M/s. Walter Tools India Private Limited,, Pune v. Assistant Commissioner of Income tax,, Pune

ITA 259/PUN/2017 | 2012-2013
Pronouncement Date: 28-02-2020 | Result: Allowed

Appeal Details

RSA Number 25924514 RSA 2017
Assessee PAN AAACW4857C
Bench Pune
Appeal Number ITA 259/PUN/2017
Duration Of Justice 3 year(s) 25 day(s)
Appellant M/s. Walter Tools India Private Limited,, Pune
Respondent Assistant Commissioner of Income tax,, Pune
Appeal Type Income Tax Appeal
Pronouncement Date 28-02-2020
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted C
Tribunal Order Date 28-02-2020
Date Of Final Hearing 02-12-2019
Next Hearing Date 02-12-2019
Last Hearing Date 11-07-2019
First Hearing Date 28-05-2019
Assessment Year 2012-2013
Appeal Filed On 02-02-2017
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH C PUNE BEFORE SHRI R.S. SYAL VICE PRESIDENT AND SHRI S.S. VISWANETHRA RAVI JUDICIAL MEMBER ITA NO.259/PUN/2017 / ASSESSMENT YEAR : 2012-13 M/S. WALTER TOOLS INDIA PRIVATE LIMITED MUMBAI-PUNE ROAD DAPODI PUNE 411 012 PAN : AAACW4857C VS. ACIT CIRCLE-10 PUNE APPELLANT RESPONDENT / ORDER PER R.S.SYAL VP : THIS APPEAL BY THE ASSESSEE ARISES OUT OF THE FINAL ASSESSM ENT ORDER DATED 28-11-2016 PASSED BY THE ASSESSING OFFICER (AO) U/S. 143(3) R.W.S. 144C(13) OF THE INCOME-TAX ACT 1961 (H EREINAFTER ALSO CALLED THE ACT) IN RELATION TO THE ASSESSMENT YEAR 2012- 13. 2. THE ONLY ISSUE RAISED IN THIS APPEAL IS AGAINST THE TRANSFER PRICING ADDITION OF RS.1 59 45 450/- MADE BY THE AO BY TRE ATING ARMS LENGTH PRICE (ALP) OF THE INTERNATIONAL TRANSACTION OF `PAYMENT OF MANAGEMENT SERVICES FEES AT NIL. ASSESSEE BY SHRI NIKHIL PATHAK REVENUE BY SHRI T. VIJAYA BHASKAR REDDY DATE OF HEARING 26-02-2020 DATE OF PRONOUNCEMENT 28-02-2020 ITA NO.259/PUN/2017 M/S. WALTER TOOLS INDIA PRIVATE LIMITED 2 3. FACTUAL MATRIX OF THE CASE IS THAT THE ASSESSEE IS A DOMES TIC COMPANY ENGAGED IN THE BUSINESS OF DISTRIBUTION OF CUTTING AND DRILLING TOOLS. IT IMPORTED FINISHED GOODS FROM OVERSEAS WALTE R GROUP ENTITIES FOR THE PURPOSE OF RESALE IN INDIA UNDER THE BRAND NAME OF PROTOTYP AND WALTER. THE ASSESSEE FILED A RETURN DECLARING TOTAL INCOME OF RS.49 25 610/-. THE RETURN WAS ACCOMPAN IED BY FORM NO. 3CEB CONTAINING DETAILS OF INTERNATIONAL TRANSACTIONS RANGING FROM IMPORT OF FINISHED GOODS TO COMMISSION INCOM E AND PAYMENT OF MANAGEMENT SERVICES FEES ETC. THE ISSUE INVOLV ED BEFORE US THOUGH DIRECTLY RELATES TO THE INTERNATIONAL TRANSACTION OF `PAYMENT OF MANAGEMENT SERVICES FEES BUT ALSO HAS LINK WITH THE SOLE BUSINESS SEGMENT OF THE ASSESSEE ENVELOPING THE INTER NATIONAL TRANSACTION OF FINISHED GOODS WHICH IS A