Recently, in the case of Marubeni Corp., Japan (ITA No: 5397/Del/2012) The Delhi Bench of the Income-tax Appellate Tribunal held that, a transfer pricing adjustment with respect to a taxpayer performing what were found to be low-end mediation services in India for its foreign related parties.
In that case tribunal after analyzing the functions finding that the taxpayer acted as a service provider with minimal risks and the tribunal rejected the Transfer Pricing Officer’s contentions and set aside the transfer pricing adjustment.
The tribunal found that the taxpayer’s primary service was to act as a mediator, and that the taxpayer was adequately compensated with a fixed fee for this activity. The tribunal looked to a chart / table provided by the taxpayer, to the Transfer Pricing Officer, and that showed for each transaction, the taxpayer’s risk was minimal with least capital being employed.
