Arms Length Price cannot be Nil

The Ahmedabad Bench of the Income Tax Appellate Tribunal (ITAT) held that the Arm’s Length Price (ALP) of intra-group services cannot be determined at nil merely because the Transfer Pricing Officer (TPO) questions the extent of benefit derived by the taxpayer. 

Where the taxpayer demonstrates actual receipt of services through agreements, contemporaneous records, cost allocation workings, emails, presentations and audit certifications, the Revenue cannot disregard such evidence based on subjective notions of commercial expediency. 

Consequently, the Tribunal deleted the transfer pricing adjustment relating to intra-group service charges and alsoremoved the consequential disallowance under Section 37(1).