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2012 (12) TMI 1041 - AT - Income TaxAdditions by way of Transfer Pricing adjustments on payment of royalty - Held that:- manufacturing of goods by the assessee was in any case not possible without the technical knowhow and assistance from SCJ (Associated Enterprise) in Japan - assessee entered into an agreement for obtaining license to manufacture specified insecticides and pesticides and agreed to pay 5% royalty on the value addition and RBI has approved it - is also not necessary for the assessee to show that any expenditure incurred by him for the purpose of business carried on by him has actually resulted in profit or income either in the same year or in any of the subsequent years - The only condition is that the expenditure should have been incurred "wholly and exclusively" for the purpose of business - since royalty is paid for allowing assessee in utilizing the technical knowhow and the license for manufacturing activity, we are of the opinion that the payment of royalty is wholly and exclusively for the purpose of business - Hence AO to allow the royalty as claimed - following the order of coordinate bench of this Tribunal dated 7th November, 2012 (supra) passed in assessee’s own case - decided in favor of assessee
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