TaxTMI 
TaxTMI 
2018 (8) TMI 1807
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.... of it in the case of the assessee itself which has not reached finality without appreciating that Transfer Pricing Officer has chosen TNMM method as the most appropriate method for determination of arm's length price (ALP) with regard to the manufacturing segment and has accepted the same comparable as selected by the assessee for benchmarking analysis ? 2. Whether on the facts and in the circumstances of the case, the Tribunal is right in directing the Assessing Officer/Transfer Pricing Officer to compute operating margin of the assessee as well as companies including forex gain/loss to foreign exchange fluctuation in respect of sale proceeds by following its earlier decision in the case of Triology E-Business Software ? 3. Whether on the facts and in the circumstances of the case, the Tribunal is right in setting aside issue of working capital adjustment by following its earlier order which has not reached finality without appreciating that working capital is calculated to find out as to how much is cost of capital that must be recovered from the customers by increasing sales price and working capital is equal to sum of total of current assets in the balanc....
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....nd enjoyed a huge brand value and owns intellectual property. By considering all these facts, the Co-ordinate Bench of this Tribunal in the assessee's own case (IT(TP)A No.1534/Bang/2012 vide order, dated April 11, 2014 for the assessment year 2008-09 has held in paras 11.2 to 11.4 as under : . . . Accordingly, when no substantial difference in the business activity of the company for the year under consideration we do not find any error or illegality in the directions of the Dispute Resolution Panel for exclusion of this company." Regarding substantial question of law No. 2 : "3. We have heard the learned authorised representative as well as the learned Departmental representative and considered the relevant material on record on admission of the additional ground raised by the assessee. As it is clear that the additional ground raised by the assessee is only in respect of inclusion of foreign exchange fluctuation in the operating margins of the assessee as well as comparable companies. We find that this issue is now settled by various decisions of this Tribunal that if any gain or loss due to the foreign exchange fluctuation arising in respect of th....
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.... as the justification and deriving the benefit from transfer of technology is concerned this is beyond the scope of the process of determining the arm's length price by the Transfer Pricing Officer, therefore we do not agree with the view of the Transfer Pricing Officer that the assessee was required to establish the benefit derived from the technology transfer by the associated enterprises against which the royalty has been paid. Once the assessee is under an obligation as per the licence agreement to manufacture the items under the licence owned by the associated enterprises then it is irrelevant to prove that the assessee has derived special benefit from the technology transferred by the associated enterprises. When the manufacturing activity itself has been carried out as per the licence granted by the associated enterprises under the terms and conditions of the licence agreement then the Transfer Pricing Officer is not allowed to outrightly reject the claim of royalty. The jurisdiction and power of the Transfer Pricing Officer is only to deter mine the arm's length price of the royalty in comparison to the com parable price. The Transfer Pricing Officer has not made an....
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....lease expenditure from the operating cost. The Transfer Pricing Officer is also directed to confine the adjustment to the value of international transactions only." 4. However, this court in a recent judgment in I.T.A. Nos. 536 of 2015 connected with 537 of 2015 delivered on June 25, 2018 (Principal CIT v. Softbrands India Pvt. Ltd. [2018] 406 ITR 513 (Karn)) has held that in these type of cases, unless an ex facie perversity in the findings of the learned Income-tax Appellate Tribunal is established by the appellant, the appeal at the instance of an assessee or the Revenue under section 260A of the Act is not maintainable. The relevant portion of the said judgment is quoted below for ready reference (page 541 of 406 ITR) : "Conclusion : A substantial quantum of international trade and transactions depends upon the fair and quick judicial dispensation in such cases. Had it been a case of substantial question of interpretation of pro visions of Double Taxation Avoidance Treaties (DTAA), interpretation of provisions of the Income-tax Act or overriding effect of the treaties over the domestic legislations or the questions like treaty shopping, base erosion and ....