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2022 (1) TMI 679 - AT - Income TaxTP Adjustment - TPO has applied benefit test in dealing with the issue of ALP of payment for SAP license - HELD THAT:- Discussions by the TPO are not at all sustainable in the context of determination of ALP in Transfer Pricing Adjustment. This has been held by Hon’ble jurisdictional High Court in several case laws as referred by the Ld. Counsel of the assesse in the submissions as above. Furthermore, determination of ALP as nil by applying the benefit test without resorting to the methodology of determining ALP as per the methodology set out in Chapter X of the Act and the relevant Rules has also been held to unsustainable. In these circumstances, the determination of ALP as nil has been held to be not sustainable in the case laws from Hon’ble Bombay High Court as above including CIT vs.Lever India Exports Ltd. [2017 (2) TMI 120 - BOMBAY HIGH COURT] and CIT vs Johnson & Johnson Ltd. [2017 (3) TMI 1520 - BOMBAY HIGH COURT] In these case laws, it was expounded that TPO is mandated by law to determine the ALP by following one of the methods prescribed u/s. 92C read with rule 10B. When No such exercises is carried out by the TPO, the determination at Nil of the ALP was held to be not sustainable. The above said case laws are fully applicable on the fact of the case. Thus we hold that authorities below have fatally erred in applying the benefit test as rightly contended by the Ld. Counsel of the assessee. Furthermore, it has been submitted that after applying the benefit test authorities below have brushed aside the details submitted by the assessee. We are in agreement that authorities below have erred in holding the ALP at nil on the ground that relevant documents have not been submitted. In our considered opinion, the assessee has discharged the onus caste upon it. The case laws as referred above are duly applicable on this issue also. The determination of ALP at nil in this regard also is not sustainable on the touchstone of the aforesaid case laws as the determination of ALP at nil without following one of the methods prescribed u/s. 92C r.w.Rule 10B has been held to be non sustainable. Accordingly, we set aside the orders of the authorities below, and decide the issue in favour of the assessee.
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