Lufthansa Cargo India Private Ltd. vs Dcit [Alongwith T.D.S. Appeal Nos. 66, ... on 30 June, 2004
11. We find that the issue is a covered issue by co-ordinate bench for assessment
year 2008-09 though there is a difference on facts inasmuch as expenditure to the
extent of 60% was held to be capitalized on the ground that during that year the
expenses of Asia Pacific headquarters were also aimed at increasing the installed
capacity from 6 lakhs units p.a. to 10 lakhs units p.a. That aspect of the matter,
however, is no longer relevant, and that is not even revenue's case before us. We
have also noted that there is no dispute about the rendition of services, but, as in the
last year, the dispute is about the services being in the nature of shareholder
services. That plea, in our considered view, is wholly unsustainable in law. A core
management support service, under a cost contribution arrangement, is inherently
outside the limited scope of shareholder services. These services are required for
ITA No. 381/Ahd/2015
Tudor India Pvt Ltd Vs. ACIT
Assessment year: 2010-11
Page 15 of 16
effective administration and management of the assessee company on day-to-day
basis. Whether assessee needs these services or not or whether assessee derives
"substantial benefit" from these services or not is not really relevant. That should be
best left to the commercial wisdom of the assessee. What is material is whether the
services were rendered or not, and whether or not the cost allocation was on a fair
and reasonable, even if not wholly precise and accurate, basis and both of these
tests are clearly satisfied on the facts of this case. It is also not a case in which
benefits are so trivial or illusory that it can be said that the assessee did not derive
any benefit from these services at all. The emails, correspondence and other
corroborative details clearly show rendition of services, and the allocation being on
approximate time basis show reasonableness in allocation of costs. As for the fact
that the date of agreement is a date subsequent to commencement of work under
the agreement, nothing really turns on it inasmuch as the existence of a formal
agreement is not even a sine qua non for a cost contribution arrangement. It is not
the case of the revenue that the agreement is not a sham agreement. The
agreement may have been formally entered into on a later date but it covers the
entire period and there is no dispute about rendition of services. In our considered
view, in the light of these discussions and respectfully following the co-ordinate
bench decision in assessee's own case for the assessment year 2008-09, we are
unable to see any legally sustainable merits in the impugned arm's length price
adjustments in respect of management fees. As regards the arm's length price
adjustment in respect of insurance premium share, we find that this issue is also
covered by the co-ordinate bench decision in assessee's own case for the
assessment year 2008-09 wherein the co-ordinate bench has, inter alia, observed as
follows:-