Transfer pricing on management fee cannot be fixed at nil where intra-group services and cost allocation are evidenced.

Transfer pricing adjustment for intra-group management fee was deleted because the assessee produced documentary evidence of actual services received and the group cost allocation basis. The ITAT held that revenue cannot nullify an international transaction merely by questioning commercial expediency, business necessity, or the assessee's commercial wisdom. Where services are shown to have been rendered, the arm's length price cannot be fixed at nil unless a legally permissible method is applied and it is demonstrated that comparable uncontrolled services would be available for nil consideration.

---

---

Issues: Whether the transfer pricing adjustment made by determining the arm's length price of management fee paid for intra-group services at nil was sustainable.

Analysis: The Tribunal noted that the assessee had placed documentary evidence to show actual receipt of services and the group cost allocation basis. It followed the earlier decision in the assessee's own case and the settled principle that the revenue cannot disallow or nullify an international transaction merely on the ground of commercial expediency, perceived lack of necessity, or the assessee's business wisdom. It further held that where services are shown to have been rendered, the arm's length price cannot be fixed at nil without adopting a legally permissible method and without demonstrating that identical services would be available in an uncontrolled situation for nil consideration.

Conclusion: The transfer pricing adjustment was deleted and the assessee succeeded on this issue.

---