SEPARATE INTERNATIO NAL TRANSACTION. THE ASSESSEE BENCHMARKED THE INTERNATIONAL TRANSACTIONS OF IMPORT OF FINISHED GOODS AND PAYMENT OF MANAGEMENT SERVICES FEES SEPARATELY UNDER THE TRANSAC TIONAL NET MARGIN METHOD (TNMM). IN THE SOLITARY BUSINESS (TRADING) SEGMENT THE ASSESSEE COMPUTED OPERATING MARGIN OF THE TESTE D PARTY AT 1.03% FOR BENCHMARKING THE TRANSACTIONS OF IMPORT OF FINISHED GOODS. CERTAIN COMPARABLES WERE CHOSEN WHOSE ME AN ITA NO.259/PUN/2017 M/S. WALTER TOOLS INDIA PRIVATE LIMITED 3 MARGIN WITHOUT WORKING CAPITAL ADJUSTMENT WAS COMPUTED AT 5.19% AND WITH WORKING CAPITAL ADJUSTMENT AT 6.99%. THE ASSESSEE IN ITS T.P. STUDY REPORT SUO MOTU OFFERED A TRANSFER PRICING ADJUSTMENT OF RS.6 07 50 000/- BY TREATING THE ARMS LEN GTH MARGIN AT 7.00% AS AGAINST ITS OWN MARGIN AT 1.03%. IN THE COMPUTA TION OF INCOME THE ASSESSEE OFFERED SUCH AMOUNT OF RS.6.07 CRORE AND ODD AS ITS ADDITIONAL INCOME. IN CALCULATING ITS OWN MARGIN AT 1.03% THE ASSESSEE TOOK INTO CONSIDERATION ALL THE ITEMS OF OPERATING REVENUE AND OPERATING EXPENSES FROM ITS PROFIT AND LOSS ACCOUNT INCLUDING A SUM OF RS.1.59 CRORE BEING PAYMENT O F MANAGEMENT SERVICES FEES PAID TO ITS ASSOCIATED ENTERPRISE ( AE). THE TRANSFER PRICING OFFICER (TPO) ACCEPTED THE INTERNATIONA L TRANSACTIONS OF IMPORT OF FINISHED GOODS UNDER THE BUSINES S SEGMENT DECLARED BY THE ASSESSEE (AFTER TAKING INTO ACCO UNT THE VOLUNTARILY OFFERED TRANSFER PRICING ADDITION OF RS.6.07 CROR E) AT ALP. HE HOWEVER DISPUTED THE CORRECTNESS OF THE ALP O F THE INTERNATIONAL TRANSACTION OF `PAYMENT OF MANAGEMENT SERVICES FEES. THE TPO OPINED THAT THE ASSESSEE DID NOT LEAD ANY EVIDENCE OF AVAILING THE MANAGEMENT SERVICES. HE ALSO FOUND CERTAIN OTHER INCONSISTENCIES IN THE SAME AND CAME TO THE CONCLUSION THAT A LP OF ITA NO.259/PUN/2017 M/S. WALTER TOOLS INDIA PRIVATE LIMITED 4 THE INTERNATIONAL TRANSACTION OF `PAYMENT OF MANAGEMENT SERVICES FEES WAS NIL. THIS LED TO RECOMMENDING THE TRANSFER PRICING ADJUSTMENT OF RS.1.59 CRORE WHICH GOT INCORPORATED IN THE DRAFT ORDER. THE ASSESSEE REMAINED UNSUCCESSFUL BEFORE THE D ISPUTE RESOLUTION PANEL (DRP) WHICH HAS BROUGHT THE ASSESSEE TO THE TRIBUNAL AGAINST THE ADDITION OF EQUIVALENT AMOUNT MADE BY THE AO IN THE FINAL ASSESSMENT ORDER. 