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2017 (10) TMI 1291 - AT - Income TaxDisallowance of the entire management services fees paid - proof of revenue expenses incurred by the appellant wholly and exclusively for the legitimate purposes of its business - Held that:- We find that facts in the present appeal are similar to the one adjudicated by the Co-ordinate Bench in the assessee’s own case in immediately preceding assessment year i.e. 2009-10 wherein held the expenditure incurred by the assessee on management fees in order to facilitate smooth running of its business is an allowable expenditure in the hands of assessee. Similar expenditure has been allowed in the hands of assessee in preceding year. Another aspect of the issue is that the said management fees is to be taxed in the hands of recipient and even the service tax has been paid by the recipient, evidence of which is placed in the Paper Book. Once the commercial expediency of expenditure is established, then the same is to be allowed as business expenditure in the hands of assessee - Decided in favour of assessee. Addition on account of Royalty expenses - no tangible benefit had accrued to the assessee on account of payment of Royalty - Held that:- It is undisputed fact that the issue relating to payment of royalty in assessment year under appeal is arising from same set of facts in assessee’s own case in assessment year 2009-10.. The royalty paid by the assessee to Dana Corporation, USA during the period relevant to assessment year 2010-11 is germinating from same agreement which was subject matter of dispute in assessment year 2009-10. The detailed reasons have been given by the Co-ordinate Bench in assessment year 2009-10 for allowing the payment of royalty. Following the decision of co-ordinate Bench, we hold that the payment of royalty paid by the assessee to its AE is justified and is at arm’s length price. We find no merit in the grounds raised by the Revenue.
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