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2016 (8) TMI 324 - AT - Income TaxTransfer pricing adjustment - royalty payment - Held that:- It it is not necessary for the assessee to show that any legitimate expenditure incurred by him was also incurred out of necessity. It is also not necessary for the assessee to show that any expenditure incurred by him for the purpose of business carried on by him has actually resulted in profit or income either in the same year or in any of the subsequent years. The only condition is that the expenditure should have been incurred “wholly and exclusively” for the purpose of business and nothing more. The TPO has no role to play in examining the decision of commercial nature. Under the guise of TPO provisions, the TPO cannot determine the ALP at NIL as held by the Hon'ble Delhi High Court in the case of EKL Appliances Ltd., {2012 (4) TMI 346 - DELHI HIGH COURT }. Therefore, rejecting the entire payment without there being any analysis cannot be accepted. In the instant case, the TPO did not examine the arms length price of the impugned royalty payment in accordance with the provisions of Sec.92C of the Act. Accordingly, we are of the opinion that the ALP of the impugned payment for royalty has been wrongly determined as NIL by the TPO and the issue needs to be examined afresh. Accordingly we set aside the order of Assessing Officer/TPO on this issue and restore the same to the file of the TPO for examination of the same afresh in accordance with the law, after affording opportunity of being heard to the assessee. - Decided in favour of assessee for statistical purposes.
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