Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2016 (6) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2016 (6) TMI 635 - AT - Income TaxInclusion of Royalty as income for the purposes of determination of operating profit - whether it did not form part of the income of the assessee and similarly payment thereof is also requires to be excluded as it is not the operating expense of the assessee - Held that:- As per the Master License agreement and franchises agreement, the assessee has to pass on the entire royalty which it has to receive from franchises and there is no income left to the assessee as per this Master License Agreement and franchises agreement thus while working out PLI of the assessee transaction of Royalty income should not be considered as operating income and royalty reimbursed to the MDC shall not be considered as operating expenses of the assessee. We therefore reverse the finding of CIT (A) that royalty receipt from franchisee, JV is the operating income of the assessee and payment of royalty to MDC shall be the operating expenses of the assessee while working PLI of the assessee Allowing appropriate adjustment of risk assumed vis-a viz-comparable company identified by ld TPO - Held that:- We find considerable force in the argument of the assesse with respect to risk adjustment on account of foreign exchange fluctuation as it is apparent from the account that there is no foreign exchange loss incurred by the assesse therefore we set aside this ground to the file of AO for once again perusing the risk adjustment claimed by the assesse and adjudicate the issue.
|