Case Law: Hamon Shriram Cottrell Pvt. Ltd vs. ITO (ITAT Mumbai)

S. 144C(8): DRP entitled to enhance by questioning very existence of transaction

The assessee entered into international transactions with its AE by way of payment of management fees, reimbursement of tender cost and payment of R&D expenses and claimed that the transactions were at ALP. The TPO & AO did not dispute that the transactions had been entered into for business purposes and determined the ALP by making adjustments. The assessee filed objections before the DRP. The DRP held that the assessee had to first show that the services had been rendered by the AE and that some tangible and direct benefit was derived by the assessee as a result of such payment and called upon the assessee to produce proof. As the assessee failed to do so, the DRP held that no tangible and direct benefit was derived by the assessee and directed that a much larger adjustment by way of disallowance of the entire amount be made. The assessee appealed to the Tribunal and claimed that the DRP could not have enhanced the assessment. HELD by the Tribunal:

Hamon Shriram Cottrell Pvt. Ltd vs. ITO (ITAT Mumbai)

 

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