Arm's Length Principle - administrative approvals do not replace independent transfer pricing benchmarking for royalty payments.
Administrative approvals from RBI/FIPB/DIPP do not determine Arm's Length Price for royalty payments; the assessee must independently benchmark the international royalty transaction using comparable uncontrolled transactions and prescribed transfer pricing methods. Reliance on prior approvals or automatic route permissions is insufficient, and the case was remitted to the assessing officer to require proper benchmarking and decide the issue after due opportunity. (AI Summary)