4 18. On the facts and circumstances of the case and in law, the AO has erred in not granting set-off of brought forward losses and unabsorbed depreciation without specifying any reasons and thereby erred in raising the consequent demand of Rs. 2,11,57,400 (including interest). 19. The AO failed to appreciate that the Appellant was having brought forward business loss of Rs.37,11,52,355 and unabsorbed depreciation of Rs. 10,49,00,828 as on 1 April 2019 as reported in the income-tax return and Tax Audit Report of AY 2019-20 which were available for set-off against business income, if any, of AY 2020-21 and once the losses are set-off, the total income of the Appellant will be INR Nil and there will not be any demand. 20. The Appellant prays that the set-off of eligible brought forward business loss and unabsorbed depreciation be granted and total taxable income be recomputed at INR Nil and balance business loss/unabsorbed depreciation be allowed to be carried forward to AY 2021-22. Interest levied under Section 234A, 234B and 234C of the Act 21. On facts and circumstances of the case and in law, the AO erred in levying interest of INR 6,15,728 under Section 234A, INR 78,50,532 under Section 234B and INR 7,77,353 under Section 234C of the Act. 22. The Appellant prays that the charging of interest under Sections 234A, 234B, 234C of the Act, is erroneous, unwarranted and be deleted. The Appellant prays that the additions made by the Ld. TPO/Ld. AO under the directions of the Hon'ble DRP be deleted and consequential relief be granted. The Appellant craves leave to add, alter, amend and/or withdraw any of the above grounds of appeal and to submit such statements, documents and papers as may be considered necessary either at or before the hearing of this appeal as per law.” 3. At the outset, ld. Counsel for the assessee requested for not pressing Grounds of appeal No.1, 2 and 3 and the same are therefore dismissed as ‘Not pressed’. 4. Further, ld. Counsel for the assessee also submitted that in Grounds of appeal No. 18, 19 and 20 only prayer is to restore the issues to the file of ld. Assessing Officer to Printed from counselvise.com ITA No.1778/PUN/2024 Sempertrans India Private Limited 5 examine the set off of brought forward business loss and unabsorbed depreciation. Since there being no objection from the side of ld. DR we restore the issues raised in Grounds of appeal No.18, 19 and 20 regarding claim of set off of off of brought forward business loss and unabsorbed depreciation to the file of ld. Jurisdictional Assessing Officer before whom assessee shall furnish necessary details and proof of brought forward business loss and unabsorbed depreciation along with copy of income tax return and Tax Audit Report. Ld. JAO after examining the same may allow the claim of the assessee if it is found in accordance with law. Thus, Grounds of appeal No.18, 19 and 20 are allowed for statistical purposes. 5. So far as Grounds of appeal No.4, 16 and 17 they are stated to be general in nature which need no adjudication. 6. Now the effective issues remain for our adjudication is Grounds of appeal No.5 to 15. 7. Brief facts of the case are that the assessee is a Private Limited company and is a wholly owned subsidiary (99.99%) of Semperit Aktiengesellschaft Holding (in short ‘SAH’). Assessee is engaged in the business of manufacturing and export of conveyor belts which are used in various segments such as paper, sugar, steel, power, fertilizers and chemicals. Return of income for A.Y. 2020-21 furnished on 15.02.2021 declaring Nil income and the same was processed u/s.143(1) of the Act determining income at Rs.70,430/-. Case selected for scrutiny through CASS for the following four issues : Printed from counselvise.com ITA No.1778/PUN/2024 Sempertrans India Private Limited 6 (i) Large difference in the opening stock of the current year and closing stock of previous year. (ii) Disallowance u/s.40A(7) (Gratuity provisions) (iii) Large expenditure by way of penalty or find for violation of any law for the time being in force (iv) High risk International Transactions (Entity reported in CbCR data) (TP Risk Parameter) 8. So far as issues relating to disallowance u/s.40A(7) of the Act (Gratuity provision) and large expenditure by way of penalty or find assessee furnished submissions and after considering the same no adverse inference was drawn. Ld. Assessing Officer (AO) further observed that there are certain international transactions entered into by the assessee namely ‘Payment of Royalty for Trademark at Rs.1,35,33,495/- and Intra Group Services availed from AE’ at Rs.5,66,05,177/-. Ld. AO made a reference to the Transfer Pricing Officer (TPO) u/s.92CA(1) of the Act for determination of Arm’s Length Price (ALP) with the reference to the international transactions reported in Form No.3CEB filed by the assessee. Ld. TPO after considering the submission of the assessee firstly observed that the ALP of the payment of Royalty for Trademark fees is Nil as the assessee by being interest the business in India and by selling the goods across the globe has itself contributed to the brand value of “Semperit” and therefore instead of compensating the assessee for its efforts to built the brand “Semperit” in a country having a sixth of the human population and penalizing it by charging Royalty fee to use a trademark which has been recognized in India because of its own efforts is not justifiable. Ld. TPO proposed the adjustment of Rs.1,35,33,495/-. Printed from counselvise.com ITA No.1778/PUN/2024 Sempertrans India Private Limited 7 9. As regards the Intra Group Services availed for which the assessee made payment to its Associated Enterprise SAH at Rs.5,66,05,177/- ld. TPO observed that the expenses allocation key adopted by the assessee is like head account, number of email account etc. rather than time sheet maintained by Team Management to calculate the man hours, work performed by them for India specifically for each activity. Ld. TPO further observed that there is also an element of duplication in the services availed and accordingly rejected the benchmark adopted by the assessee and adopting other method concluded that no Third party would pay for services which are not availed substantially and need of the same has not been proved and benefit itself remarked to be difficult to calculate. Ld. TPO calculated ALP of Intra Group Services as Nil and proposed the upward adjustment of Rs.5,66,05,177/-. In all, ld. TPO proposed an upward adjustment of Rs.7,01,38,672/-. 10. Based on ld. TPO’s report, ld. AO made addition on account of adjustment proposed by ld. TPO at Rs.7,01,38,672/- and along with addition on account of difference in opening and closing stock at Rs.1,16,17,927/-, determined the total income at Rs.8,18,27,030/-. 