The Tax Publishers2020 TaxPub(DT) 5574 (Mum-Trib)

INCOME TAX ACT, 1961

Section 92C

Material placed on record clearly established that assessee had received management services from its AE. Therefore, TPO was not justified in determining nil ALP of management service fee paid to AE and that too, in an ad hoc manner without following any one of the methods prescribed under section 92C(1).

Transfer pricing - Determination of ALP - Payment of management service free to AE - TPO determined nil ALP without applying any one of the prescribed methods

Assessee claimed deduction of management service fee paid to its AE abroad. TPO determined ALP thereof at nil. Assessee challenged this on the ground of TPO not having applied any one of the prescribed methods. Held: Material placed on record clearly established that assessee had received management services from its AE. Therefore, TPO was not justified in determining nil ALP and that too, in an ad hoc manner without following any one of the methods prescribed under section 92C(1). Accordingly, TP adjustment was deleted.

Supported by:CIT v. Merck Limited. [ITA No. 272 of 2014, dated 8-8-2016) : 2016 TaxPub(DT) 3970 (Bom-HC), CIT v. Lever India Exports Limited [ITA No. 1306, 1307 and 1349 of 2014, dated 23-1-2017] : 2017 TaxPub(DT) 0590 (Bom-HC), CIT v. Johnson & Johnson Ltd. [ITA No. 1030 of 2014, dated 7-3-2017] : 2017 TaxPub(DT) 1277 (Bom-HC) and CIT v. Kodak India Pvt. Ltd. [ITA No. 15 of 2014, dated 11-7-2016) : 2016 TaxPub(DT) 3872 (Bom-HC).

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2011-12


INCOME TAX ACT, 1961

Section 37(1)

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