4. WE HAVE HEARD BOTH THE SIDES AND GONE THROUGH THE RELE VANT MATERIAL ON RECORD. THE BUSINESS OF THE ASSESSEE MAINLY C ONSISTS OF TRADING OF CUTTING TOOLS. OUT OF THE TOTAL REVENUE FROM THE ASSESSEES PROFIT AND LOSS ACCOUNT AT RS.101.31 CRORE R EVENUE FROM SALE OF PRODUCTS STANDS AT RS.99.30 CRORE. IN ADDITION THE ASSESSEE EARNED COMMISSION INCOME OF RS.4.14 LAKH @ 10% OF THE VALUE OF SALES. THE EXPENSE SIDE OF THE ASSESSEES PROFIT AND LOS S ACCOUNT RECORDS CERTAIN OPERATING AND NON-OPERATING COSTS. THE ASS ESSEE AGGREGATED TRADING OF GOODS AND COMMISSION INCOME IN THE OVERALL BUSINESS/TRADING SEGMENT. ITS PLI UNDER THE TNMM W AS CALCULATED AT 1.03% AT PAGES 67 AND 68 OF THE TRANSFER PR ICING STUDY REPORT. THE ASSESSEE HAVING ONLY ONE BUSINESS SEGM ENT CALCULATED ITS OPERATING PROFIT AT RS.1.04 63 364/- BY CONSIDE RING ITA NO.259/PUN/2017 M/S. WALTER TOOLS INDIA PRIVATE LIMITED 5 ALL THE ITEMS OF OPERATING REVENUE AND OPERATING EXPENSES FR OM ITS P&L ACCOUNT INCLUDING PAYMENT OF MANAGEMENT SERVICES FEE A T RS.1.59 CRORE. THIS IS SUBSTANTIATED FROM THE ASSESSEES PROFIT AND LOSS ACCOUNT WHOSE COPY IS AVAILABLE AT PAGE 81 OF THE PAP ER BOOK. IT CAN BE SEEN THERE FROM THAT THE NET PROFIT HAS BEEN COMP UTED AT RS.44.12 LAKH. ON ADDING UP THE AMOUNT OF NON-OPERATING EXPENSES OF RS.60.50 LAKH THE FIGURE OF OPERATING PROFIT AT RS.1.0 4 CRORE IS OBTAINED WHICH MATCHES WITH THE FIGURE AS SHOWN IN THE T.P. STUDY REPORT FOR DEMONSTRATING THE PLI OF THE ASSESSEE AT 1.03% . THE ASSESSEE SELECTED CERTAIN COMPARABLES WITH THEIR MEAN MARGIN AT 6.99% (BEFORE WORKING CAPITAL ADJUSTMENT) AND 5.19% (AFTE R WORKING CAPITAL ADJUSTMENT). WITH THE INCREASED UNADJUSTED MARGIN OF THE COMPARABLES AT 6.99% THE ASSESSEE ROUNDED IT TO 7.00% AND TOOK IT AS THE ARMS LENGTH MARGIN. THE ASSES SEE ITSELF OFFERED RS.6.07 CRORE FOR TAXATION TOWARDS THE TRANSFER P RICING ADDITION. THUS IT IS CLEAR THAT THE ASSESSEES OWN MARGIN ( AFTER CONSIDERING THE PAYMENT OF MANAGEMENT SERVICES FEES AT RS. 1.59 CRORE) STANDS AT 1.03% WHICH WAS TAKEN AS A STARTING PO INT FOR COMPUTING THE SUO MOTU TRANSFER PRICING ADJUSTMENT WITH THE AVERAGE MARGIN OF COMPARABLES AT 7.00%. ITA NO.259/PUN/2017 M/S. WALTER TOOLS INDIA PRIVATE LIMITED 6 5. THE TPO DETERMINED THE ALP OF THE INTERNATIONAL TRANSACTIO N OF PAYMENT OF MANAGEMENT SERVICES FEES AT NIL. THE EFFECT OF SUCH DETERMINATION ON THE OVERALL PROFIT IS THAT THE ASSESSEE OUGHT TO HAVE SHOWN ITS INCOME HIGHER TO THIS EXTENT. IN OTHER WORDS IN THE ABSENCE OF PAYMENT OF MANAGEMENT SERVICES FEE OF RS.1. 59 CRORE THE ASSESSEES PROFIT MARGIN WOULD HAVE INCREASED FROM 1. 03% TO 2.66%. AS AGAINST THE VARIATION IN THE PROFIT MARGIN OF THE ASSESSEE THE MARGIN OF COMPARABLES IS STATIONARY AT 7%. IF ANOTHER EXPENDITURE OF THE ASSESSEE IS HELD TO BE NOT AT ALP IT WOULD FURTHER INCREASE THE AMOUNT OF INCOME AND THE CONSEQUENTIAL PROFIT MARGIN OF THE ASSESSEE BEYOND 2.66%. WITH EVERY INCREAS E IN THE MARGIN OF THE ASSESSEE THERE WILL BE A SOUTHWARDS SOJOUR N OF THE DIFFERENCE BETWEEN