Case Law Details
Royal Canin India Private Limited Vs Additional/Joint/Deputy/ Assistant Commissioner of Income Tax (ITAT Mumbai)
ITAT Mumbai held that TPO has jurisdiction to examine the quantum of expenditure, however, TPO has no jurisdiction question the assessee’s need or prudence for making payment for the expenditure.
Facts-
The assessee entered into Franchise Agreement with Royal Canin SAS, France (subsidiary). During the period relevant to AY under appeal, the assessee entered into various international transactions with its Associated Enterprise (AE) Royal Canin SAS. One of the international transaction was payment of franchise fee Rs.16,57,07,523/-. The assessee paid franchise fee on turnover basis. The assessee is consistently following same model of payment of franchise fee since 2010. The Revenue has disallowed franchise fee paid by the assessee since beginning i.e. from A.Y 2011-12. In AY 2011-12 and 2012-13 the adjustment was deleted on technical grounds. The appeals for the assessment years 2013-14, 2014-15 and 2015-16 involving identical issue of adjustment of franchise fee are pending before the CIT(A).
TPO held that there was no requirement for the assessee to pay franchisee fee. DRP upheld the adjustment made by TPO. Accordingly, AO passed the impugned order. Being aggrieved, by the same, the present appeal is preferred.
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