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2014 (1) TMI 388 - ITAT MUMBAIAddition proposed by the TPO on account of Technical fee paid to AE – Addition Related to Royalty or charges – Method of Payment – Held that:- The assessee chose CUP as the most appropriate method for this segment and also relied on Government’s directives - the issue was covered by FIPB instructions, where royalty is accepted to be 5% to 8% - on the basis of global study, reliance can be made on one entity, which can be accepted to be CUP, so far as the business of the assessee and its affiliates are concerned, where the TP study identified the uncontrolled transaction of royalty of 10%, against which, the assessee’s payment was at 3%, which can be accepted to be the ALP - the comparables as suggested by the TPO cannot be accepted in the defined segment of the business, which does not have global presence - the assessee has done its business, strictly in accordance with the business agreement with its parent AE and has made the payments also in accordance with the norms as prescribed by the Government of India regulations and FIPB, Ministry of Commerce – the adjustment proposed by TPO reversed – Thus, the assessee’s payment made on account of royalty/license fee to be at arm’s length – Decided in favour of Assessee. Payment on account of research and development – Held that:- The CIT(A) has very categorically observed that, “there is nothing on record to suggest the bench marking the ALP - Even in the records, there is nothing specific, which clearly suggests the bench mark for the addition – FIPB approval cannot be treated as acceptance of arm’s length price more so in view of the specific method prescribed under the Act - thus, the matter remitted to the AO for fresh adjudication. Disallowance of delayed payment - Contribution to PF on account of ESIC and fund – Held that:- The payment have been made before the due date of filing of the return – Thus, the addition cannot be made.
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