No Transfer pricing adjustment is necessary when period and basis of computation of royalty is different from comparable transactions

Transstory (India) Ltd. Vs ITO (ITAT Visakhapatnam) – The taxpayer was to pay royalty for only seven years and in respect of certain specified product, the royalty payable by the two group companies in China was for 20 years and it was based on sales of all the products. The only basis of adjustment made by the TPO is variation in rates of royalty paid by the taxpayer vis-a-vis the two group companies in China.
In the case of R&D cess on royalty, the CIT(A) had given a categorical finding that under Section 3(2)

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