https://www.taxtmi.com/caselaws?id=219056 ITAT Mumbai held that the arm's length price (ALP) must be determined solely on the value of international transactions with associated enterprises, not on the assessee's entire turnover. An addition based on a margin difference of 1.10% was upheld only on AE transactions. Regarding royalty and liquidated damages, the tribunal ruled that expenditures need only be incurred wholly and exclusively for business purposes, without requiring proof of necessity or profitability. Disallowance based on lack of prudence or unremunerativeness is not permitted under Rule 10B. The TPO erred in determining the ALP at nil; the adjustment made by the AO was thus invalid. The decision affirmed that transfer pricing adjustments must follow statutory methods and principles, rejecting arbitrary or excessive additions. en-us Tue, 27 Nov 2012 00:00:00 +0530 Mon, 11 Aug 2025 15:10:44 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=219056 ITAT Mumbai held that the arm's length price (ALP) must be determined solely on the value of international transactions with associated enterprises, not on the assessee's entire turnover. An addition based on a margin difference of 1.10% was upheld only on AE transactions. Regarding royalty and liquidated damages, the tribunal ruled that expenditures need only be incurred wholly and exclusively for business purposes, without requiring proof of necessity or profitability. Disallowance based on lack of prudence or unremunerativeness is not permitted under Rule 10B. The TPO erred in determining the ALP at nil; the adjustment made by the AO was thus invalid. The decision affirmed that transfer pricing adjustments must follow statutory methods and principles, rejecting arbitrary or excessive additions. Case-Laws Income Tax Tue, 27 Nov 2012 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=219056