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2021 (9) TMI 1517 - AT - Income TaxTP adjustment - international transactions in connection with payment of brand royalty and payment of professional fees - benchmarking the international transaction without appreciating the fact that the said international transaction is closely interlinked to the manufacturing activity of the Appellant - HELD THAT:- The crux of the discussions wherein in the Tribunal’s order for the assessment year 2009-10, it has observed that the assessee had paid brand royalty under two agreements, first, at 0.5% under the agreement dated 01.07.2008 and then again under another agreement dated 05.04.2001. The duplicate amount of royalty earlier paid was directed to be disallowed. The relevant part of this Tribunal order [2021 (7) TMI 681 - ITAT PUNE] for the assessment year 2010-11 in assessee’s own case remit the matter to the file of AO/TPO for redetermining the ALP of the international transaction of payment of Royalty and disallow the duplicate payment of brand Royalty in terms indicated above in the Tribunal order - Ground allowed for statistical purposes. Management services fess and payment of professional fees - Tribunal observed that in its own order for the assessment year 2009-10 [2019 (4) TMI 1505 - ITAT PUNE] following the view taken for the preceding year held that the assessee did avail services from its AE and the authorities below were not justified in coming to the conclusion that no services were obtained by the assessee. We set aside the impugned order on this score and remit the same to the file of the AO/TPO for fresh determination of ALP of the international transaction of payment of management services fee in accordance with the observations and directions given in the Tribunal order passed for the assessment year 2009-10 [2019 (4) TMI 1505 - ITAT PUNE] and 2010-11 [2021 (7) TMI 681 - ITAT PUNE]. Thus, Grounds allowed for statistical purposes. Disallowance u/s. 37 in respect of royalty expenditure incurred by the assessee - CIT(Appeals) had taken a view that the assessee is engaged in manufacture of equipments through licenses from group concerns. Royalty has been paid in respect of technical know-how obtained for manufacturing of equipments. Since the technology and designs have been used by the assessee in its manufacturing, the royalty for the same cannot be said to be for nonbusiness purposes. Similarly, brand royalty has been paid for the use of brand on the products manufactured by it. It was therefore an admitted fact that assessee was using the Brand name and logo on its manufactured products. These payments, therefore, cannot be considered as meant for nonbusiness purposes in respect of transfer pricing adjustment. This view of the Ld. CIT(Appeals) was left unaltered and relief provided to the assessee was sustained by the Tribunal. Before us also, DR submitted that there is no difference on the facts and circumstances for this year also and the issue is covered in favour of the assessee. That when the facts and circumstances are similar and that a view has already been taken which is factually analyzed, therefore, on same parity of reasoning under same set of facts and circumstances, we allow this ground of appeal. Thus, Ground No.2 raised in appeal by the assessee is allowed. Disallowance u/s.37 in respect of legal and professional fees incurred by the assessee on account of HR, legal, IT, finance, sales, marketing and other ancillary services - As decided in own case assessment year 2010-11 [2021 (7) TMI 681 - ITAT PUNE] CIT(A) has given cogent reasons for deleting the disallowance inasmuch as the AO simply adopted the TPO’s reasoning without showing as to how the same applied to the non- AE transactions as well. Further, the expenditure contains payment for Testing fees and also Generic service fee. To this extent, we approve the view taken by the ld. CIT(A). TDS u/s 195 - non deduction of tds on commission on sale to overseas sales agents - HELD THAT:- As decided in Kikani Exports Pvt. Ltd [2014 (9) TMI 96 - MADRAS HIGH COURT] wherein it was held that the services rendered by the non-resident agent can at best be called as a service for completion of the export commitment and would not fall within the definition of fees for technical services and therefore, section 9 of the Act is not applicable to the instant case and consequently, section 195 of the Act does not come into play. The assessee has further submitted that it is a settled position of law that the retainer ship charges/commission paid to overseas non-resident agents for promoting assessee’s business in foreign countries is not in the nature of fees for technical services and therefore, is not liable to be taxed in India. Thus no statutory obligation to make TDS u/s.195 of the IT Act in respect of the commission paid to overseas sales agents. Disallowance u/s.14A r.w. Rule 8D - AO proposed to the assessee that the expenditure incurred in relation to the dividend income in respect of this investment is required to be disallowed - assessee objected to the same on the ground that no dividend income has been received during the year with regard to this investment - HELD THAT:- It is a settled position of law that when no exempt income has been received by the assessee then there cannot be any disallowance u/s.14A of the Act. This view was also taken in the case of HOLCIM INDIA P. LTD. [2014 (9) TMI 434 - DELHI HIGH COURT] and based on this decision of the Hon’ble Delhi High Court, the Ld. DRP had directed the Assessing Officer to delete the addition. Therefore, we are of the considered view on the given facts and circumstances, there is no need for interference with the findings of the Ld. DRP and relief provided to the assessee is sustained. Revenue appeal dismissed.
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