INCOME TAX ACT, 1961

Section 92C

Transfer pricing - Determination of ALP - Payment of royalty to AEs -

Assessee paid royalty to its AEs abroad. TPO determined ALP thereof at nil on the ground that AEs to whom assessee paid Royalty had discontinued production of such products and the assessee was making exports to them also. Held: TPO is required to determine ALP of an international transaction under one of the methods mandated under rule 10B. Nothing of the sort had been done in the instant case. TPO got influenced with extraneous reasons, which had no bearing on determination of ALP of international transaction. Undisputely, payment of Royalty to AEs was as per RBI norms. Accordingly TPO was not justified in determining ALP thereof at nil.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. :

INCOME TAX ACT, 1961

Section 92C

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