TaxTMI 
TaxTMI 
2018 (2) TMI 1210
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.... 4. The Ld. CIT (A) has erred in law and on facts without appreciating 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 manufact....
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....the assessee for the use of technology. His relevant observations reads as under:- "The transaction is therefore being benchmarked by applying the 'benefit test' which is an internationally accepted method. Under this test it is to be seen as to whether the taxpayer has received any tangible benefit from the use of the 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 t....
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.... Stat Exclusive technology, copyrights, patent and trademark license to manufacture, market and sell motor vehicle engines, specifically a 750 cc, 4 cylinder, twincam engine, drivetrain and gear box for use with the superbike motorcycle. Edmond B. Cicotte, individual Williams Controls, Inc. Michigan Michigan 11/1/ 1998 3.00% Royalty Stat Exclusive patent, technology and knowhow license to make, use and sell adjustable automotive brake, clutch, and accelerator pedals and parts, but excluding 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 ....
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.... 3.0% 7. The additional evidence filed by the assessee was forwarded to the TPO to submit his remand report which has been incorporated by the ld. CIT (A) from pages 11 to 15 of the appellate order. In the said remand report, the TPO submitted that the CUP data relied upon by the assessee is unreliable and cited the OECD Transfer Pricing Guidelines and the decision of ITAT Mumbai Bench in the case of UCB India Pvt. Ltd. vs. ACIT (2009) 30 SOT 95, but failed to examine the external comparables or any comments on merits. Ld. CIT (A), after considering the entire material facts on record and the submissions made by the assessee as well as the remand report of the TPO, held that the royalty paid by the assessee to its AE @ 3.15% on net sales 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 su....