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 M/s. Newedge Group S.A. Paris  M/s. Newedge Facilities Management inc.

 M/s. Newedge Group (Hong Kong Branch)  M/s. Societe General Bank, Mumbai Branch 3.1. The list of international transactions carried out by the assessee with its Associated Enterprises (AEs) during the year under consideration are as follows:-

S.No.      Nature of Transaction                                        F.Y.2010-11
                                                                            (Rs.)
1.         Provision of Booking Services                                51,47,760
2.         Professional Fees-Regional Management                        3,06,00,651
3.         Bank Charges                                                 15,156
4.         Receipt of interest on fixed deposit                         27,19,132
5.         Payment of Interest on Loan                                  3,68,653
6.         Insurance Cost allocation                                    (1,221)
7.         Software expenses allocation                                 15,41,547
8.         Professional fees-Global support services                    59,89,703
9.         Professional Fees-Corporate Center Services                  87,81,497


                                                  M/s. Newedge Broker India Pvt. Ltd.,


10.        Professional    Fees-Data Processing,     Technical 17,83,822
           Assistance and related services

(i) Professional fees - Regional Management -Rs.3,06,00,651/-

(ii) Software Expenses Allocation - Rs.15,41,547/-

(iii) Professional Fees-Global Support Services - Rs.59,89,703/-

(iv) Professional Fees- Corporate Centre Services-Rs.87,81,497/-

(v) Professional Fees-Data Processing, Technical Assistance and related services - Rs.17,83,822/-

3.4. Professional Fees-Regional Management (Rs.3,06,00,651/-) 3.4.1. During the year under consideration, the assesses has claimed that it has received management services from Newedge HK for which it has paid Rs.3,06,00,651/- to its AE, The assessee submitted that the services broadly include providing assistance in respect of the following areas: Regional E solutions; Regional IT; Regional Legal and compliance; Regional Risk and Credit & Regional Operational Risk Management; Regional Sales Facilitation Group; Regional Finance; Regional Internal M/s. Newedge Broker India Pvt. Ltd., Audit; Regional HR Services; Regional Business Logistics; Regional Management services ;Regional Project Management; and Regional Communication.

3.6.2. The ld. TPO observed that all the submissions of the assessee in this regard were duly considered and verified. However, on perusal of the same it is noticed that the assessee has not been able to conclusively prove that it has received benefits and that cost all location done is correct. Thus, the reply of assessee is not acceptable in this regard and hence rejected.

3.7. Professional Fees-Data Processing Technical Assistance and related services-Rs.17,83,822/-

The assessee submitted that it receives services in the nature of data processing technical assistance and related services from its AE, Newedge Facilities Management Inc. (hereinafter referred to as "Newedge US") which it claims that it provides a broad range of common global services to its group entities. The assessee contended that the cost incurred in provision of such services is initially borne by Newedge US and is subsequently allocated to each entity that receives benefit there from, on M/s. Newedge Broker India Pvt. Ltd., the basis of appropriate allocation keys. Further, the assessee submitted that Newedge India also benefits from such common services and shares the cost of such services. The services include GMI Service, Dataport, Lotus Notes, Global Websites, and Global Network Services, Wan/ Telecommunication Management Services, Anti - Money Laundering, Fimastar, Yolus, Access control, Pulse, Risk systems, methodology and data, Parser, Technical assistance for small projects/activities and acting as a paying agent for several key global expenditures. The assessee also claimed that these costs are allocated by the AEs to the Newedge group companies without any mark-up and the costs are either directly allocated or are based on appropriate allocation key such as number of users/ headcount etc. 3.7.1. Further, during the course of hearing, the assessee was asked to submit the brief occupation of the services along with the proof for benefits availed by the assessee for which the above payment is made to the AE. In this relation, the assessee has submitted the general description of the above mentioned services as mentioned above and stated that the assessee has not only availed the aforesaid services but also benefited from said services. Also, the assessee claimed that all the allocations above are based on the actual cost incurred by AHs and does not include any mark-up thereon.

