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Contingency expenses, exempt-income disallowance, and royalty benchmarking: unsupported adjustments were deleted under consistent accounting and transfer-pricing principles.
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Contingency expenses reflected in CTC reports could not be disallowed where they matched the regular books, the books were not rejected, and no evidence showed inflation or fictitious claims; deletion was sustained under the rule of consistency. No disallowance of expenditure relating to exempt income was sustainable because no income exempt under Chapter III was earned; deletion under section 14A read with Rule 8D was sustained. The royalty transfer-pricing adjustment was unsustainable because no prescribed method or proper benchmarking had been applied and relevant joint-venture and support-service documents were not properly considered; deletion was sustained. The Revenue's appeal was dismissed, while the cross-objection was infructuous.
Contingency expenses reflected in CTC reports could not be disallowed where they matched the regular books, the books were not rejected, and no evidence showed inflation or fictitious claims; deletion was sustained under the rule of consistency. No disallowance of expenditure relating to exempt income was sustainable because no income exempt under Chapter III was earned; deletion under section 14A read with Rule 8D was sustained. The royalty transfer-pricing adjustment was unsustainable because no prescribed method or proper benchmarking had been applied and relevant joint-venture and support-service documents were not properly considered; deletion was sustained. The Revenue's appeal was dismissed, while the cross-objection was infructuous.
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