11. Subsequently, assessee challenged the draft assessment order and approached the Dispute Resolution Panel (DRP) and made submissions on all the issues raised regarding the adjustments proposed in the draft assessment order. Ld. DRP vide its order dated 24.05.2024 only sustained the adjustment proposed for Intra Group Services at Rs.5,66,05,177/- affirming the observation of ld. TPO that Printed from counselvise.com ITA No.1778/PUN/2024 Sempertrans India Private Limited 8 the documents/evidence filed by the assessee do not provide any relevant admissible details for rendition of services by the AE do not provide cost/value of the services, nor establish the receipt of services by the applicant assessee from its AE- SAH. Ld. DRP further held that no independent party would have paid sum of Rs.5,66,05,177/- for no services and ALP being computed by ld. TPO is upheld. Ld. AO in compliance to the directions given by ld. DRP vide order dated 24.05.2024 passed final assessment order on 27.06.2024 and adjustment for ALP of Intra Group Services as Nil, disallowed the claim of expenses at Rs.5,66,05,177/- and assessed the total income at Rs.5,66,75,608/-. 12. Aggrieved assessee is now in appeal before this Tribunal challenging the assessment order framed u/s.144 r.w.s.260 r.w.s.144B of the Act. 13. Ld. Counsel for the assessee stated that the ALP of the Intra Group Services has been calculated by applying Transactional Net Margin Method (TNMM) and the same is duly incorporated in the TP study report and Audit Report on Form 3CEB. He further submitted that various services relating to Information Technology, Procurement Services, Operational Excellence, Treasury, Human Resources, Quality Management, Engineering and Maintenance, Accounting and Consultation, Legal Affairs and Insurance, Insurance, Risk Management and Internal Audit along with segment and Team, Technical and Operations, Commercial, Assistance and Compounding and Team Assistance have been provided by AE to not only to the Indian entity, i.e. the assessee but to all other wholly owned subsidiaries/companies controlled by AE- Printed from counselvise.com ITA No.1778/PUN/2024 Sempertrans India Private Limited 9 SAH and on a scientific basis the expenses have been allocated to the companies located across the globe of which assessee is also a part. Reference made to the following written submissions : Printed from counselvise.com ITA No.1778/PUN/2024 Sempertrans India Private Limited 10 Printed from counselvise.com ITA No.1778/PUN/2024 Sempertrans India Private Limited 11 Printed from counselvise.com ITA No.1778/PUN/2024 Sempertrans India Private Limited 12 14. Further, ld. Counsel for the assessee referring to the decision of Coordinate Bench, Mumbai in the case of CLSA India (P) Ltd. VS. DCIT (2019) 101 taxmann.com 388 (Mumbai Trib.) stated that the TPO is bound to determine ALP by following one of the method prescribed u/s.92C(1) however where TPO has not followed any prescribed method and adhoc determination of ALP by TPO dehors section 92C91) would not be sustainable. Referring to this decision, he submitted that TPO in the instant case has adopted other method calculating Nil value of the Intra Group Services and for arriving at Nil value no method has been adopted by TPO as prescribed in section 92C(1) of the Act. Ld. Counsel for the assessee made reference to various documents filed in the paper book in support of its contention that genuine claim of Intra Group Services expenditure has been made and there are various areas for which the costs are incurred by AE at Printed from counselvise.com ITA No.1778/PUN/2024 Sempertrans India Private Limited 13 the Head office level by appointing an expert team as well as the Accounting Softwares and other Marketing strategies are decided at the head office level and the costs incurred for carrying out all these activities is apportioned/allocated to the wholly owned subsidiaries located in various countries including that of the assessee based on Agreements and scientific approach. 15. On the other hand, ld. DR vehemently argued supporting the order of ld. DRP and stated that assessee has not been able to file any evidence in support of Intra Group Services rendered by AE or received by the applicant assessee and further he also submitted that documents like Service Agreement, Cost Sheet Agreement, Statement of allocation of services Agreement copy of Invoices etc are the self generated documents with AE of the assessee and are just paper trial created to justify the claim and they do not prove the receipt of services. He submitted that there is no actual rendition/receipt of services therefore ALP of the Intra Group Services has been rightly calculated at Nil and even claim of the assessee for allowing expenses u/s.37 of the Act is also not correct because the requirement of section 37 is actual rendition and actual receipt of services which in this case is missing. 16. We have heard the rival contentions and perused the record placed before us. Firstly we will take up factual Grounds raised in Grounds of appeal No.6 to 15 revolves around the disallowance of expenditure of Rs.5,66,05,177/- claimed by the assessee for availing Intra Group Services Printed from counselvise.com ITA No.1778/PUN/2024 Sempertrans India Private Limited 14 from its AE namely Semperit Aktiengesellschaft Holding (in short ‘SAH’). 17. In the proceedings before ld.TPO, assessee filed various details exhibiting that various services have been rendered by AE in the various units/companies located in other countries including India and on a scientific basis the expenses have been apportioned. The assessee in the Transfer Pricing Study Report (TPSR) as well as in Audit Report on Form No.3CEB has calculated the ALP of the Intra Group Services based on Transactional Net Margin method (in short TNMM) in order to prove that the alleged expenditure claimed in the profit and loss account towards Intra Group Services is at ALP. Ld. TPO before moving to check the correctness of the calculation of ALP by TNMM adopted by the assessee, first went on to analyse as to whether the assessee has actually received the services. Ld. TPO observed that assessee has to prove that the services are rendered and received and the second aspect of Intra Group Services is the quantification of such services in terms of actual expenditure, incurred and commensurate benefits derived therefrom. The third aspect is ALP of such services, if the same requires payments of Arms Length. The observations of ld. TPO on this aspect as to whether Intra Group Services have been rendered or not reads as under : “4.2.4.2 Determining whether intra-group services have been rendered 4.2.4.3 Under the arm's length principle, the question whether an intra-group service has been rendered when an activity is performed for one or more group members by another group member should depend on whether the activity provides a respective group member with economic or commercial value to enhance its commercial position. This can be determined by Printed from counselvise.com ITA No.1778/PUN/2024 Sempertrans India Private Limited 15 considering whether an independent enterprise in comparable circumstances would have been willing to pay for the activity if performed for it by an independent enterprise or would have performed the activity in house for itself. If the activity is not one for which the independent enterprise would have been willing to pay or perform for itself, the activity ordinarily should not be considered as an intra-group service under the arm's length principle. 