THE ARMS LENGTH MARGIN OF THE COMPAR ABLES AT 7% AND THAT OF THE ASSESSEE. TO CITE AN EXAMPLE IF DIFFERE NCE BETWEEN THE ASSESSEES MARGIN AND THAT OF COMPARABLES IS SAY X% AND THE TRANSFER PRICING ADJUSTMENT COMES TO RS. A TH EN WITH THE REDUCTION IN THE ASSESSEES DEDUCTIBLE EXPENDITURE EQUIV ALENT TO Y% (BECAUSE OF ALP ADJUSTMENT OF ANOTHER TRANSACTION) AND THE CORRESPONDING INCREASE IN THE ASSESSEES MARGIN THE DIFFE RENCE IN THE MARGINS WILL REDUCE FROM X% TO X(-)Y% AND THE AMOUNT OF ITA NO.259/PUN/2017 M/S. WALTER TOOLS INDIA PRIVATE LIMITED 7 TRANSFER PRICING ADDITION WILL CORRESPONDINGLY REDUCE FROM RS .A TO RS.A (-) EQUIVALENT OF Y%. WITH THE ASSESSEES MARGIN AT 1 .03% IN THE SCENARIO OF NO SUO MOTU TRANSFER PRICING ADJUSTMENT OFFERED BY THE ASSESSEE COUPLED WITH THE ALP OF MANAGEMENT SERVICES FEES ACCEPTED AT RS.1.59 CRORE AND THE MEAN MARGIN OF COMPAR ABLES AT 7.00% THE TRANSFER PRICING ADJUSTMENT WOULD BE EQUIVALENT OF 5.97% (7.00% 1.03%). IN ANOTHER SCENARIO OF OTHER FACTORS REMAINING THE SAME BUT WITH THE ALP OF MANAGEMENT SERVICES F EES AT RS.1.59 CRORE TAKEN AT NIL THE PROFIT RATE OF THE ASSE SSEE WILL INCREASE FROM 1.03% TO 2.66% REQUIRING THE TRANSFER PRICING ADJUSTMENT AT EQUIVALENT OF 4.34% (7.00% - 2.66%). TO PU T IT SIMPLY THE SUO MOTU TRANSFER PRICING ADJUSTMENT OF RS.6.07 CRORE REPRESENTING ADDITIONAL PROFIT EQUIVALENT OF 5.97% (7.00% OF COMPARABLES MINUS 1.03% OF THE ASSESSEE WITH THE CLAIM OF PAYMENT OF MANAGEMENT SERVICES FEES) IN A SENSE CONSIS TS OF TWO PARTS NAMELY 4.34% TOWARDS PROFIT IN THE INTERNATIONAL TRANSA CTION OF IMPORT OF FINISHED GOODS AND 1.63% TOWARDS MANAGEMEN T SERVICES FEES PAID IF THE ALP OF THE LATTER IS TO BE TAKEN AS NIL. ITA NO.259/PUN/2017 M/S. WALTER TOOLS INDIA PRIVATE LIMITED 8 6. ONE NEEDS TO APPRECIATE QUALITATIVE DIFFERENCE BETWEEN TW O SITUATIONS VIZ. THE FIRST IN WHICH THE ASSESSEE ITSELF IMPORTS THE GOODS FROM ITS AE AT SUCH A PRICE COINCIDING WITH ARMS LENGTH MARGIN OF 7.00% AND THE SECOND IN WHICH IT IMPORTS THE G OODS AT A PRICE COINCIDING WITH PROFIT AT 1.03% AS IS THE CASE BEFORE U S. IN NORMAL CIRCUMSTANCES THE CONTENTION OF THE ASSESSEE FOR A DJUSTING THE SURPLUS AMOUNT OF PROFIT IN THE BUSINESS/TRADING TRANSACTION S WITH THE TRANSFER PRICING ADJUSTMENT IN THE INTERNATIONAL TRANSACTIO N OF PAYMENT OF MANAGEMENT SERVICES FEES WOULD NOT HAVE MER ITED ACCEPTANCE IF IT HAD MADE TRANSACTIONS OF IMPORT OF FINISHED GOODS AT SUCH A PRICE GIVING PROFIT AT 7.00%. THE CONTENTION IN THA T SET- UP IF ACCEPTED WOULD HAVE AMOUNTED TO AGGREGATION OF TWO DISTINCT INTERNATIONAL TRANSACTIONS RESULTING INTO CROSS SUBSIDIZATION WHICH IS A