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2018 (2) TMI 975 - AT - Income TaxDisallowance of management services fees - Held that:- Management service fee paid by assessee to Asia Investment Pvt. Ltd is allowable. As decided in assessee's own case [2017 (4) TMI 908 - ITAT PUNE] where there is nexus between the expenditure incurred and the purpose of business, then the revenue cannot put itself in the arm chair of the businessman to decide how much of the expenditure is reasonable.The expenditure incurred by the assessee on management fees in order to facilitate smooth running of its business is an allowable expenditure in the hands of assessee. - Decided in favour of assessee Addition on account of payment of Royalty to Dana Corp., USA. - TPA addition - Held that:- Since, identical issue has already been decided in favour of assessee by the Tribunal in assessment years 2009-10 and 2010-11 that where the payment of Royalty by the assessee to its associate enterprise Dana Corporation is @ 2.85%is liable to be considered at arm's length rate and no addition is warranted on this count. Accordingly, the claim of assessee is thus, allowed. In any case, the jurisdiction and power of TPO is to determine arm's length price of Royalty and the order of TPO holding that the assessee had not derived any benefit under the said Agreement is beyond the scope of TPO while benchmarking the international transaction for the purpose of determining arm's length price - Decided against revenue Warranty provision applicability - Held that:- DRP has given categoric finding that provision of warranty made by assessee are based on scientific analysis of the past data and represents a reliable estimate of obligation arising out of sales made during the relevant previous year. The ld. DR has not been able to controvert the findings of DRP. In Rotork Controls India P. Ltd.(2009 (5) TMI 16 - SUPREME COURT OF INDIA) has held that where provision for warranty is made on scientific basis, the same is to be allowed.- Decided against revenue
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