4.2.4.4 In general, no intra-group service should be found for activities undertaken by one group member that merely duplicate a service that another group member is performing for itself, or that is being performed for such other group member by a third party. An exception may be where the duplication of services is only temporary, for example, where an MNE group is reorganizing to centralize its management functions. Another exception would be where the duplication is undertaken to reduce the risk of a wrong business decision (e.g. by getting a second legal opinion on a subject). 4.2.4.5 There are some cases where an intra-group service performed by a group member such as a shareholder or coordinating centre relates only to some group members but incidentally provides benefits to other group members. The incidental benefits ordinarily would not cause these other group members to be treated as receiving an intra-group service because the activities producing the benefits would not be ones for which an independent enterprise ordinarily would be willing to pay. 4.2.4.6 Similarly, an associated enterprise should not be considered to receive an intragroup service when it obtains incidental benefits attributable solely to its being part of a larger concern, and not to any specific activity being performed. 4.2.4.7 While every attempt should be made to charge fairly for the service provided, any charging has to be supported by an identifiable and reasonably foreseeable benefit Any indirect-charge method should be sensitive to the commercial features of the individual case (e.g. the allocation key makes sense under the circumstances), contain safeguards against manipulation and follow sound accounting principles, and be capable of producing charges or allocations of costs that are commensurate with the actual or reasonably expected benefits to the recipient of the service. The allocation might be based on turnover, or staff employed, or some other basis. Whether the allocation method is appropriate may depend on the nature and uSAHe of the service. i. The OECD guidelines provide that in an intra-group service there are two issues which need to be analysed, one, whether intro group services have in fact been provided. Second what is the charge for such services? Printed from counselvise.com ITA No.1778/PUN/2024 Sempertrans India Private Limited 16 ii. Along with the facts as narrated supra, I would like to also place on record judicial precedence and a culled-out summary of OECD views on the subject of intra group services. These, briefly, are as under. Judicial precedence The decision of Bangalore ITAT in the case of Ws Gemplus India Private Limited in ITA number 352/ Bang/2009 wherein at para 20 the following has been held: i. \"20. We heard both sides in detail and also perused the records of the case including the paper book filed by the assessee company running in to 390 pages The necessary facts of the case have already been discussed in paragraphs above. On examination of the facts and circumstances of the case and the terms of the agreement entered into by the assessee and its Singapore associate, the TPO has come to certain pertinent observations in her order. She has observed that the terms prescribed in the agreement in respect of the payments to be made by the assessee company are independent of the nature and volume of services, if any rendered by the Singapore Associate. This is a vital observation made by the TPO which goes to the root of the issue. The function of the TPO is to compare the payments made by the assessee company for services received if any and to see whether those payments are comparable. In a given scenario, the TPO has to examine whether the payments were ALP conducive. Therefore it is very imperative on the part of the assessee to establish before the TPO that the payments were made commensurate to the volume and quality of services and such costs are comparable. The payment terms as pointed out by the TPO are independent of the nature or volume of services. The assessee has defeated in this primary examination itself. The TPO is also justified in making a pertinent observation that the expenses are apportioned by Singpore affiliate among different country centres on the basis of their own agreements and not on the basis of the actual services rendered to the individual units. It is in addition to the above fundamental flaw, that the TPO has made a clear findings that there are no details available on record in respect of the nature of services rendered by Singapore affiliate to the assessee company. Therefore, we are of the considered view that the TPO is justified in holding that the assessee has not proved any commensurate benefits against the payments of service charges to the Singapore affiliate. Therefore, the TPO is justified in making the adjustment of ALP under sec. 92CA of the Income-tax Act 1961.\"[emphasis supplied]. ii. Further, attention is also invited to the decision of M/s Deloitte Consulting India Pvt. Ltd. in ITA no. 579, 1272, 1273/Mum./2011, wherein the following has been held: \"39. On the issue as to whether the TPO is empowered to determine the ALP at \"nil\", we find that the Bangalore Bench of the Tribunal in Gemplus India Pvt. Ltd. (supra), held that the assessee has to establish before the TPO that the payments made were Printed from counselvise.com ITA No.1778/PUN/2024 Sempertrans India Private Limited 17 commensurate to the volume and quality service and that such costs are comparable. When commensurate benefit against the payment of services is not derived, then the TPO is justified in making an adjustment under ALP. 40. In the case on hand, the TPO has determined the ALP at \"nil\" keeping in view the factual position as to whether in a comparable case, similar payments would have been made or not in terms of the agreements. This is a case where the assessee has not determined the ALP. The burden is initially on the assessee to determine the ALP. Thus, the argument of the assessee that the TPO has exceeded his jurisdiction by disallowing certain expenditure, is against the facts. The TPO has not disallowed any expenditure, Only the ALP was determined. It was the Assessing Officer who computed the income by adopting the ALP decided by the TPO at \"nil\". 45. .... In our view, under similar circumstances a uncontrolled comparable company would not incur such expenditure. Hence, the ALP is rightly determined at \"nil\", As no expenditure would have been incurred, there is no necessity to apply a particular method to arrive at such conclusion. In fact, by all the five methods or any one of them, when applied to the fact that there is no necessity of payment, the result of \"nil\" ALP will come.