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2022 (8) TMI 1341 - AT - Income TaxTP Adjustment - Erroneous adjustment of management charges - HELD THAT:- The nature of services rendered by the Associated Enterprises “FWL” is broadly in four categories, i.e. Strategic Guidance, Technical Support, Systems and Software and Business and Administrative Support. We noted that the management fee paid by the Assessee which is about 2% of the overall cost which was included in the cost base while determining the ALP under the TNMM approach adopted at an entity level which was accepted by the Transfer Pricing Officer. Assessee has produced all relevant evidences as noted above and the case-law cited by the CIT-DR in the case of M/s. Lite-on Mobile India Private Limited, Kancheepuram Vs. The Deputy Commissioner of Income Tax, Chennai [2021 (11) TMI 678 - ITAT CHENNAI] where there was no evidence furnished and as to whether the Associated Enterprises has provided services or not? But the facts in the case are distinguishable and in the present case, Assessee has produced invoices, details of key payment personnel in regard to strategic guidance, series of invoice copies showing third party charges such as Verizon charges in regard to technical software and systems support and also furnished IOCL bid documents in regard to the business and administrative support services. According to us, the Assessee in the present case is able to prove with evidences the services rendered by the Associated Enterprises for which the Assessee has paid management fee for availing various support services pursuant to the management service agreement entered with its AE. We reverse the order of the lower authorities on this issue and allow the claim of deduction claimed by the Assessee on account of the management fee paid to its AE. Thus, this issue in the Assessee’s appeal is allowed TDS u/s 195 - royalty - Disallowance of expenditure incurred towards off-the-shelf software - Assessee now argued that the expenditure incurred towards its share of software cost which are in the nature of off-the-shelf software products such as of Microsoft Office [MS Office], IBM Lotus Notes, AVEVA, Auto CAD, etc - HELD THAT:- This issue stands now covered by the decision in the case of Engineering Analysis Centre of Excellence Private Limited Vs. Commissioner of Income Tax [2021 (3) TMI 138 - SUPREME COURT] wherein has held that “the amount paid by resident Indian and end-user / distributors to non-resident computer software manufacturers / suppliers , as consideration for resale / use of computer software through EULAs / distribution agreement, is not payment of royalty for use of copyright in computer software, and thus, the same does not give rise to any income taxable in India.” This issue is covered by the decision of the Hon’ble Supreme Court wherein it is held that the expenditure incurred towards the purchase of the off-the-shelf software products is not in the nature of “Royalty” for use of copyright in the software and thus not liable for withholding of tax u/s.195 of the Act, we delete the disallowance and allow this issue of the Assessee.
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