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| The Tax Publishers2019 TaxPub(DT) 0654 (Pune-Trib) INCOME TAX ACT, 1961
Section 92C
Once commercial expediency of expenditure in question was established, then same had to be allowed as business expenditure as TPO could not put itself in the arm chair of businessman, i.e., assessee to decide how much of the expenditure was reasonable.
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Transfer pricing - Determination of ALP - Payment of management fee to AE -
Assessee claimed deduction of management fee paid to its AE abroad. TPO determined ALP thereof at nil.Held: Perusal of concerned agreement refelected that nature of services to be provided and fees to be charged for providing the said services. The majority of support services were being rendered by AE to the assessee and the perusal of expenses debited by assessee reflected that no major expenses had been incurred by assessee and benefits flowed from AE to the assessee. The said benefits were for smooth carrying on the business by the assessee and were incurred for the purpose of business. Once commercial expediency of expenditure in question was established, then same had to be allowed as business expenditure as TPO could not put itself in the arm chair of businessman, i.e., assessee to decide how much of the expenditure was reasonable.
Relied:Hero Cycles (P) Ltd. v. CIT 2015 TaxPub(DT) 4897 (SC) S.A. Builders Ltd. v. CIT(A) : (2007) 288 ITR 1 (SC) : 2007 TaxPub(DT) 0833 (SC).
REFERRED :
FAVOUR : In assessee's favour.
A.Y. : 2012-13
INCOME TAX ACT, 1961
Section 37(1)
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