\" (emphasis supplied] iii. Further, attention is also invited to the decision of M/s Knorr- Bremse India Pvt. Ltd. in ITA no. TEA no. 5097/DeV2011, wherein the following has been held 7.2. The appellant in the present case also did not demonstrate as to how the transaction by transaction approach in his case is not possible, It has also not been shown as to whether there has been any real or tangible benefit by carrying such international transactions with the AEs. The comparable uncontrolled price method (\"CLIP\" method), for the subject transactions being most direct method for determining arm's length price and chosen as most appropriate method in this case by TPO, therefore, cannot be faulted with. We, therefore, do not find any error in rejecting the TNMM method applied by the assessee and determination of ALP by applying CUP method for Benchmarking international transactions in a case like this. The DRP also cannot be said to have erred in approving the CUP method adopted by the TPO for Benchmarking international transactions with the AE. The assessee's ground on this count being devoid of any merit stands rejected. 9.2. After hearing the parties with reference to material on record, we find that the authorities below have not conclusively held that the assessee could not enter into such a transaction nor had they disallowed the same by holding that such an expenditure is not assessee's business expenditure. The DRP as well as the authorities below have merely elucidated that the payments are reimbursement in respect of Ms. Rita Ricken and other personnel's case to serve the interest of shareholders, By saying so they have Printed from counselvise.com ITA No.1778/PUN/2024 Sempertrans India Private Limited 18 only described the circumstance under which the international transaction has been entered by the appellant, so as to test the benefit that can be said to have reached the assessee, It, therefore, cannot be said to have questioned the commercial expediency of such transactions entered by the appellant. The I.T. rules contain exhaustive detail regarding nature of information and documents which are required to be maintained by the assessee. Rule 10D(1) of the IT. Rules, 1962 also mandates the maintainability of record of uncontrolled transactions to be taken into account in nalyzing the comparability of the international functions entered into by the assessee. It, therefore, is obligatory on part of the appellant to maintain such record and produce the same before the TPO to show that it has benchmarked the international transaction at ALP. This obligation, however, has not been discharged by the assessee. 9.3. The appellant in the present case is also not shown to be willing to pay any amount for such services, if it were, so provided by an independent enterprise or if the same would have been performed in house. The DRP is found to have considered these services as non-beneficial for the recipient and did not take it as chargeable services. The perusal of e-mails and other contemporaneous record only goes to reveal that incidental and passive association benefit has been provided by the associate enterprise. In this view of the matter there could neither be any cost contribution or cost reimbursement nor payment for such services to the AE. The TPO, therefore, has rightly adopted Nil value for benchmarking the arm's length price in respect of both these services. We, therefore, do not find any reason to interfere with the well-reasoned conclusion reached by the AO on this count. The grounds raised in appeal in this respect, therefore, stand rejected,\" iv. Further, attention is also invited to the decision of Delhi High Court in the case of Cushman and Wakefield in ITA No. 475/2012 dated 23.05.2014, wherein the following has been held: 31. As explained, for 82.44% share of the revenue from the services of the Client Solution Group, the relatable cost allocation was 72.5%. The precise activities conducted by the Client Solutions Group for the benefit of the assessee out of the entire range of activities conducted by it, and the cost applicable to such activities have not been provided, instead a broad-brush Ir464 approach at flatly 'equating' the costs relatable to the revenue generated has been provided. Whilst several e-mails from Mr. Arshpreet Choudhary were placed on record, they-e evidence the fact that certain services were rendered. That constitutes only the first part of the exercise the second aspect is to relate the cost of specific activities conducted to the benefit incurred by the assessee, rather than allocate cost from a common pool or basket of revenue generated through an unexplained percentage relation to the revenue generated. The basis for the costs incurred, the activities for which they were incurred, and the benefit accruing to the assessee from those activities must all be proved to determine first, whether, and how much, of such expenditure was for the purpose of benefit of the assessee (deductible under Section 37 of the Act), and Printed from counselvise.com ITA No.1778/PUN/2024 Sempertrans India Private Limited 19 secondly, whether that amount passed muster under a transfer pricing analysis. 32. Having made these observations, the Court also notes that the contrary findings of the TPO, that no services were rendered, and those of the ITAT, that services were rendered, must be viewed in this context. The ultimate analysis has to disclose whether the service rendered has a value and if so, determine that. Particular reliance has been placed by the TPO, and the ITAT, on the 2009 Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations of the Organization for Economic Cooperation and Development (\"OECD\"), specifically paragraphs 7.4-7.6. These concern intra-group services (i.e. services provided by one member of a group to another, such as the case presently), and factors relevant to determine whether such a service exists. The Court notes, first, that the 2009 OECD Guidelines are not binding, and further, that paragraph 7.4. of the Guidelines itself recognizes that each case depends on its facts and circumstances. Whilst the factors enumerated in paragraph 7.6 are relevant, strict adherence to the OECD guidelines, bordering on rigidity, is antithetical. 35. The TPO's Report is, subsequent to the Finance Act, 2007, binding on the AO. Thus, it becomes all the more important to clarify the extent of the TPO's authority in this case, which is to determining the ALP for international transactions referred to him or her by the AO, rather than determining whether such services exist or benefits have accrued. That exercise of factual verification is retained by the AO under Section 37 in this case. Indeed, this is not to say that the TPO cannot - after a consideration of the facts state that the ALP given that an independent entity in a comparable transaction would not pay any amount. However, this is different from the TPO stating that the assessee did not benefit from these services, which amounts to disallowing expenditure. That decision is outside the authority of the TPO.... 37. At this point, it is noteworthy that the circumstance that the assessee had market research facilities in India does not correspond to the performance of services abroad, especially in relation to client interaction services located outside India albeit for ultimately sourcing them into the Indian market. The