PROPOSITION UNACCEPTABLE IN THE TRANSFER PRICING R EGIME. HOWEVER THE POSITION WHICH IS INSTANTLY OBTAINING BEFORE US IS THAT THE ASSESSEE ACTUALLY IMPORTED GOODS AT SUCH A PRICE WHICH GAVE IT A PROFIT MARGIN OF 1.03% AFTER TAKING THE TRANSACTION OF PAYME NT OF MANAGEMENT SERVICES FEES OF RS.1.59 CRORE AT ALP. TO M AKE GOOD THE DEFICIENCY IN THE ACTUAL PROFIT SO COMPUTED VIS--VIS THE ARMS LENGTH PROFIT RATE THE ASSESSEE OFFERED TRANSFER PRICING A DJUSTMENT ITA NO.259/PUN/2017 M/S. WALTER TOOLS INDIA PRIVATE LIMITED 9 AT 5.97%. IN CASE THE ASSESSEE HAD ITSELF TAKEN THE ALP OF PAYMENT OF MANAGEMENT SERVICES FEES AT NIL OR IN OTHER WO RDS NOT CLAIMED ANY DEDUCTION FOR IT THEN THE ASSESSEES MARGIN WO ULD HAVE SWELLED FROM 1.03% TO 2.66%. WITH THE ALP MARGIN STA TIC AT 7.00% THE TRANSFER PRICING ADJUSTMENT WOULD HAVE COME DO WN TO 4.34% RATHER THAN 5.97%. UNDER THESE CIRCUMSTANCES W HEN THE ASSESSEE OFFERED SUO MOTU TRANSFER PRICING ADJUSTMENT OF RS.6.07 CRORE AT 5.97% CONSIDERING ARMS LENGTH MARGIN AT 7.00% THE SAME ALSO ENCOMPASSED THE EFFECT OF INTERNATIONAL TRANSACTION OF PAYMENT OF MANAGEMENT SERVICES FEES AT ALP. THE AO/TPO IN OUR CONSIDERED OPINION WERE NOT JUSTIFIED IN ACCEPTING ON ON E HAND THE TRANSFER PRICING ADJUSTMENT OF RS.6.07 CRORE IN THE INTE RNATIONAL TRANSACTION OF IMPORT OF GOODS WITH THE ASSESSEES MARGIN A T 1.03% (AFTER THE CLAIM OF MANAGEMENT SERVICES FEES AT 1.59 COR E AT ALP) AND SIMULTANEOUSLY ON THE OTHER HAND MAKING SEPARATE TRANS FER PRICING ADJUSTMENT OF RS.1.59 CRORE IN THE INTERNATIONAL TRANS ACTION OF PAYMENT OF MANAGEMENT SUPPORT FEES. SUCH AN ACTION HAS RESULTED INTO DOUBLE DISALLOWANCE OF RS.1.59 CRORE WHICH CA NNOT LEGALLY STAND. ITA NO.259/PUN/2017 M/S. WALTER TOOLS INDIA PRIVATE LIMITED 10 7. WE HAVE NOTED ABOVE THAT THE ASSESSEE TOOK ARMS LEN GTH MARGIN AT 7.00% ON THE BASIS OF THE UNADJUSTED MEAN MARGIN OF COMPARABLES AT 6.99%. IN FACT IT IS THE WORKING CAPITAL ADJUSTE D MARGIN WHICH IS NORMALLY CONSIDERED FOR THE PURPOSE. WE N OTE THAT THERE IS A POSITIVE DIFFERENCE OF 1.80% IN THE MARGIN OF COMPARABLES [6.99% (UNADJUSTED MARGIN) OF THE COMPARABLES MINUS 5.19% (ADJUSTED MARGIN)] BETWEEN WHAT THE ASSESSEE HAS TAKEN AS ARMS LENGTH MARGIN AND WHAT OUGHT TO HAVE BEEN TA KEN. THE AMOUNT OF TRANSFER PRICING ADJUSTMENT MADE BY THE ASSE SSEE BY TAKING NIL ALP OF THE INTERNATIONAL TRANSACTION OF `PAYMENT OF MANAGEMENT SERVICES FEES AT RS.1.59 CRORE ACCOUNTS FO R ONLY 1.63% [2.66% (MARGIN OF THE ASSESSEE BY TAKING ALP OF MANAGEMENT SERVICES FEE AT RS.1.59 CRORE) MINUS 1.03% ( MARGIN OF THE ASSESSEE BY TAKING ALP OF MANAGEMENT SERVICES FEE AT NIL)]. THE AMOUNT