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2015 (5) TMI 688 - HC - Income TaxTP adjustment - disallowance of referral fee - Revenue argued that the assessee was unable to support the claim of having incurred any expenditure at all - Tribunal accepting the assessee's argument that the referral fee in the given facts of the case was not subject to ALP adjustment - Held that:- The ITAT in the light of its discussion with regard to the legal position arising from the amendment of 2007, was of the opinion that the assessee “had submitted ample evidence to support its expenditure and it was shown that such expenditure is incurred with respect to the revenue earned”. The Revenue’s submissions in appeal to this Court - concededly without any discussion or hearing on this aspect in the first instance when main judgment was delivered - that the details and specifics were unavailable despite repeated queries in that regard, ipso facto could not have been a circumstance for the disallowance which ultimately resulted in the present instance. The AO plainly and facially adopted a differential standard when he considered non-AE international transactions (which yielded substantial revenue of ₹ 4,68,98,175/-) as opposed to AE driven transactions that yielded ₹ 6,27,45,515/-. The AO also ignored the fact that the arm’s length transactions in the present case in fact led to lower referral fee of 27.65% as opposed to the non-AE international transactions where the identical outgoing was up to 30.97%. Given these set of circumstances, the undue emphasis placed upon lack of certain particulars which did not fit into the mould as to suit the understanding of the AO could not have led to the disallowance. Having regard to this background, the Court is of the opinion that the ITAT’s findings on this aspect are entirely factual and cannot be characterized as perverse calling for interference.- Decided in favour of assesse.
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