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The Tax Publishers AB Mauri India (P) Ltd. v. ACIT [ITA No. 1970/Mds/2011, dt. 5-5-2016] : 2019 TaxPub(DT) 2283 (Mds-Trib) Management fee with only marginal improvement in revenue--Disallowance thereof Depreciation on non-compete fee--Pendency of appeal to disallow whether possible *Facts:* Assessee was in the business of manufacturing yeast. It had to pay management fee to its group parent in UK for intra group services. TNMM was used to benchmark the transactions with AE. TPO disallowed the management fee as NIL citing no benefit or revenue growth was only marginal thus benefit test was not proven by assessee. On appeal DRP allowed part of the management fees. On further appeal: The assessee had paid non-compete fee in earlier years. Depreciation on the same was claimed. This was allowed by the ITAT in the earlier years but the case was appealed by the department in the high court. The DRP accepted the ITAT order of earlier year but could not allow the same citing pendency of appeal in high court. On further appeal: Held in favour of the assessee :-- ALP was not arrived by the TPO on management fee, nor were comparables examined without this the officer citing marginal growth in revenue thus requires disallowance is incorrect thus requires remand for correct arriving of ALP first. The pendency of appeal of earlier year ITAT decision in high court is not a cause to deny the benefit of depreciation on non-compete fee otherwise held as allowable to the assessee.

The Tax Publishers

AB Mauri India (P) Ltd. v. ACIT [ITA No. 1970/Mds/2011, dt. 5-5-2016] : 2019 TaxPub(DT) 2283 (Mds-Trib)

Management fee with only marginal improvement in revenue--Disallowance thereof Depreciation on non-compete fee--Pendency of appeal to disallow whether possible

Facts:

Assessee was in the business of manufacturing yeast. It had to pay management fee to its group parent in UK for intra group services. TNMM was used to benchmark the transactions with AE. TPO disallowed the management fee as NIL citing no benefit or revenue growth was only marginal thus benefit test was not proven by assessee. On appeal DRP allowed part of the management fees. On further appeal:

The assessee had paid non-compete fee in earlier years. Depreciation on the same was claimed. This was allowed by the ITAT in the earlier years but the case was appealed by the department in the high court. The DRP accepted the ITAT order of earlier year but could not allow the same citing pendency of appeal in high court. On further appeal:

Held in favour of the assessee :--

ALP was not arrived by the TPO on management fee, nor were comparables examined without this the officer citing marginal growth in revenue thus requires disallowance is incorrect thus requires remand for correct arriving of ALP first.

The pendency of appeal of earlier year ITAT decision in high court is not a cause to deny the benefit of depreciation on non-compete fee otherwise held as allowable to the assessee.