JUDGMENT :

Firdosh P. Pooniwalla, J.

The present Appeal is filed by the Revenue challenging the Order dated 25th January 2017 passed by the Income Tax Appellate Tribunal (ITAT). Respondent is the Assessee under the provisions of the Income Tax Act, 1961 (the Act) and the relevant Assessment Year is 1999-2000.

2. The Assessee, i.e. Colgate Palmolive Marketing SDN BHD, is an entity incorporated in Malaysia and is engaged in the business of marketing, distribution and sale of household products, fabrics and personal care. Colgate Palmolive (India) Limited (CPI) entered into an Agreement dated 14th May, 1998 with the Assessee for use of the Assessee’s SAP system (the said Agreement). As per the said Agreement, the Assessee was to charge CPI for the use of the SAP system. CPI was required to make payments towards consideration for the use of the system, consideration towards rendering services comprising of costs of maintenance, up-gradation of the system to keep it functional and fees for training personnel for using the SAP system. For the Financial Year 1998-99 (A. Y. 1999-2000), as per the said Agreement, CPI paid to the Assessee a sum of USD 11,80,500/- for the use of the SAP system a