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2015 (8) TMI 1082 - AT - Income TaxAddition on account of difference in arm’s length price (ALP) of international transaction - CIT(A) deleted the addition - Held that:- CIT(Appeals) has rightly followed the decision of Mumbai Bench of the ITAT in the case of Dresses Rand India (Pvt.) Ltd. (2011 (9) TMI 261 - ITAT MUMBAI) holding that while evaluating the arm’s length price of a service, it is wholly irrelevant as to whether the assessee benefits from it or not; the real question which is to be determined in such cases is whether the price of this service is what an independent enterprise would have paid for the same. Under these circumstances, we are of the view that the Learned CIT(Appeals) has keeping in mind the preponderance of the probability to run the business of assessee has rightly accepted the claimed expenditure on the nature of the services required to run the business of the assessee with the direction to the Assessing Officer to allow the same. The Hon’ble jurisdictional High Court of Delhi in the case of Hive Communication Pvt. Ltd. (2011 (7) TMI 82 - DELHI HIGH COURT) followed by the Delhi Benches of the ITAT in the case of Ericson India Pvt. Ltd. (2012 (11) TMI 1 - ITAT, DELHI) has held that the legitimate business needs of the company must be judged from the view point of the company itself and must be viewed from the point of a prudent businessman. It was held that the it is not for the Assessing Officer to dictate what the business needs of the company could be. It is the businessman who can only judge the legitimacy of the business need of the company from the point of a view of a prudent businessman. The term “benefit” to a company in relation to its business has a very wide connotation. It was further held that it is not feasible to evaluate the price of each service in financial term in isolated and stand alone manner for each such service or part of the service and hence TNMM at entity is acceptable. The First Appellate Order on the issue is well supported by the decisions cited by the Learned AR and hence we are not inclined to interfere therewith. - Decided against revenue.
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