INCOME TAX ACT, 1961

Section 92C

Transfer pricing - Determination of ALP - Payment of management fee to AE - Benefit test--No dispute as to rendition of services by AE

Assessee claimed deduction of management service fee paid to AE abroad. TPO determined ALP thereof at nil on the ground that no benefit was derived by assessee from concerned services.Held: Assessee would be the right person to know whether services are required or not. Such issues should be left best to the commercial wisdom of assessee. What is important is whether services were rendered or not. Assessee, in the instant case had placed voluminous documentary evidence on record in the form of e-mails correspondence indicating rendition of management services by AE, therefore, ALP of said services could not be taken as nil.

REFERRED : Vijay Kumar Talwar v. CIT (2011) 1 SCC 673 : 2011 TaxPub(DT) 0693 (SC) Commissioner of Customs (Preventive) v. Vijay Dasharath Patel 2007 (210) E.L.T. 321 (SC) : 2007 TaxPub(EX) 0721 (SC) Hero Vinoth (Minor) v. Seshammal (2006) 5 SCC 545 WB. Electricity Regulatory Commission v. CESC Ltd. Etc. [C.A. 4037 OF 2002, dt. 3-10-2002] Madan Lal v. Gopi (Mst.) & Anr 1980 (4) SCC 255 Sassoon J. David & Co. Pvt. Ltd. v. CIT (1979) 118 ITR 261 (SC) : 1979 TaxPub(DT) 1025 (SC) CIT v. Rajendra Prasad Moody (1978) 115 ITR 519 (SC) : 1978 TaxPub(DT) 1028 (SC) CIT v. Walchand & Company Pvt. Ltd. (1967) 65 ITR 381 (SC) : 1967 TaxPub(DT) 0323 (SC) Sir Chunilal v. Mehta & Sons, Ltd. v. The Century Spinning & Manufacturing Co., Ltd. AIR 1962 SC 1314 Eastern Investments Ltd. v. CIT (1951) 20 ITR 1 (SC) : 1951 TaxPub(DT) 0110 (SC) Pr. CIT v. M/s. Softbrands India P. Ltd. (2018) 406 ITR 513 (Karn) : 2018 TaxPub(DT) 3520 (Karn-HC)

FAVOUR : In assessee's favour.

A.Y. : 2010-11

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