TMI Blog2018 (9) TMI 2130X X X X Extracts X X X X X X X X Extracts X X X X ..... benefits and commercial expediency are not to be invoked as per the above legal position. The impugned action of the lower authorities under challenge is therefore held to be not sustainable. Quantification of the impugned ALP - TPO admittedly applied CUP' method in his order - He appears to have treated the tax payer itself as a valid comparable as it had not paid any royalty to the very payee in earlier assessment years. This made him to adopt nil price of the impugned royalty so as to make the adjustment in question. We see no reason to concur with such a course of action since the assessee itself having paid Nil amount in the past to the AE, cannot be taken as a valid comparable. This tribunal in the case of Technimont ICB In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me Tax Act, 1961 (hereinafter the Act ), relating to Assessment Year 2013-14. 2. Facts in brief:- 2.1. The Assessing Officer passed a draft assessment order dt. 23/12/2016 u/s 143(3) r.w.s. 144C(1) fo the Act, interalia making the following additions:- i. Transfer Pricing Adjustment Rs.1,93,83,735/- ii. Provision for leave encashment Rs.28,18,656/- iii. Disallowance u/s 40A(9) Rs.11,21,347/- iv. Employees Contribution to PF/ESI Rs.10,21.069/- This draft assessment order was passed consequent to the order passed by the TPO u/s 192CA(3) of the Act, on 20/10/2016. 3. Aggrieved the assessee carried the matter in appeal before the DRP. The DRP-2, New Delhi, vide order dt. 12/06/2017, disposed of this objections ra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TPO, DRP to Assessing Officer holding the assessee not to have derived any tangible and commensurative benefit of paying any of the interest sales thereby culminating in the impugned adjustment of the entire payment of Rs.16,24,110/- is sustainable or not. Learned CIT D/R vehemently supports the above extracted findings under challenge that the payee s products in question had long been established in India. He points out the fact that this is the first year of the impugned royalty outgo forming the point of dispute as international transaction under the Act. whereas the assessee had been using the very brand name/trademark in the past without incurring any such expenditure. He terms the lower authorities action under challenge to be strict ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erck Ltd. vs. DCIT 2016 139 DTR 1 (Mum.), as well as in L.K. India Pvt. Ltd. vs Dy.Cit, Circle-1(2)in ITA No. 209/Ahd/2015, decided on 31st May, 2017. The co-ordinate bench(es), hold therein that it is an assessee s call as to whether or not the services availed in question are commercially expedient rendering same benefits being derived from its business. 4.1 We keep in mind the said case-law to revert back to the relevant facts before us. It is clear first of all that the lower authorities have been very fair in not holding the assessee s royalty transactions to be a sham ones. They have applied benefit and commercial expediency test in the instant case whilst computing nil ALP. We see no reason to approve the same these two tests o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee by relying on the order of TPO as well as the DRP, we are not inclined to deviate from the view taken by the co-ordinate bench of the ITAT on this issue on the very same facts in the assessee s own case for the immediately preceding Assessment Year. Respectfully following the same, we allow these grounds of the assessee. 7. Ground No. 6, 7 8 are on the issue of provision for leave encashment. This Bench of the Tribunal in the assessee s own case for the Assessment Year2012-13, on the very same issue in ITA No. 2336/Kol/2016, order dt. 13th July, 2018, held as follows:- 5. Both the learned representatives next contention is that we have restored the above latter issue of leave encashment provision disallowance to Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of disallowance made by the Assessing Officer u/s 40A(9) of the Act, on account of subsidy paid to IEL Club, Gomia amounting to Rs.11,21,347/- 8.1. The assessee submitted that the payment in question was given to a club that has be set up by the assessee company itself for the exclusive use of its employees in view of the fact that Gomia is a remote area and lacks any recreational facilities. The said amount was incurred, as per the assessee, for running of the club so as to provide entertainment and relaxation to the employees. 8.1.1. The ld. D/R relied on the order of the DRP. 8.2. We find that for the assessment years 2007-08, 2011-12 2012-13, the expenditure in question was allowed by either the ld. CIT(A) or by the DRP. Thes ..... X X X X Extracts X X X X X X X X Extracts X X X X
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