Management fees -- ALP taken as NIL but services provided

Facts: Assessee in international freight forwarding/log business paid group management fee to its AEs for a gamut of services. TPO held the ALP (arm's length price) as NIL citing the assessee did not manifest how they were benefitted (benefit test) by these group management services. On higher appeal DRP reviewing the voluminous documentation held that services were factually provided but on benefit test sustained the addition assuming NIL ALP. On higher appeal -

Held on Assessee's own case of earlier years that once revenue has agreed that services are provided, they cannot assume ALP as NIL. Benefits need not be direct and be seen transparently in all circumstances.

Ed. Note: Most decisions on NIL ALP for management fees has gone against revenue.

Need for robust group level documentation is a must for establishing management fees.

In logistics industry management fee precedence's are not too many so this decision should come as a respite to such companies who require a wide range of management services for long-term business sustenance.

Case: CEVA Logistics India (P) Ltd. v. DCIT 2023 TaxPub(DT) 785 (Delhi-Trib)