2018 (7) TMI 2328

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....e enterprise namely M/s. Orica International Pte. Ltd., Singapore to the tune of above stated amount by taking Nil ALP as well as disallowing provision for leave encashment of Rs.11,03,341/- u/s 43B(f), involving proceedings u/s 143(3) r.w.s. 144C(13) of the Income Tax Act, 1961 (in short 'Act'). 2. Both the learned representatives inform us during the course of hearing that we have already heard these two issues of Nil ALP in case of the very payee M/s. Orica International Pte Ltd. Singapore giving rise of identical adjustment as well as leave encashment provision disallowance in assessee's appeals in ITA No.418/Kol/2015 & ITA No. 85/Kol/2016 on 24.05.2018. They are very fair in stating that whatever is the outcome of the two issues there....

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....ta v. Landis+ Gyr Ltd. [2017] 86 taxmann.com 109 (Kolkata - Trib.), Deputy Commissioner of Income-tax, Circle -1(1), Hyderabad v. Air Liquide Engineering India (P.) Ltd. [2014] 43 taxmann.com 299 (Hyderabad - Trib.), DresserRand India (P.) Ltd. v. Additional Commissioner of Income-tax, Range - 6(2), Mumbai [2011] 13 taxmann.com 82 (Mumbai) interalia conclude that Chapter-X, provisions in the Act do not require the tax payer to prove any expenditure to have been incurred out of necessity or for the purpose of business or that it should actually result in profits, an ALP cannot be NIL amount where the TPO's order nowhere records that the relevant conditions incorporated in section 92C(3) of the Act, are satisfied, the TPO would not sit in jud....

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....edly applied 'CUP' method in his order (supra). He appears to have treated the tax payer itself as a valid comparable as it had not paid any royalty to the very payee in earlier assessment years. This made him to adopt nil price of the impugned royalty so as to make the adjustment in question. We see no reason to concur with such a course of action since the assessee itself having paid Nil amount in the past to the AE, cannot be taken as a valid comparable. This tribunal in the case of Technimont ICB India (P) Ltd. v. Addl. CIT (2012) 138 ITD 23(Mumbai TM) has concluded long back that a transaction between payee and its AE is not an uncontrolled one so as to be taken as a comparable. We accept the assessee's instant first substantive gr....