Transfer Pricing Dispute Analysis for Danisco (India) Pvt. Ltd. for Assessment Year 2013-14

Introduction

The Income Tax Appellate Tribunal (ITAT) Delhi Bench handled the transfer pricing dispute case involving ACIT, Circle-7(1), New Delhi and Danisco (India) Pvt. Ltd. for the assessment year 2013-14, focused on the adjustments related to intra-group services (IGS).

Background

ACIT, Circle-7(1), New Delhi, challenged the pricing of intra-group services provided to Danisco (India) Pvt. Ltd., questioning their transfer pricing methods and the necessity and benefits of the services rendered.

Issues Addressed

The main issues revolved around the valuation and justification of services classified under management, technical support, and IT services. The revenue authority questioned the applicability of the Cost Plus Method (CUP) and the actual benefit derived by Danisco from these services.

Tribunal’s Decision

The ITAT, after thorough examination, sided largely with Danisco, indicating that the services were necessary for its operations and that the transfer pricing adjustments proposed by the TPO were not justified. The tribunal referenced past cases and the consistency in the application of services to validate their stance.

Conclusion

The tribunal’s decision underscored the importance of clear documentation and justification for intra-group services in transfer pricing cases. It highlighted the need for tax authorities to consider the actual business context when evaluating the benefits of such services.

The decision was pronounced on May 5, 2021, providing significant insights into the handling of transfer pricing disputes involving intra-group services.

Transfer Pricing Dispute Analysis for Danisco (India) Pvt. Ltd. for Assessment Year 2013-14