ITAT Delhi Remands Cargill India's Intra-Group Services TP Dispute To TPO

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has remanded transfer pricing adjustments relating to intra-group services received by Cargill India Pvt. Ltd., after observing that the Arm's Length Price (ALP) of various services had been determined at nil without discussing the evidence produced by the taxpayer.

A bench comprising Judicial Member Vimal Kumar and Accountant Member S. Rifaur Rahman and partly allowed cross-appeals filed by Cargill India Pvt. Ltd. and the Revenue for Assessment Year 2009-10.

Reproducing findings from its decision in the taxpayer's own case for AY 2008-09, which it followed in the present matter, the Tribunal noted,

“they have determined the ALP of intra group services viz. administrative services, corporate IT & other services, treasury services, administrative and technical training services, brokerage services, other services and software sharing services at nil by using the same terminology without discussing the plethora of evidences brought on record by the taxpayer”

The taxpayer, a wholly owned Indian subsidiary of Cargill Mauritius Limited, is engaged in the business of import, export and domestic trading in edible oils, fertilizers, grains, oil seeds and other food products, and in the business of processing crude oil.

The dispute concerned transfer pricing adjustments relating to intra-group services received from associated enterprises. The TPO rejected the Transactional Net Margin Method (TNMM), applied the Comparable Uncontrolled Price (CUP) method and determined the ALP of several categories of services at nil.

Before the tribunal, the taxpayer argued that a coordinate bench had remanded an identical issue for AY 2008-09 and that the TPO and the Commissioner of Income Tax (Appeals) [CIT(A)] had failed to properly consider the evidence and additional evidence placed on record regarding receipt of services.

Observing that the present case involved similar facts and issues, the tribunal set aside the transfer pricing adjustments and remanded the matter to the TPO for fresh adjudication after examining the evidence and additional evidence brought on record by the taxpayer.

On the corporate tax issue, the Tribunal upheld the taxpayer's claim relating to the carry forward and set-off of unabsorbed depreciation beyond eight years, relying on the Gujarat High Court's decision in General Motors India Pvt. Ltd. v. DCIT and the Delhi High Court's ruling in PCIT v. British Motor Car Co. Ltd.

For Assessee: Shri Kamal Sawhney, Shri Nikhil Aggarwal and Shri Puru Medhira, Advocates

For Revenue: Shri Dharm Veer Singh, CIT(DR)