OF TRANSFER PRICING ADJUSTMENT OF RS.1.59 CROR E REPRESENTING 1.63% PROFIT RATE IS IN ANY CASE LESS THAN EVE N 1.80% BEING THE CUSHION BETWEEN THE ADJUSTED AND UNADJUSTED MEAN MARGIN OF THE COMPARABLES. ON THIS SCORE ALONE THERE WA S NO REASON TO GO AHEAD WITH THE TRANSFER PRICING ADDITION OF RS.1 .59 CRORE. ITA NO.259/PUN/2017 M/S. WALTER TOOLS INDIA PRIVATE LIMITED 11 8. WITHOUT PREJUDICE TO THE ABOVE DISCUSSION WE NOW PROC EED TO EXAMINE IF THE TPO WAS JUSTIFIED IN DETERMINING NIL ALP OF THE INTERNATIONAL TRANSACTION OF PAYMENT OF MANAGEMENT SERVICES FE ES. IN THIS REGARD IT IS OBSERVED THAT THE ASSESSEE MADE PAYME NT OF RS.1.59 CRORE TOWARDS AVAILING MANAGEMENT SERVICES PURSU ANT TO THE MANAGEMENT SERVICES AGREEMENT WITH SANDVIK AB. THE TP O OBSERVED THAT THE EXPENSES WERE APPORTIONED BY ASSOCIATED ENTERPRISE AMONGST DIFFERENT COUNTRY CENTRES ON THE BASIS OF THEIR AGREEMENT WHICH DID NOT HAVE ANY LINK WITH THE ACTUAL SERVIC ES RENDERED TO THE INDIVIDUAL UNITS. IN THE ABSENCE OF AVAILABILITY OF ANY EVIDENCE SHOWING AVAILING OF THE SERVICES BY THE ASSESS EE THE TPO DETERMINED NIL ALP. THE ASSESSEE FURNISHED CERTAIN DETAILS BEFORE THE DRP PROVING THE AVAILMENT OF THE SERVICES. NOT CONVINCED THE DRP AFFIRMED THE ORDER OF THE LOWER AUTHORITIE S BY PRIMARILY RECORDING THAT THERE WAS NO EVIDENCE OF AVAILING TH E SERVICES AND FURTHER FROM SOME EVIDENCE FILED BY THE ASS ESSEE IT WAS DIVULGED THAT THE SERVICES WERE IN FACT RENDERED BY WALTER AB WHEREAS THE AGREEMENT FOR THE SERVICES WAS WITH SANDVIK AB. ITA NO.259/PUN/2017 M/S. WALTER TOOLS INDIA PRIVATE LIMITED 12 9. WE HAVE HEARD BOTH THE SIDES AND GONE THROUGH THE RELEVANT MATERIAL ON RECORD. IT IS SEEN FROM A COPY OF MANAGEMENT SERVICES AGREEMENT BETWEEN SANDVIK AB (THE PROVIDING PARTY) AND THE ASSESSEE (THE RECEIVING PARTY) WHICH IS APPLICABLE TO THE YE AR UNDER CONSIDERATION AS WELL THAT THE TERM `PROVIDING PARTY HAS BE EN DEFINED AS `ALL OR SOME OF THE SANDVIK COMPANIES WHICH PROV IDE MANAGEMENT SERVICES. THUS IT IS CLEAR THAT THE CHARGES BY SANDVIK AB WERE NOT ONLY FOR THE SERVICES PROVIDED BY IT BU T ALSO SOME OTHER GROUP COMPANIES INCLUDING WALTER AB. THE VIEW POINT OF THE DRP ON THIS ISSUE IS THEREFORE NOT CORRECT. 10. NOW WE TURN TO THE ISSUE OF AVAILING ACTUAL SERVICES. IT IS SEEN FROM THE AGREEMENT THAT IT PROVIDES FOR RENDERING INTRA GROUP SERVICES CONSISTING OF MANAGEMENT SERVICES IT RELATED SER VICES SERVICES PRIMARILY AIMED AT INCREASING AND RETAINING THE V ALUE OF INTANGIBLE ASSETS SALES SERVICES AND SCHEDULE RELATED SERVICE ACTIVITIES. THE AGREEMENT PROVIDES THAT THERE WILL BE NO CHARGE FOR SHAREHOLDER RELATED ACTIVITIES. WE