Filing of Voluminous Correspondence, Reports not a proper way to discharge Assessee’s burden to establish ALP of Expenditure in question: ITAT [Read Order]

ALP of expenditure - ITAT - Taxscan

The Income Tax Appellate Tribunal (ITAT), Bangalore Bench ruled that the filing of voluminous correspondence, reports is not a proper way to discharge the assessee’s burden to establish Arm’s Length Price (ALP) of expenditure in question.

The assessee, M/s. Exide Life Insurance Company Ltd. is engaged in the business of life insurance and annuity. It offers a range of life insurance products to its customers which includes whole life, endowment, money back, unit-linked products, pension, and term policies.

The issue raised in this case was whether intra-group services are duplication of services for which the AE has already paid in addition to what is paid by way of allocation is also to be looked into. If the AE charges a mark-up for the services rendered, then the ALP of such mark-up will have to be determined.

The assessee has filed material before the TPO to demonstrate the nature of services rendered. In the paper book filed before us, the index of the paper book gives a description of the service. The TPO had specifically called upon the assessee to give details of the services rendered and how the same were utilized by the assessee and its relevance for the assessee’s business. The evidence filed by the assessee in this regard is in the form of e-mails between parties, reports, etc. As to how the evidence filed by the assessee was actually useful in its business has also to be highlighted as the assessee will be the best person to know these facts which are within its knowledge. It is only if such a stand is taken by the assessee can the TPO take the issue forward to arrive at a proper conclusion.

The two-member bench headed by the Vice President, N.V.Vasudevan, and Accountant Member, Chandra Poojari opined opinion filing of voluminous correspondence, reports, etc., would not be a proper way of discharge of assessee’s burden to establish the ALP of expenditure in question.

Therefore, the ITAT directed the assessee to comply with the queries raised by the TPO in his show-cause notice which has been set out in his order under section 92CA of the Act.

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