2017 (12) TMI 48

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....is against the transfer pricing addition in relation to the international transaction of purchase and sale of goods from the Associated Enterprise (AE). 3. Briefly stated, the facts of the case are that the assessee is a wholly owned subsidiary of Honda Motor Co. Ltd., Japan. It was incorporated in September, 2006 to support independent spare parts business of Honda Group's Indian subsidiaries operating in automotive (both twowheelers and four-wheelers) and power product industry. The assessee is engaged in the distribution of spare parts, accessories and other ancillary products for various Honda products in India for servicing. It entered into agreement with Honda Siel Car India Ltd. for doing the business of spare parts relating to cars....

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.... contention of being only a manufacturer. Its contention of placing orders for manufacturing, did not weigh with the Tribunal to hold the assessee as a manufacturer. The assessee was considered as predominantly a Distributor. It was, however, noticed in para 6.3 of the order, whose copy is placed in the paper book, that the facts and functions of the assessee were not clearly reported by it and, hence, could not be properly adjudicated by the TPO. It was further noticed that: 'the function of Distributor has to be treated differently from the function of job order manufacturer of spare of spare or cases where there is value addition.' That is how, the matter was sent back for re5 examining the functional profile of the assessee and for dete....

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....at the manufacturing was got done from local manufacturers as was being done in the preceding two years. We find that the only difference which has arisen in the instant year is that whereas royalty was earlier paid by Original equipment manufacturers (OEMs) like, Honda Siel Car India Ltd., etc. to the ultimate holding company Honda Motor Company Ltd., Japan, for the use of technical information etc. in the manufacture of goods by the Local manufacturers, has now fallen on the assessee for payment. Except this, there is no difference worth the name insofar as the functional profile of the assessee is concerned. The goods are being manufactured in the same way by the Local manufacturers etc. with the technical know-how supplied by the assess....

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....ed unsuccessful before the DRP and the Assessing Officer made the transfer pricing addition equal to the amount of royalty payment. The assessee is aggrieved against such addition. 7. We have heard the rival submissions and perused the relevant material on record. It is clear from the facts that the TPO determined Nil ALP of the international transaction of payment of Royalty, which has been adopted by the AO as such, without any further examination. The Hon'ble Delhi High Court in CIT v. Cushman & Wakefield (India) (P.) Ltd. (2014) 367 ITR 730 (Del) read along with (2015) 277 CTR 368 (Del) has held that the authority of the TPO is limited to conducting transfer pricing analysis for determining the ALP of an international transaction a....