HAVE PERUSED THE NATURE O F SERVICES RECEIVED BY THE ASSESSEE WHICH HAVE BEEN TABULA TED ON PAGES 521 AND 522 OF THE PAPER BOOK. THERE IS A DETAILED DESCRIPTION OF SERVICES IN THE CATEGORIES OF PRICING AND QUOTA TION ITA NO.259/PUN/2017 M/S. WALTER TOOLS INDIA PRIVATE LIMITED 13 PRODUCT AND PROPOSAL PRODUCT RELATED PRICING AND QUOTATION PRODUCT DRAWING AND PRICING BUSINESS PROMOTION AND CALCULATIO N. AGAINST EACH OF THE ABOVE CATEGORIES THERE IS AN ELABORATE DESCRIPTION OF THE NATURE OF SERVICES AND THE PERSONS/AE P ROVIDING THEM. THEN THERE ARE COPIES OF E-MAILS FROM PAGES 523 TO 537 OF THE PAPER BOOK WHICH DEMONSTRATE THAT THE PERSONNEL OF THE A E RENDERED SERVICES TO THE ASSESSEE THAT HAVE BEEN CAPTUR ED IN THE TABLE GIVEN AT PAGES 521 AND 522 OF THE PAPER BOOK. THIS SHOWS THAT NOT ONLY THERE WAS AN AGREEMENT BETWEEN THE ASSESSEE A ND ITS AE FOR RENDERING THE SERVICES BUT THE ASSESSEE ACTUALLY AVA ILED THE SAME. 11. HAVING COME TO THE CONCLUSION THAT THE SERVICES WERE AVAILED BY THE ASSESSEE THE NEXT QUESTION IS DETERMINATION OF THE ALP OF THE TRANSACTION. THE LD. AR DREW OUR ATTENTION TOWARDS THE OR DER PASSED BY THE TRIBUNAL IN THE ASSESSEES OWN CASE FOR THE IMMEDIATELY PRECEDING ASSESSMENT YEAR 2011-12 A COPY OF WHICH HAS BEEN PLACED AT PAGE 224 OF THE PAPER BOOK. IT WA S SHOWN THAT IN THE IDENTICAL FACT SITUATION THE TRIBUNAL HAS HELD THE TRANSACTIO N OF PAYMENT OF MANAGEMENT SERVICES FEE AT ALP. THIS FACTUAL ASSERTION COULD NOT BE CONTROVERTED BY THE LD. DR. IN THE A BSENCE ITA NO.259/PUN/2017 M/S. WALTER TOOLS INDIA PRIVATE LIMITED 14 OF ANY DISTINGUISHING FEATURE IN THE FACTS OF THE IMMEDIATELY PRECEDING YEAR VIS-A-VIS THE CURRENT YEAR RESPECTFULLY FOLLOWING THE PRECEDENT WE HOLD THE INTERNATIONAL TRANSACTION OF PAYMEN T OF MANAGEMENT SERVICES FEES WAS AT ALP. 12. IN THE RESULT THE APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH FEBRUARY 2020. SD/- SD/- (S.S. VISWANETHRA RAVI) (R.S.SYA L) JUDICIAL MEMBER VICE PR ESIDENT PUNE; DATED : 28 TH FEBRUARY 2020 / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. THE CIT(A)-13 PUNE 4. THE PR. CIT -5 PUNE 5. / DR C ITAT PUNE 6. / GUARD FILE / BY ORDER // TRUE COPY // SENIOR PRIVATE SECRETARY / ITAT PUNE ITA NO.259/PUN/2017 M/S. WALTER TOOLS INDIA PRIVATE LIMITED 15 DATE 1. DRAFT DICTATED ON 26-02-2020 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 27-02-2020 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS 7. DATE OF UPLOADING ORDER SR.PS 8. FILE SENT TO THE BENCH CLERK SR.PS 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK 10. DATE ON WHICH FILE GOES TO THE A.R. 11. DATE OF DISPATCH OF ORDER. *