2018 (7) TMI 477

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....."Whether on the facts and in the circumstances of the case, the Tribunal is right in law in confirming the direction of the DRP with regard to payment of Royalty to its associated enterprises whereby the DRP had set aside the TPO findings that Royalty payment cannot be allowed and therefore proposed an TP Adjustment under 92CA for sum of Rs. 127,32,50,000 by following its earlier order in the case of assessee which has not reached finality and even when the TPO had applied the test of benefit obtained by the assessee by receiving intangibles against the said payment of Royalty? 2. "Whether on the facts and in the circumstances of the case, the Tribunal is right in law in setting aside the a TPO finding with regard to treating the Trading....

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....bined transaction approach the price paid for the international transaction is at Arm's Length. We may also that legally the TPO should adopt the ALP as nil. On similar approach by TPO adopting ALP at Nil the IT At, Bangalore Bench, in the case of M/s. Festo Controls Pvt. Ltd., Vs. DCIT in ITA No.969/Bang/2011 [AY:  2007-08]  Dated 4.1.2013, the Tribunal examined the question as to whether the TPO can determine the ALP at nil on the ground that no services were rendered. The Tribunal, on the above issue followed the decision of the Mumbai Bench of the ITAT in the case of Castrol India Ltd. v. ACIT in ITA No.3938/MUM/2010 dated 14.09.2012 wherein it was held that it was incumbent upon the TPO to workout the ALP of the relevant tran....

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....wed in their totality, differ from those which would have been adopted by independent enterprises behaving in a commercially rational manner. The OECD guidelines should be taken as a valid input in judging the action of the TPO because, in a different form, they have been recognized in India'x tax jurisprudence. The Hon'ble Court held that it is well settled that the revenue cannot dictate to the assessee as to how he should conduct his business and it is not for them to tell the assessee as to what expenditure the assessee can incur [Eastern Investment  Ltd.,  20  ITR  1[SC], Walchand & Co., 65 ITR 381 [SC] followed).   Even Rule  10B[1][a] does not authorize disallowance of expenditure on the ground that....

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....Assessee's own case for the Assessment years 2003-04, 2007-08 and 2008-09. We further note that the TPO for the Assessment Year 2012-2013 has accepted the manufacturing and trading segment as integrated and combined transaction for the purpose of determining the ALP Under TNMM." 4. The controversy involved herein is no more res integra in view of the decision of this Court in I.T.A. Nos.536/2015 c/w 537/2015 dated 25.06.2018 [Prl. Commissioner of Income Tax & Anr. V/s. M/s. Softbrands India Pvt. Ltd.,] wherein it has been observed that unless the finding of the Tribunal is found ex facie perverse, the Appeal u/s. 260-A of the Act, is not maintainable. The relevant portion of the Judgment is quoted below for ready reference: "Conclusion: ....