2014 (3) TMI 533

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ure Company between Magneti Marelli Powertrain Spa, Itlay, Maruti Suzuki India Ltd. and Suzuki Motor Corporation, Japan. This company was set up in India to manufacture and sell Engine Control Units (ECUs). The assessee reported six international transactions including `Payment of technical assistance fee' to the tune of Rs. 38,58,80,000/-. Only this transaction is in dispute inasmuch as the other five international transactions have not been questioned by the Transfer Pricing Officer (TPO). 3. The facts concerning this international transaction are that assessee entered into agreement with its foreign A.E for acquiring technology required for the purpose of manufacturing ECUs in respect of the following : - * Euro IV/75 HP 1.3 SDE/Su....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....9; amounting to Rs. 38.58 crores. In the opinion of the TPO, it was Comparable Uncontrolled Price (CUP) method which was required to be applied. He, therefore, rejected the assessee's TNMM and sought to apply CUP method. Accordingly, ALP of this transaction was determined at Rs. Nil as against the amount paid by the assessee at Rs. 38.58 crore. The assessee was unsuccessful before the DRP. In the final order passed u/s 144C(13), the A.O made this addition. The assessee is aggrieved against such addition. 5. We have heard the rival submissions and perused the relevant material on record. At the outset, we note that the recording by the TPO that the assessee made payment of Rs. 38.58 crore in the year in question for which deduction was ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....o facto lead to the interference then all the international transactions are at ALP. The Special Bench of the Tribunal in the case of LG Electronics India Pvt. Ltd. Vs ACIT 2013 140 ITD 41 (Delhi) (SB) has held to this extent. Thus, the approach so adopted by the assessee in combining so many international transaction for determining ALP on a consolidated basis, is incorrect. 7. The next major flaw in the assessee's calculation is that it took into consideration the 'Projected operating profit margin' to show that its international transaction for the current year was at ALP. The requirement under the relevant provisions of the Act along with the rules is to consider the `actual' figures and not any `projected' figures.....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... manufactured by it for four different models of cars pertaining to Maruti, Fiat and Tata. When technical information was admittedly obtained, it could not be said that the assessee ought not to have paid any consideration for that to its A.E. The TPO seems to have gone wrong by considering that the foreign A.E contributed capital to the tune of Rs. 20 crores and odd and took away a sum of Rs. 38 crores and odd in the shape of fees for technical services. This type of comparison made by the TPO for determining that the ALP of the international transaction of payment of technical fee at Nil, has no legal legs to stand on. When he resorted to the application of CUP method, it was incumbent upon him to ask the assessee for the submission of de....