INCOME TAX ACT, 1961

Section 92C

Transfer pricing - Determination of ALP - Payment of management support service fee to AE -

Assessee claimed deduction of management service fee paid to its AE abroad. TPO determined ALP of the payment in relation to MSS at nil on the ground that assessee was not able to domonstrate the receipt of service and benefits derived therefrom. Assessee contended that there could not be any adjustment in respect of international transaction of 'receipt of supporting services' from its AEs which are in turn, used for providing the freight forwarding services. He submitted that both the transactions, i.e., 'provision of freight forwarding services' and 'receipt of marketing support services' were intrinsically linked to each other. Held: There existed direct nexus between revenue earned and cost incurred by assessee and, therefore, it would be incorrect to analyse management support services received as a single element of cost in isolation, issue was, therefore, restored to TPO for adjudication afresh.

REFERRED :

FAVOUR : Matter remanded.

A.Y. : 2010-11

INCOME TAX ACT, 1961

Section 32(1)(ii)

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