Assessee’s Contentions

Revenue’s Contentions

Tribunal’s Judgment

The assessee established that the royalty, management fee and other cross-charge payments were incurred for genuine business purposes and supported by adequate documentation.

The assessee failed to substantiate the need for the services and the benefits derived. Therefore, the TPO was justified in making the TP adjustment.

The Tribunal held that the assessee had sufficiently demonstrated the business need and commercial benefit of the services received from its AEs.

Since there was no change in the FAR profile or the nature of international transactions, the APA agreed for subsequent years could be relied upon as a guiding benchmark.

The APA applied only to the covered assessment years and could not be relied upon for AYs 2013-14 and 2014-15.

The Tribunal held that although an APA is not binding for non-covered years, it has persuasive value where the FAR profile and transactions remain unchanged.

The CIT(A) rightly restricted the royalty adjustment only to the extent it exceeded the arm's length rate accepted under the APA.

The Revenue sought restoration of the TPO's order and the entire TP adjustment.

Finding no change in the FAR profile and no contrary evidence from the Revenue, the Tribunal upheld the CIT(A)'s approach and dismissed the Revenue's appeal.