e-mails considered by the ITAT from Mr. Braganza and Mr. Choudhary so far as they deal with specific interaction with IBM by those persons, and relate it to benefits obtained by the assessee, provide a sufficient basis to hold that benefit accrued to the assessee. However, this determination remains unclear and inchoate. The devil here lies in the details. The details of the specific activities for which cost was incurred by both CWS and CWHK (for the activities of Mr. Braganza and Mr. Choudhary), and the attendant benefit to the assessee, have not been considered till date. This must be provided, in addition to a consideration of the ALP vis-a-vis the total cost claimed by these AEs. To this extent, for the consideration of ALP in respect of these transactions, the matter is remanded back to the file of the concerned AO, for an ALP assessment by the TPO, Printed from counselvise.com ITA No.1778/PUN/2024 Sempertrans India Private Limited 20 followed by the AO's assessment order in accordance with law. [Emphasis supplied] v. OECD guidelines regarding Intra Group Services - The main categories of non beneficial services identified in the OECD Guidelines that are not required to be charged are: • Shareholder/stewardship activities; • Duplicate services; • Services that provide incidental benefits; • Passive association benefits; and • On call services. I. Shareholder / stewardship activities: The major categories of expenses that may be regarded as stewardship/shareholder activities include: • Costs of activities relating to the legal structure of the parent company (e.g. costs of issuing shares, share transfer expenses, meetings of shareholders and costs of the supervisory board). This includes expenses associated with the issuance of stock and maintenance of shareholder relations, • Costs relating to the reporting and legal requirements of the parent company (eg. consolidation of financial reports, maintenance of shareholder records, filings of prospectuses and income tax returns). This includes expenses for compliance with regulations or policies imposed by the foreign government upon the member rendering the services; • Costs incurred by a parent company to raise funds for acquisition of a new company in its own right. This includes the interest expense on indebtedness not incurred specifically for the benefit of another member of the group: • Costs of managerial and control (monitoring) activities related to the management and protection of the investment as such in participations, • Costs of visits and reviewing subsidiary performance on a regular basis; and • Costs of financing or refinancing the parent's ownership participation in the subsidiary. Printed from counselvise.com ITA No.1778/PUN/2024 Sempertrans India Private Limited 21 II. Duplicate services: Duplicative services are those that a group member offers to any other member which can be regarded as duplicate (ie, the service is already performed by the recipient or by an arm's length party on its behalf). In that case, no intra-group services should be regarded as being rendered by the group member. The OECD Guidelines, as well as the Canadian and US regulations, all agree that there is no added commercial value provided by such services, and thus they cannot be regarded as being rendered for the benefit of the related party. For example, when the subsidiary does not have personnel qualified to make such an analysis, and does not make the analysis itself, the cost of the financial analysis done by the parent must be allocated to the subsidiary. If, however, the subsidiary has qualified financial staffs that perform the analysis, and this analysis is then reviewed by the parent's financial staff, the review by the parent's financial staff is duplicative and an allocation may not be made. III. Services that provide incidental benefits The OECD Guidelines highlight another set of services which does not warrant an allocation, namely services that are rendered and result in an incidental benefit. This refers to services performed by one group member (e.g. a shareholder or coordinating centre) for a particular group member or a set of group members, such that it also incidentally provides a benefit to other group members. The OECD Guidelines provide two examples to explain the situation. The first involves a situation in which a reorganization or acquisition (disinvestment) deal that is carried out by a parent or sister company produces economies of scale or benefits for some other group member not directly involved in the decision. In this case, the service rendered is not an intragroup service because an independent enterprise would not be willing to pay for a service that provides only an incidental benefit. The other example has been concerning an enterprise that obtains incidental benefits simply by virtue of its affiliation with the patent or the group per se (e.g. in the form of a higher credit rating). This situation generally does not call for the consideration of a service being rendered. However, if the higher credit rating is due to a guarantee provided by a group member or group's reputation derived from global marketing and public relation campaigns, then an intra-group service charge would be appropriate. IV. On-Call Services: The OECD Guidelines refer to another special category of services in the context of intragroup services, namely services provided on call. The availability of such services generally requires the existence of a support group of some sort and an understanding between the group members about the nature of the assistance being provided in any field of operation whenever required, and on an on-call basis. For example, a parent company or a group service centre may be available to provide assistance with regard to legal, finance, technical or tax issues at any time. Printed from counselvise.com ITA No.1778/PUN/2024 Sempertrans India Private Limited 22 The aspect that merits consideration here is whether the availability of that service in itself is regarded as a separate service (for chargeable purpose) over and above the service fee compensation for the actual service rendered. The justification provided in the OECD Guidelines for considering such availability as a separate service rendered is that it is common knowledge that independent enterprises incur so- called stand-by charges to ensure availability of those services when the need for them arises. An example of that service is the appointment of a legal, technical or financial service provider on a retainer basis. These services are not necessarily a normal requirement and may vary in terms of frequency and importance from year to year. Therefore, one must ascertain the potential need of the stand-by service option for the recipient of the services. In cases where the service requirement is remote or could be easily procured from other sources without an on-call service option, the availability of that option is redundant and, hence, unjustified. Therefore, to evaluate whether an on-call service is rendered, one must consider the benefit that the on call arrangement offers to the group over a period of several years, given the sporadic nature of the occurrence of those service needs (rather than only for the year of taxation under consideration). 