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2016 (7) TMI 732 - AT - Income TaxTransfer pricing adjustment - whether the international transaction made by the assessee was at arm’s length? - Held that:- AO as well as the DRP found that the assessee has not received any service from the parent company. In fact, the Chief Financial Officer of the parent company was summoned under Section 131 of the Income-tax Act, 1961 (in short 'the Act'). He admitted before the Assessing Officer that it is not possible to provide the details of the administrative services provided to the Indian company. Considering the functions performed by the joint venture partners as shareholders of the Indian company, the DRP found that the services rendered by the shareholders does not require any compensation from the assessee-company even as per the OECD guidelines. The DRP further found that the contribution said to be made by the joint venture partners to the sales of the existing business of the assessee-company was not available on record. In the absence of any material to indicate that services were rendered by the joint venture company, this Tribunal is of the considered opinion that the DRP has rightly confirmed the order of the Transfer Pricing Officer. Disallowance of payment of royalty - revenue v/s capital nature - Held that:- The DRP found that the payment was made by the assessee for right to use the technology and technical information for a prescribed period and it is not perpetual. The DRP has also found that the assessee does not obtain any enduring benefit. The payment is also recurring in nature. Therefore, the DRP for the assessment year 2009-10 found the payment as revenue expenditure. Admittedly, this direction of the DRP was not challenged by the Revenue further. Therefore, it attained finality. Since the nature of payment was examined by DRP and it was found as revenue expenditure and the direction of the DRP attained finality, this Tribunal is of the considered opinion that the CIT(Appeals) has rightly found that the payment was revenue in nature. Therefore, this Tribunal do not find any reason to interfere with the order of the lower authority and accordingly the same is confirmed.
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