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2017 (6) TMI 236 - AT - Income TaxTransfer pricing adjustment - Reimbursement of expenses given by AE to the assessee - adjustment made by AO while passing the order u/s.92CA(1) - Held that:- Tribunal in assessee’s own case for the immediate preceding AY 2011-12 wherein exactly similar issue was dealt by the Tribunal and the addition so made was deleted as held in the entire transaction involving payment of expenditure by the assessee, its recovery from the associated enterprises, which-in turn recovers it from the end clients, there is no involvement of any profit-element in the hands of the associated enterprises. Therefore, it would be wrong on the part of the income tax authorities to take a position and infer notionally about recovery of mark-up or profit element in the hands of assessee. It has also been brought out that it is a standard practice in the I.T. Industry to recover out of pocket expenses incurred during the course of providing services for the clients on a cost to cost basis. Under these circumstances, in our view, the Transfer Pricing Officer erred in proceeding to infer a non-existent understanding between assessee and its associated enterprises so as to impute income qua the instant transaction in terms of section 92(1) of the Act. - Decided in favour of assessee.
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