ITAT says Unconventional Commercial Payments Cannot Be Recharacterised Without Evidence

Tech Mahindra paid ₹440.12 crore to British Telecom for defined exclusivity and commercial rights and ₹23.36 crore towards transition of existing IT contracts. ITAT rejected the Revenue's recharacterisation of these payments and deleted the consequential interest adjustments, holding that commercial substance cannot be disregarded merely because the arrangement is unconventional and ALP cannot be determined at Nil on a perception of commercial necessity.