2015 (9) TMI 610 - ITAT DELHI

Transfer pricing adjustment - Payment of royalty - Whether the assessee is paying royalty for the receipt of technical guidance, it need not have paid management fee as held by TPO - Commercial and Business expediency of incurring any expenditure - Held that:- The TPO while giving the appeal effect to the order of Hon'ble ITAT examined the additional evidences submitted by the assessee and deleted the addition on account of management fees vide its order dated 12.01.2015.Further in the AY 2009-10 and AY 2011-12 also the TPO has accepted the transaction of payment of management fees as being at arm’s length and did not draw any adverse inference in this regard. Hence, the payment of management fees, therefore, is made entirely for business consideration and is an expenditure incurred wholly and exclusively for the purposes of business.- Decided in favour of assessee.

Disallowance under section 40A(2)(b) on account of payment of administrative charges - Held that:- It is not necessary for the assessee to show that any legitimate expenditure incurred by him is also incurred out of necessity or the expenditure incurred by him for the purpose of business actually resulted in profit. TPO is not justified in determining the ALP on the payment made for management fees.

There is no warrant for disallowance of sum paid to M/s Talbros Automotive Pvt. Ltd. as the Assessing Officer failed to discharge the onus that was lying upon him as per the mandate of the provisions of Section 40A(2) of the Act - Decided in favour of assessee.