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2016 (12) TMI 1402 - AT - Income TaxTransfer pricing adjustment - royalty payment - TPO concluded that the assessee did not show as to what is tangible and substantial commercial benefit derived by the assessee from the allied services and consequent payment of technical and management cost and on this basis, he disallowed the entire payment - Held that:- We find that the assessee is paying royalty @ 8% on exports and 5% for sale within India as per the license agreement dated 31.10.2003. Subsequently, the principal agreed to waive royalty in respect of Rudrapur plant of the assessee w.e.f. 1st April, 2007. It is not the case of the AO or the TPO that the royalty rate of other units excluding Rudrapur unit has been increased on waiver of royalty for Rudrapur unit. It is also not the case of AO/TPO that sales from Rudrapur unit was also included to compute royalty payable to the principal. Under these facts, in our considered opinion, no part of royalty payment can be considered as royalty of Rudrapur unit and therefore, the action of AO/TPO to apportion part of royalty payment to Rudrapur unit is not valid and proper. We hold accordingly and appeal of Revenue for AY 2010-11 is dismissed and ground Nos. 9 & 10 of assessee’s appeal for AY 2011-12 are allowed.
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