4.2.4.8 Keeping in view the above referred judicial precedence and the OECD Guidelines, during the course of hearing, the assessee was asked to demonstrate the fact that services was actually rendered. The assessee was also asked to relate the cost of specific activities conducted by the AE for the benefit of the assessee. The assessee was also asked to demonstrate the basis of allocation of costs, the activities for which they were incurred, and the benefit accruing to the assessee from those activities. 4.2.4.9 In response to the same the assessee had filed certain details/document which were perused and not found tenable. It was observed that the various e-mails/evidences produced by the assessee do not demonstrate the rendering of any service by the AE to the assessee for which any payment would be made by an independent party in an arm's-length scenario. The nature of services as claimed by these e-mails/ documents reveal that they are general correspondences between the assessee and its AE. On perusal of the contents of these e-mails, it is clear that these are general notes and exchange of information. The nature of communication in these e-mails is of the nature which would be entered into between the group entities of any group. They are not of the nature to show any specific services rendered by the AE, for which any separate charge needs to be paid by the assessee to its AE. In fact, if one closely observes the nature of services from the e- mails produced, it is clear that the purported services for which payment is claimed are in the nature of shareholder services only. In other words, on perusal of these e-mails it is clear that it cannot be considered as services rendered for which entity acting on Printed from counselvise.com ITA No.1778/PUN/2024 Sempertrans India Private Limited 23 arm's-length basis, would agree to make any payment. Further, nothing has been placed on record by the assessee to demonstrate any benefit received by it from the services rendered for which the payment is claimed. Further, even if for argument sake, it is taken that these documents show that some services have been rendered, whether these had some value and if yes, the cost incurred for that and the benefit for which such cost was incurred, has not been proved by the assessee. The assessee has also not demonstrated that the price paid was such that an independent entity would have paid for such services for the benefits (if any) received by it. The notes given by the assessee do not demonstrate the benefits received for which such payment was made. Further, it has not been demonstrated that the cost allocated is commensurate with the benefits derived by the assessee, so as to justify the payment on arm's length basis. 4.2.4.10 Assessee has incurred 14 percentage of employee benefit expenses in relation to turnover. Hence, assessee submission that SIPL is thinly staffed company has no substantial basis. 4.2.4.11 Component of cost effectiveness and economy of scale cannot be need of the company as stated by the assessee in its submission. Need should have been substantiated with lack of adequate expertise with company or at domestic level. Further, assessee has not submitted any documents that can prove that assessee has explored the options from third party to substantiate the argument of cost effectiveness or economy of scale. Assessee has himself commented that it is difficult for him to quantify the benefit arise from services availed. No prudent businessman will incur expenses year on year if benefit for the same cannot be quantified or ascertained. Allocation key adopted by the assessee is like head count, number of email account etc rather, time sheet maintained by team management to calculate the man hours work performed by the employees for India specific activities would have been more logical and any third party would expect before making any payment for the services availed. Nature of services, from assessee's submission, itself highlights the fact that they are general in nature and are in the nature of shareholder activity only. Further, from perusal of financials it can be stated that there is also an element of duplication in the services availed. Thus, the benchmarking adopted by the assessee is rejected herewith and benchmarking proposed to be adopted by the TPO using other method, it is concluded that there is no third party would pay for services which are not availed substantially, need of the same has not been proved and benefit itself remarked to be difficult to calculate. Hence, ALP of Intra Group Services is proposed to be Rs. NIL. (Adjustment of Rs. 5,66,05,177/-) 5. In view of the above facts an ALP adjustment of Rs. 1,35,33,495/- and Rs. 5,66,05,177/- is proposed.” Printed from counselvise.com ITA No.1778/PUN/2024 Sempertrans India Private Limited 24 18. Ld. TPO has observed that the assessee has actually not received any services from its AE and therefore examination of the ALP and the payment made to the AE is not required to be examined. Ld. TPO has observed that the ALP of the Intra Group Services is proposed to be Nil. In other words, TNM method adopted by the assessee has not been examined by ld. TPO because of his observation that no Intra Group Services have been received by the assessee. This observation of ld. TPO has been incorporated in the draft assessment order which have been challenged by the assessee before the ld. DRP. However, ld. DRP has also affirmed the view of ld. TPO and the finding of ld. DRP reads as under : “9. Findings of the Panel: (i) The \"Intra Group Services Fees are separate set of transactions which required to be benchmarked on own. The entity level approach is not relevant to the Intra Group Services fees since the Transfer Pricing Officer has made a categorical finding that the payments have not been commensurate to the services claimed to have been rendered. Hence, the payments are not regular international transactions and cannot be subsumed into broad- based comparison methods. (ii) The \"Other Method\" is the MAM in this peculiar case. (iii) There is a case of base erosion, and the sums are moving out of India without proper basis and devoid of Arm's length pricing. 9.10. Directions of the DRP: Thus, the claimed documents / evidence do not provide relevant and admissible details for \"rendition of services\" by the Associated Enterprise, cost/value of the services, nor establish the \"receipt of services\" by the Applicant assessee from Associated Enterprises. The Applicant has not been able to establish that it has received service from the Associated Enterprise, Semperit Management AG. Hence, the action of the Ld. TPO in proposing adjustment under \"Intra Group Services Fees holding that no independent party Printed from counselvise.com ITA No.1778/PUN/2024 Sempertrans India Private Limited 25 would have paid sum of Rs.5,66,05,177/-/- for no services, and Arm's Length Price being \"Nil\", is upheld.” 