Tuesday, 30 November 2010

Indian Tax Tribunal rules payment of management charge to be disallowed if the taxpayer cannot prove commensurate benefit received for such charge

The Indian Income-Tax Appellate Tribunal ("the Tribunal") has ruled in the case of M/s Gemplus India Private Limited ("the taxpayer") pertaining to audit proceedings for financial year ("FY") 2002-2003 that deduction for payment of management services fee should be disallowed if the taxpayer had not proved the commensurate benefits received for the service fees paid. Further, the Tribunal observed that to satisfy the arm's length standard, a charge for such services must at least meet certain conditions.

Fuente: PKN