TaxTMI 
TaxTMI 
2018 (2) TMI 1210
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.... the fact that the assessee company had made payment of royalty of Rs. 91,42,654/- without any benefit accruing to it. 5. The Ld. CIT (A) has erred in ignoring the fact that the assessee was also making payment of fee for technical know- how. 6. The CIT (A) has erred in not appreciating that no independent party would have made payment of royalty under these circumstances. 7. The appellant craves leave for reserving the right to amend, modify, alter, add or forego any ground(s) of appeal at any time before or during the hearing of this appeal" 2. Notice was sent to the respondent-assessee through speed post at the address mentioned in 'Form-36', however, the said notice has been returned back unserved as on the given address the respondent company was not there, accordingly, we are proceeding to decide the appeal exparte qua the respondent on merits after considering the material on record and hearing the learned Department Representative. 3. The brief facts are that assessee-company is a subsidiary of Bestex Kyoei Company Ltd. and is primarily engaged in the business of manufacturing of automotive components. The assessee has entered into following international transactio....
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....e intangible which would help it in earning greater economic benefit. In arm's length situation a person would pay royalty only if the use of technology will give him greater economic benefit. In the present case, as discussed above, despite the use of the intangible, the assessee has a loss at the net level. This clearly shows that techniques or branding has not provided any benefit to the assessee. No independent person in such a situation will pay any royalty. This view is also supported by the ITAT, Delhi's decision in the case of Abhishek Auto [2010-TII-54-ITAT-DEL-TP] wherein the ITAT held as under: 'If the tested party without the use of imported technology and imported raw material can make additional margins, then it would be a case which may require an adjustment, but in this case the international transactions have demonstratively boosted the profits of the appellant." In view of the above discussion and particularly keeping in view the fact that the assessee has neither benchmarked this transaction properly by applying the most appropriate method and nor has it furnished the requisite information I am constrained to determine the arm's length price of this transacti....
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.... supplemental components such as wiring harness, electronic sensors and electrical controls, with right to sublicense. Norman C. Fawley; NCF Industries, Inc. Natural Gas Vehicle Systems, Inc. New York California 2/9/ 1990 3.00% Royalty Stat Amendment to exclusive patent, technology and know-how license to manufacture, use, exploit, sell and sublicense composite reinforced metallic cylinders and tubes, and non-metallic rehabilitation systems produced to prevent propagating ductile fractures or to increase the burst pressure. Environmen- -tal Recycling Technologies plc Global Tech International, Inc London Farmington Hills 6/23/ 2008 3.00% Royalty Stat Exclusive patent and knowhow license to make, use, sublicense, and sell automotive products or components which do not feature as part of its manufacture the essential encapsulation of a magnesium part. Turbodyne Technologi es, Inc. and Turbodyne Systems, Inc. Allied Signal, Inc. California Torrance 1/28/ 1999 3.70% Royalty Stat Exclusive patent license to make, use and sell electrically assisted charge air products or other engine products, including electrically assisted turbochargers and turbocharger....
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.... meets the arm's length requirement and it is comparable to the royalty paid by uncontrolled third parties. He further held that no meaningful conclusion was provided by the TPO to hold that the entire royalty payment should be reduced to Nil. The entire revenue of the assessee is from products manufactured by the technology provided by its AE. The assessee has been supplying automobile component to various reputed automobile manufacturers such as Honda Siel Cars India Ltd. There is an agreement between the assessee and the AE dated 1.04.2008 in consideration for the license and rights availed and no independent company would provide such license to use a technology including knowhow vary of charge without any charge or royalty. Accordingly, he directed the TPO/Assessing Officer to delete the addition of Rs. 91,42,654/-. 8. Before us, learned DR strongly relied upon the order of the Assessing Officer/TPO. 9. After considering the relevant findings given in the impugned orders, we find that it is an undisputed fact that the assessee in terms of agreement dated 1.04.2008 had entered into an agreement with its AE for granting the use of non-exclusive right and license to use technol....