19. We also note that during the course of proceedings before ld. DRP, reference made to one of the observation of the AO is about the disallowance of the alleged expenses u/s.37 of the Act. Ld. DRP asked the assessee to explain the allowability of the expenditure u/s.37 of the Act to which the assessee made detailed arguments stating that the payments have been made to the AE (SAH) for various services including Cost Allocation method, Cyber security Awareness, Engineering and Maintenance support, Technical Assistance, Ageing analysis etc. However, ld. DRP was not satisfied and observed that the appellant has failed to establish the rendition and receipt of claimed services and the deficiency of fact cannot be made good by support of case laws. Finding of ld. DRP on the disallowance u/s.37(1) of the Act reads as under : “10.5 Factual Finding by the DRP: In the instant case, the assessee has failed to establish the business nexus to own business as well as exact nature services provided by Associated Enterprises and hence the purpose and business connection of the claimed expenditure have not been established. Hence, the Assessing Officer is directed to undertake a disallowance of the claimed payments, which are in order on account of the failure to establish the business nexus, actual incurrence and the services received by the assessee. It is noteworthy that the Ld. TPO has found that the Applicant has not received any benefit/ utility from the claimed \"Intra Group Services\", and thus any such services cannot be held to have been rendered by Associated Enterprise of the applicant, thus, not received by the Applicant. The Panel has upheld the finding. However, apart from the ALP of so-called Intra Group Services Fees being determined as \"Nil\" by the TPO, the Panel holds that the Assessing Officer is also liable to undertake the alternate disallowance of the payments as failing to fulfil ingredients of section 37. Printed from counselvise.com ITA No.1778/PUN/2024 Sempertrans India Private Limited 26 The Assessing Officer is directed to go through the Paragraphs above and succinctly assess the income accordingly. Needless to mention, there would not be double addition/disallowance of Rs. 5,66,05, 177/-, but the Assessing Officer will provide the additional supporting argument that the sums have not only \"Nil\" ALP as determined by the Ld. TPO; but also are not eligible for deduction under s.s. 37(1) of the I.T. Act. This is an additional ground raised by the Panel. The Assessing Officer is directed to comply with the additional ground and incorporate the same. 10.6 Direction of the DRP: The Assessing Officer is directed to make disallowance of Rs. 5,66,05,177/- claimed as Intra Group Services payment to Associated Enterprise Semperit Management AG ('SAH') on account of lacking in establishment of \"receipt\" of services, absence of business nexus and no case of Intra Group Services rendition. The claim of deduction does not pass the factual/legal tests of sub- section 37(1). This is to be taken as a supporting and alternate ground to Ld. TPO's action of setting the ALP of the claims services at \"Nil\". It is directed that the Assessing Officer is to discuss the above ground in assessment order, and no double addition / disallowance is to be conducted.” 20. Before us, during the course of hearing, ld. Counsel for the assessee stated that there are several areas in which the assessee did not have expertise and needed the services of its AE SAH. He submitted that the SAH has considerable expertise in the field of Marketing, Finance and Treasury, Risk Management and Insurance, Human Resources etc. and such services are beneficial to all the Semperit Group entities. The aim of the SAH is of establishing control and governance process. The activities which are part of the Intra Group Services availed by the assessee from its AE are very much required to carry out the business activities expeditiously and for the optimum return in the form of increased Income and Revenue, Cost efficiency, Quality Control and Customer Satisfaction. It is further submitted that if such services have Printed from counselvise.com ITA No.1778/PUN/2024 Sempertrans India Private Limited 27 not been availed from the SAH, then assessee would have to avail the said services from third party vendors and had to incur much more cost. He also submitted that whatever expenditures are covered under the head Intra Group Services have not been claimed under any other head of expenditure in the profit and loss account. He submitted that the SAH is a Central entity which coordinates with the group with the aim of achieving operational efficiency and also to benefit from the best practices followed by various Group entities. Further support services provided by AE are allocated to the Semperit Group entities including the assessee on a Cost Plus 5% markup and such cost allocation is based on a systematic allocation methodology for each category of services rendered. The cost allocation working covers three aspects namely (i) The total cost incurred by the AE (ii) Allocation keys applied and (iii) Costs allocated to the assessee. It is also further submitted that for receiving the Intra Group services assessee has entered into Agreement with AE which is forming part of the paper book which provides the overview of the transaction, benefits received from receipt of Intra Group services, cost methodology for a month, detailed discussion of services received by the assessee etc. Further, our attention was also drawn to the relevant pages of the paper book demonstrating cost allocation to various Semperit entities scattered across the globe and depending upon the business volume and other criteria costs have been allocated. 21. So far as services received by the assessee, detailed list with paper book reference have been filed and we have Printed from counselvise.com ITA No.1778/PUN/2024 Sempertrans India Private Limited 28 perused the same and the details of various services received by the assessee from its AE reads as under : Printed from counselvise.com ITA No.1778/PUN/2024 Sempertrans India Private Limited 29 Printed from counselvise.com ITA No.1778/PUN/2024 Sempertrans India Private Limited 30 Printed from counselvise.com ITA No.1778/PUN/2024 Sempertrans India Private Limited 31 Printed from counselvise.com ITA No.1778/PUN/2024 Sempertrans India Private Limited 32 Printed from counselvise.com ITA No.1778/PUN/2024 Sempertrans India Private Limited 33 Printed from counselvise.com ITA No.1778/PUN/2024 Sempertrans India Private Limited 34 22. We have also gone through the details of various services received by the assessee from its AE booked under the head Intra Group Services and find merit in the following submissions of the assessee filed before ld. TPO : Printed from counselvise.com ITA No.1778/PUN/2024 Sempertrans India Private Limited 35 Printed from counselvise.com ITA No.1778/PUN/2024 Sempertrans India Private Limited 36 Printed from counselvise.com ITA No.1778/PUN/2024 Sempertrans India Private Limited 37 Printed from counselvise.com ITA No.1778/PUN/2024 Sempertrans India Private