3.9. We find from Form 3CEB vide its Annexures in pages 31-36 of the paper book wherein the assessee clearly stated the list of services availed M/s. Newedge Broker India Pvt. Ltd., from the respective AEs and the payments made thereon together with the prescribed method adopted by the assessee by the assessee to justify the same to be at arm's length price. Moreover, in the TP study report, the assessee had clearly mentioned its profile wherein it has been categorically stated that it is a broker member of BSE and NSE and had employed 15 staff only for carrying out its activities in India. This itself goes to prove that assessee company requires lot of support services from its AEs to smoothly carry on the business in India. The list of intragroup services and the basis for benchmarking carried out by the assessee in the TP study report together with the benefits received thereon are listed out in pages 68-83 of the paper book filed before us. As stated by the ld. TPO in his order, the single year updated data of the comparable companies were also provided by the assessee during the course of TP assessment vide letter dated 13/11/2014. Further, vide letter dated 09/12/2014, the assessee gave complete description of services received along with the cost allocation mechanism and sample invoices raised by the AEs on the company for rendering intragroup services in detail by way of Annexure-5 & 6 to the said letter. These are enclosed in pages 240-258 of the paper book. We also find from pages 249 of the paper book, the assessee has furnished in detail the cost allocation working mentioning the name of the concerned AE, the description of services rendered the amount incurred thereon and how the same has been allocated on the assessee. It is not in dispute that all those costs were allocated to the assessee without any mark-up by the AEs. We further find that the sample invoices were also enclosed in page 252 and allocation keys were explained in page 253 of the paper book. We further find from pages 257 & 258, sample invoice and cost allocation made without mark-up by the AEs for rendering intragroup services to the assessee. Further, we find from pages 265 till pages 505 of the paper M/s. Newedge Broker India Pvt. Ltd., book filed, the third party invoices of AEs which is charged on assessee at cost. This also conclusively briefs that there is no mark-up charged by the AE while allocating the cost on assessee. Further from pages 506 to 556 of the paper book, we find the invoices raised for data processing, technical assistance and related services for each month. The entire evidences for rendering the services by the AE to assessee are enclosed from pages 580-911 of the paper book in the form of various e-mail correspondences. This fact is also acknowledged by the ld. DRP in page 6 para 3.7 of its directions. From the perusal of the e-mail correspondences we find that it is in fact the assessee which has asked its AEs for rendering those services in order to smoothly carry out its business operations in India and to be in tandem with the globally accepted policies, uniform accounting policies, uniform HR policy etc. While this is so, we are unable to comprehend ourselves to accept the observations made by the ld. DRP that assessee had not asked for these services to be rendered by the AE. Hence we hold that the ld. TPO was accordingly not justified in determining the ALP of those transactions at Rs.'Nil'. From the description of various services rendered by the AEs to the assessee, we find that these services are required for running the day to day business of the assessee and survival of the assessee company in India. Pursuant to rendering of these services alone, the assessee is able to earn income in India, given the fact that assessee has only 15 staff in its rolls in India. We find that the ld. DRP having stated that CUP is the Most Appropriate Method to be adopted in this case did not bother to bring in comparable instances to determine the ALP using CUP whereas the assessee has adopted TNMM as the Most Appropriate Method and had benchmarked the same by bringing in the comparable companies and had benchmarked the same. No error was found in the said method by either of the lower authorities. Either way when the Revenue seeks to disturb the Most M/s. Newedge Broker India Pvt. Ltd., Appropriate Method adopted by the assessee, it is incumbent on the part of the Revenue to adopt any of the other prescribed methods in the statute i.e. Rule 10B of the Rules. Without resorting to any of the methods for the purpose of determining the ALP of international transaction, the ld. TPO erred in determining the ALP of intragroup services at Rs.'Nil'. This issue is fully settled by the Co-ordinate Bench decision of this Tribunal in the case of Lintas India Pvt Ltd., vs. DCIT reported in 107 taxmann.com 426. The operative portion of the said judgement is as under:-