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2015 (5) TMI 350 - AT - Income TaxTransfer pricing adjustment - payment of export commission - Held that:- TPO is to conduct a Transfer Pricing analysis to determine the arm’s length price (ALP) and not to determine whether there is a service from which assessee has derived benefit or not. The exercise to determine whether assessee had derived any benefit or not from payment of such management fee is to be examined by the AO and appropriate disallowance u/s 37 is called for. In the instant case, the TPO had determined the ALP of payment of export commission at ‘NIL’ by holding that the assessee did not derive any benefit from services rendered by the AE. Therefore, keeping in view the dictum laid down by the judgment of the Hon’ble Jurisdictional High Court in the case of CIT-I Vs. Cushman and Wakefield (India) (P.) Ltd. reported in [2014 (5) TMI 897 - DELHI HIGH COURT] necessarily AO as to determine whether the assessee has derived any benefit from payment of export commission and if any benefit had derived, whether such payment is commensurate to comparable transaction has to be examined by the TPO. For the above said purpose, the Transfer Pricing issue is restored to AO/TPO for denovo consideration. - Decided in favour of assessee for statistical purposes. Payment of royalty for export to Associated Enterprises (AEs) - Held that:- The assessee has sold the goods to AE on principal to principal basis and has received the sale consideration. In view of the above, in our opinion, there is no justification for disallowance of the royalty on the export. We may reiterate that the Revenue has disallowed the entire royalty paid even on domestic sale which has been considered at length by us in the earlier paragraph of this order and we have arrived at the conclusion that the payment or royalty was a revenue expenditure, incurred for the purpose of business. Accordingly, the addition made by the TPO by determining arm’s length price of royalty on export at nil is deleted. There is no justification for disallowance of royalty on the export made to the AEs. Accordingly, the addition made by the AO/TPO by determining the ALP of royalty on exports to the AEs at “nil” is deleted - Decided in favour of assessee. Sales tools expense disallowed - expense incurred by the Assessee for subsidizing 50 percent of the basic cost of standard tools / fixtures for standardization of ‘Honda Exclusive Authorized Dealers [‘HEAD’] outlets - Held that:- It is observed that position on this issue is similar to that of the immediately preceding issue inasmuch as neither the ld. AR nor the ld. DR is aware of the final position on this issue in the earlier years. We, therefore, set aside the impugned order on this score and remit the matter to the file of AO for deciding it in consonance with the final view taken on it in earlier years. - Decided in favour of assessee for statistical purposes.
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