Limited 38 Printed from counselvise.com ITA No.1778/PUN/2024 Sempertrans India Private Limited 39 Printed from counselvise.com ITA No.1778/PUN/2024 Sempertrans India Private Limited 40 Printed from counselvise.com ITA No.1778/PUN/2024 Sempertrans India Private Limited 41 Printed from counselvise.com ITA No.1778/PUN/2024 Sempertrans India Private Limited 42 Printed from counselvise.com ITA No.1778/PUN/2024 Sempertrans India Private Limited 43 Printed from counselvise.com ITA No.1778/PUN/2024 Sempertrans India Private Limited 44 23. Now from going through the above details of services claimed to have been received by the assessee, we notice that all such services are linked to day to day business activity starting from procurement of Raw material, Manufacturing of goods, effecting of sales, guidelines for quality check, Internal audit procedures, Information Technology, Human Resources, Central procurement, Finance transformation, Operation excellence, Legal Affairs, Group Treasury, Risk Management, Internal Audit etc. It has been an admitted fact that for carrying out the business activity of the level of assessee in appeal before us, the task is not only to procure goods, manufacture and sale but there are many minute workings which are required to be done by the companies Printed from counselvise.com ITA No.1778/PUN/2024 Sempertrans India Private Limited 45 adopting the international standards and other requirement for Export of Goods. For each of the business activity including the incurring of cost, acquiring of companies assets, export sales, employees and the responsibilities, financial aspects, quality checks, accounting of the transaction of SAH based software and also of getting the regular report about each sphere of the business activity, assessee is required to take the services which can be either from third party but then it would have its own cost. In the instant case, assessee being part of the SAH group, they have centralized system of providing the services to their Semperit entities. We have also gone through the audited profit and loss account and notice that there is no duplicity of expenditure claimed by the assessee and whatever expenses have been claimed in the services rendered under the Intra Group Services have not been claimed under any other head. 24. Under these facts and circumstances, we notice that the alleged Intra Group Services do not fall in the category of shareholder/stewardship activities, they are not duplicate services, they are not services that provide incidental benefits, i.e. the services performed by one Group Member for a particular Group Member or set of Group Members nor it is in the nature of on call services. We therefore are of the considered view that the observations of ld. DRP that assessee has not received any services from its AE is uncalled for. We hold that the assessee has incurred expenditure in the form of services received from its AEs which have been shown under the head Intra Group Services and has the assessee not taken these services from its AE, then it would have incurred cost for making payment to a third party. Since Printed from counselvise.com ITA No.1778/PUN/2024 Sempertrans India Private Limited 46 the ALP adopted by the assessee based on TNM method has not been examined by the ld. TPO in light of the prescribed method, the issue therefore needs to be restored to the file of ld. TPO for necessary examination of the ALP. We therefore hold that alleged expenditure have been incurred towards Intra Group Services. Grounds of appeal No.6 to 15 raised by the assessee are allowed for statistical purposes. 25. Now coming to the second part of the transaction which the assessee has raised in Ground No.5 that ld. DRP erred in upholding the action of the ld. TPO in applying other method inappropriately and further erred by not bringing on record any comparable data as mandated by section 92C r.w. Rule 10B and Rule 10C of the Rule D. Reference to this ground, ld. Counsel for the assessee placed reliance on the decision of Coordinate Bench Mumbai in the case of CLSA India (P) Ltd. VS. DCIT (supra) contending that the issue of determination of ALP is not required to be restored to the ld. TPO because ld. TPO has adopted other method but the other method so adopted by the TPO is not prescribed by the Board. We have gone through the aforesaid decision and notice that in the said decision, the assessee adopted TNM method for calculating the ALP of the Intra Group Services. However, ld. TPO determined the ALP by estimating the man power of services rendered by AE to the assessee and calculated the ALP and this procedure of calculating the ALP was not on basis of any method prescribed u/s.92C(1). It thus indicates that ld. TPO used its option of applying other method and calculated the ALP at its own. However, the facts in the instant case are different so much so that ld. TPO has not made any calculation of ALP but has observed that assessee Printed from counselvise.com ITA No.1778/PUN/2024 Sempertrans India Private Limited 47 has not received any Intra Group Services from its AE. The question of calculating the ALP comes after, i.e. first it is to be accepted that Intra Group Services have been received and once they are found to be received, then the payments made for receiving such Intra Group Services needs to be tested as to whether they are at ALP or not. For arriving at such ALP, one of the method prescribed u/s.92C(1) of the Act needs to be applied. Assessee in the instant case had adopted TNM method and has filed TP study report making reference to various comparables in order to strengthen its valid claim of expenditure under the head Intra Group Services. We are therefore of the considered view that the decision referred and relied on by ld. Counsel for the assessee in the case of CLSA India (P) Ltd. VS. DCIT (supra) is not applicable on the facts of the instant case. Further in the preceding paras, we have restored the issue of determination of ALP of the alleged expenditure to the file of ld. TPO for examining the correctness of the ALP calculated by the assessee adopting TNM method. We therefore fail to find any merit in Ground No.5 raised by the assessee and the same is dismissed. 26. Remaining grounds other than those adjudicated above are either consequential or general in nature which needs no adjudication. 27. In the result, appeal filed by the assessee is partly allowed for statistical purposes. Order pronounced on this 14th day of November, 2025. Sd/- Sd/- (ASTHA CHANDRA) (MANISH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER पुणे / Pune; \u0001दनांक / Dated : 14th November, 2025. Satish Printed from counselvise.com ITA No.1778/PUN/2024 Sempertrans India Private Limited 48 आदेश क\u0002 \u0003ितिलिप अ ेिषत / Copy of the Order forwarded to : 1. अपीलाथ / The Appellant. 2. \u000eयथ / The Respondent. 3. The Pr. CIT concerned. 4. िवभागीय ितिनिध, आयकर अपीलीय अिधकरण, “C” ब\u0014च, पुणे / DR, ITAT, “C” Bench, Pune. 5. गाड\u0004 फ़ाइल / Guard File. आदेशानुसार / BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण, पुणे / ITAT, Pune Printed from counselvise.com "