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2013 (12) TMI 1356 - AT - Income TaxTransfer pricing adjustment on account of payment of royalty – Held that:- Following M/s. SC Enviro Agro India Pvt. Ltd. Versus Dy. Commissioner of Income tax [2012 (11) TMI 1107 - ITAT MUMBAI] - there was no justification for payment of royalty on the ground that it was a case of contract manufacturing - under transfer pricing provisions, the TPO was required to determine arms-length-price and then recommend adjustment which had not been done - The disallowance had been made on the ground that there was no justification for royalty which was not correct - the royalty was payable as per agreement for using of technical know-how on value added price to the principal - Thus royalty payment was independent of manufacturing of goods - royalty had been paid not on entire sale price but only value added price which was worked out separately - The royalty had also been paid on sale to third parties which had been allowed but royalty on sales to AE had not been allowed when rate of royalty was the same - no disallowance had been made in the earlier year – the order of CIT(A) set aside – Decided in favour of Assessee.
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