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| The Tax Publishers2021 TaxPub(DT) 1252 (Mum-Trib) INCOME TAX ACT, 1961
Section 92C
When TPO without following any of the methods prescribed under section 92C, had determined ALP of royalty paid by assessee to its AE at Nil, the same, on the said count was liable to be struck down.
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Transfer pricing - Determination of ALP - Royalty paid to AE - TPO determined 'Nil' ALP without following any of the prescribed methods
Assessee claimed deduction of royalty paid to its AE abroad. TPO determined ALP thereof at nil for the reason that, as, per him, assessee was not required to pay any royalty without receiving any new technology from its AE.Held: TPO had clearly traversed beyond scope of his jurisdiction which was restricted to determination of ALP of the transaction by following any of the methods prescribed in section 92C. Also, TPO was not vested with any jurisdiction to question commercial expediency of the transaction carried out by the assessee with its AE. In the backdrop of aforesaid facts, when TPO without following any of the methods prescribed under section 92C, had determined ALP of royalty paid by assessee to its AE at Nil, the same, on the said count was liable to be struck down.
Relied:CIT v. Lever India Exports Ltd. (2017) 78 Taxmann.com 88 (Bom-HC) : 2017 TaxPub(DT) 590 (Bom-HC), CIT v. Merck Ltd. (2016) 73 Taxmann.com 23 (Bom) : 2016 TaxPub(DT) 3970 (Bom-HC), CIT v. Johnson & Johnson (2017) 80 Taxmnn.com 269 (Bom-HC) : 2017 TaxPub(DT) 1841 (Bom-HC), CIT v. RK Ceramics India (P) Ltd. (2017) 78 Taxmann.com 230 (AP) : 2017 TaxPub(DT) 817 (AP-HC), Firmenich Aromatics India (P) Ltd. v. Dy. CIT (2018) 96 Taxmann.com 649 (Mum-Trib) : 2018 TaxPub(DT) 6042 (Mum-Trib).
REFERRED :
FAVOUR : In assessee's favour.
A.Y. : 2014-15
INCOME TAX ACT, 1961
Section 92C
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