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2018 (11) TMI 1543 - AT - Income TaxDetermination of arm’s length price in relation to Management support services - Held that:- As decided in assessee’s own case, we hold that the benefit is not a precondition for justifying arm’s length price. Under Rule 10B of the Income-tax Rules, 1962 which deals with ‘Determination of the arm’s length price’. There is no mention of the ‘benefit test’ being adopted for the purpose of determining such arm’s length price. It is not a precondition to conclude that the payment is within arm’s length. In other words, the TPO cannot apply the benefit test for determining ALP as he cannot assess the benefit derived by assessee in a particular transaction. Accordingly, ground No.3 raised by the assessee is allowed. TDS u/s 195 - Management services categorized as ‘Fees for Included Services’ - taxabilty in India as per the DTAA between India and United States of America - Held that:- As decided in assessee's own case [2018 (8) TMI 1264 - KERALA HIGH COURT] Management service cannot be characterized as ‘fees for included services’, and hence, not taxable in India as per the Double Taxation Avoidance Agreement (DTAA) between India and USA - disallowance u/s 40(a)(i) is not justified. Management services paid to the AE of the assessee disallowed u/s 37 - Held that:- DRP has only given a general direction based on the finding of the TPO that there was no benefit accrued to the assessee on payment of management fees and hence ALP of said international transaction is to be determined at ‘Nil’. The fact that the above expenditure, whether it is business expenditure, which can be claimed as deduction u/s 37 of the I.T.Act, was never examined. Therefore this issue is also restored to the A.O. to test the reasonableness of the claim of deduction u/s 37 of the I.T.Act. - decided in favour of assessee for statistical purposes.
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