TaxTMI 
TaxTMI 
2016 (4) TMI 1361
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....r pricing adjustment in relation to the international transaction of 'Payment of export commission.' 3. Briefly stated, the facts of the case are that the assessee is engaged in the business of manufacture and sale of motorcycles and scooters in India. Honda, Japan provides necessary technology and support to the assessee for manufacturing two-wheelers in India. The manufacturing activity is undertaken by the assessee and the goods so manufactured, namely, two wheelers, are largely sold in India to unrelated parties and some part of the total sale is exports made both to Associated enterprises (AEs) and nonassociated enterprises (non-AEs). The assessee reported certain international transactions in Form No.3CEB. These transactions, inter a....
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...., treated arm's length price (ALP) of the international transaction of payment of export commission at Nil, which resulted into recommending transfer pricing adjustment of Rs. 22,85,36,863/-, being the value of international transaction itself. The assessee remained unsuccessful before the Dispute Resolution Panel (DRP). In the final assessment order, the AO made this addition, against which the assessee has come up in appeal before us. 4. We have heard the rival submission and perused the relevant material on record. It is observed that the assessee applied the TNMM as the most appropriate method with the Profit level indicator (PLI) of Operating Profit/Operating Revenue. The international transaction of `Payment of export commission' has....
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.... of Mr. Braganza and Mr. Choudhary), and attendant benefits to assessee were not considered, the Hon'ble High Court remanded the matter to file of concerned AO for an ALP assessment by TPO, followed by AO's assessment order in accordance with law considering the deductibility or otherwise as per section 37(1) of the Act. 6. When we advert to the facts of the instant case, it turns out that the TPO proposed the transfer pricing adjustment equal to the stated value of transaction at Rs. 22.85 crore with Nil ALP of `Payment of export commission' by holding that no benefit was received by the assessee as a result of the payment of commission and hence no payment on this account was warranted. The AO in his draft order has taken ALP of ....
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....26/Del/2015 impressing upon us to sustain the addition is misconceived because in such decisions the tribunal found as a fact that no services were, in fact, received by those assesses requiring payment of consideration. On the contrary, we are confronted with a situation in which such an analysis is yet to be done by the AO/TPO. It is only after doing this exercise that the factum of the AE having rendered some or no services will come to the fore, requiring the making or not making of any addition. 8. It is further found that the tribunal in assessee's own case for the AYs 2008-09, 2009-10 and 2010-11 has restored the matter to the file of the AO/TPO for deciding the issue in the light of the judgment in the case of Cushman (supra). Noth....
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....ssee is aggrieved against this addition. 10. We have heard the rival submissions and perused the relevant material on record. It is noticed that the assessee paid royalty in respect of domestic sales as well as export sales to AEs and non-AEs for a sum of Rs. 404.65 crore. The TPO simply considered royalty paid in respect of exports to its AEs for the purposes of disallowance by considering other royalty as deductible. It is undisputed that royalty was paid by the assessee in respect of exports to AEs at the same rate at which it was paid for sales made to non-AEs. Firstly, we find the view point of the TPO to the effect that assessee is a `Contract manufacturer', as clearly untenable because the assessee purchased raw material, did manufa....
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....ed by the Tribunal in the case of its sister concern, namely, Hero Motor Corp Ltd. (ITA No.5130/Del/2010), chose to delete the addition so made by the TPO in identical circumstances. Similar view has been reiterated by the Tribunal in the assessee's own case for the AYs 2009-10 and 2010-11. In the light of the fact that the Tribunal has consistently deleted the addition in respect of royalty payment by considering the same to be at ALP, we are disinclined to accept the stand of the ld. DR for restoring the matter to the file of AO/TPO for a fresh determination of the ALP of this international transaction. This issue is decided in the assessee's favour. 12. Last ground of the appeal is against the grant of depreciation u/s 32 @ 15% on Mould....