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2017 (10) TMI 1259 - AT - Income TaxTP adjustment on account of reimbursement of software cost by the assessee to its AE - Held that:- Coordinate Bench of the Tribunal in taxpayer’s own case for AY 2007-08 upheld the findings of ld. CIT (A) returned in favour of the taxpayer qua the identical issue on the premise that it is settled principle of law that certain transactions entered into by the taxpayer for business expediency need not necessarily attract financial benefits. In such cases, Revenue cannot dictate its term that certain transactions should not be entered into. Even otherwise, there is no data available with the Revenue that the CUP value of the transaction would be NIL nor any comparable has been taken where such adjustment on account of reimbursement of software cost or reimbursement of expatriate cost as the case may be has been taken as NIL. Also keeping in view the concept of “there is no free lunch” a third party shall not charge anything for providing services. TPO as well as CIT (A) have not disputed the incurring of the software cost. Even otherwise, rule of consistency is required to be followed by the Revenue particularly when there is no change in facts and circumstances of the case. When the Revenue has extended relief to the taxpayer in AY 2007-08 and 2008-09 the ld. CIT (A) had no reason to decline the same qua the year under assessment. The Revenue has also accepted same transaction at arm’s length in AY 2011-12 and 2012-13. - Decided in favour of the assessee. Adjustment u/s 92CA on account of value of the royalty transfer in uncontrolled condition - Held that:- The taxpayer has used both internal as well as external comparables to benchmark royalty payment and in fact, for internal payment relied upon technical know-how payment between Bencom and third party based in Syria where licence fee has been paid @ 6% of the net sales. CIT (A) also discussed the benefit of technical knowhow to the taxpayer. Moreover, when the Revenue has been continuously deciding the royalty payment issue in favour of assessee since AY 2007-08 on the basis of same Agreement between assessee and Bencom and there is no change in the business model and facts and circumstances of the case, the rule of consistency is required to be followed by the Revenue. So, we are of the considered view that ld. CIT (A) has rightly deleted the addition of ₹ 13,57,77,031/- made by the AO on account of royalty payment to its AE. So, we find no ground to interfere in the impugned order passed by the ld. CIT (A) qua deletion of royalty payment. - Decided in favour of the assessee.
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