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2020 (2) TMI 114 - AT - Income TaxTransfer pricing adjustment in respect of marketing support services - Comparable selection - HELD THAT:- Inclusion of Quadrant Communications - in our opinion when the data is not available in public domain, for comparability of business support system segment be that of said company does not arise at all. Therefore, we reverse the direction of DRP to include the same as comparable resulting into the adjustment made by the AO is therefore deleted. Therefore, we hold that the Quadrant Communications cannot be compared. Asian Business Exhibition & Conference Ltd - Tribunal examined the profit and loss accounts of the said company and held the direct income of said company is from exhibition and events. Therefore, agreement between Renishaw plc and RMSPL is an internal affiliate agreement of the said two companies to co-ordinate and exchange the communication and correspondence between them relating to the clients based in India. We note that the financial statements for the period ended on 31-03-2010 placed at page No. 19 wherein the sales and services income of ₹ 45,02,00,743/- out of which the marketing support services is only ₹ 5,14,37,962/-. Therefore, bifurcation of sales and service income the income earned from marketing support services is only to meager, therefore, which cannot be compared with Asian Business Exhibition & Conference Ltd. Transfer pricing adjustment in respect of management services - HELD THAT:- We reverse the order of DRP and direct the AO to accept the value of managerial services as claimed by the assessee at Nil. Thus, ground No. 3 raised by the assessee is allowed. Transfer pricing adjustment as directed by the DRP on account of payment of royalty - HELD THAT:- The new and improved technology helps the RMSPL in minimizing its risk of producing sub-standard products and maintaining the highest manufacturing quality. The assessee does not incur any expenses on the research and development and no expenditure was debited to profit and loss accounts as on 31-03-2010. It is observed from the pages Nos. 587 and 589 of the paper book that the research and development which reveals that the Renishaw it incurred huge cost for updation of the technology which supports the view of assessee paying royalty on the export sales effected to its Renishaw affiliates, a third party. Payment of royalty has been accepted by the respondent-revenue from 2006 onwards the details of which filed and the TPO did not accept contentions of the assessee for the year under consideration. The TPO accepted the arm’s length price on manufacturing activity but however treated the transactions on account of royalty at Nil without applying any method. In view of the discussion made here-in above, we direct the AO to accept arm’s length price adopted by the assessee in international transactions on export of sales on account of royalty. Therefore, transfer pricing adjustment made by the AO in pursuance of directions of DRP is deleted. Thus, ground No. 4 by the assessee is allowed.
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