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2022 (9) TMI 887 - HC - Income TaxTP Adjustment - adjustment on account of ALP determined for royalty payment and on account of managerial remuneration to the director - Advertisement, Marketing and Promotion (‘AMP’) expenses incurred by the assessee for the benefit of the AE’s trademark and brand - rejection of two comparables, namely, Columbia Laboratories Inc. and Premier Consumer Products Inc. - HELD THAT:- Both fact finding authorities have concurrently held that the rejection of the two comparables by the TPO is based on conjectures and surmises and thus, deleted the addition made on account of transfer pricing adjustment for transaction related to royalty. Appellant concedes that if the rejected two comparables are taken into consideration, the payment made by the assessee to its AEs towards royalty would be at arm’s length and no adjustment would be merited. He also concedes that the said two comparables comply with all the filters prescribed by the TPO. We therefore find that the reliance placed by CIT(A) and ITAT on the judgment of this Court in Chrys Capital Investment [2015 (4) TMI 949 - DELHI HIGH COURT] was correct - an enquiry under Rule 10B(3) ought to be carried out, to determine as to whether the material differences between the assessee and the said entity can be eliminated. Unless such differences cannot be eliminated, the entity should be included as a comparable. No substantial questions of law arise for consideration.
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