Tax authority's substitution of projected figures with actuals overturned; original acquisition valuation upheld; transfer pricing issues remitted for...
Beneficial owner held liable for differential customs duty; royalties added under Rule 10(1)(c); confiscation, penalties under s.111(m), s.114A, s.112...
ITAT allowed the appeal of the assessee-company, deleting the TP adjustment on royalty payment. It held that the royalty transaction was closely linked to the manufacturing segment, which had already been benchmarked under TNMM, and the assessee's operating margin of 4.19% had been accepted at arm's length by the TPO pursuant to DRP directions. Once the combined TNMM benchmarking, whose PLI includes royalty, is accepted as arm's length, a separate adjustment on royalty under a different method is impermissible. Following HC precedent, ITAT ruled that isolating one element for distinct benchmarking would distort the ALP determination.
ITAT allowed the appeal of the assessee-company, deleting the TP adjustment on royalty payment. It held that the royalty transaction was closely linked to the manufacturing segment, which had already been benchmarked under TNMM, and the assessee's operating margin of 4.19% had been accepted at arm's length by the TPO pursuant to DRP directions. Once the combined TNMM benchmarking, whose PLI includes royalty, is accepted as arm's length, a separate adjustment on royalty under a different method is impermissible. Following HC precedent, ITAT ruled that isolating one element for distinct benchmarking would distort the ALP determination.
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