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2013 (7) TMI 971 - AT - Income TaxAdditions made on arm's length price u/s 92CA(3) on payment of royalty to AE - whether assessee is benefited on payment of royalty - whether assessee is able to show that it derived economic benefit from the know how received from the AE - Held that:- the royalty is related to transfer of technical assistance and know how in the automotive industry - the agreement between the assessee and Stanley was not merely a paper transaction, rather it was approved by the RBI for genuineness of its transaction - The assessee applied the CUP method for ALP - the royalty payment was a revenue expenditure incurred wholly and exclusively for the benefit of the assessee - Royalty, then, is a transaction closely linked with production and sales - the disallowance made on account of royalty is found to be totally uncalled for and it is deleted as such - Decided in favor of assessee Disallowance of provisions for warranty u/s 37(1) - Held that:- provision had been made based on the past factor of actual expenses incurred towards warranty liability - Decided in favor of assessee Disallowance of provisions for leave encashment u/s 43B - Held that:- Matter needs to be verified by the AO by confirming the amount of disallowance - Remanded back for statistical purposes Disallowance of depreciation on computer peripherals - UPS and projector - Held that:- every computer system is accompanied by a UPS and, therefore, a UPS is these days considered an integral part of a computer system - thus entitled to 60% depreciation - assessee has not been able to show as to how a projector forms an integral part of a computer - regarding projector the order of DRP is upheld
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