TaxTMI 
TaxTMI 
2019 (5) TMI 1719
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....ent to refer the computation of arm's length price (ALP) to the Transfer Pricing Officer (TPO). The transfer pricing proceedings initiated by the AO under section 92CA(1) of the Act are without any jurisdiction and ought to be quashed. 2. The learned AO/TPO erred in making transfer pricing adjustment without appreciating the fact that the appellant was a 51:49 joint venture (JV) between Mahindra & Mahindra Limited (M&M) and International Truck and Engine Mauritius Holding Limited (ITEMH)S a step down subsidiary of Navistar International Corporation Inc., USA (NIC), respectively and in the case of JV, the transactions entered into between the JV and its JV partners are always at arm's length basis. 3. The learned AO/TPO erred in making transfer pricing adjustment amounting to INR 52,35,76,599 in respect of the international transaction of lump sum amount of USD 10 million paid as royalty to LuxIPCO, Luxembourg (associated enterprise) for the right to use the intellectual property and know-how in relation to Base Engine as per the direction of the DRP. 4. The learned DRP erred in not directing the TPO to accept the benchmarking analysis carried out by the appellant b....
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....er withholding taxes, the same had equivalent to Indian Rs. 52,35,76,599.49. The assessee had adopted CUP method to benchmark its international transaction. Learned Transfer Pricing Officer (TPO) during the course of proceedings before him had asked the assessee to undertake appropriate method to benchmark research based on royalty stat database. However, TPO noted that tax payer did not furnish their methodology benchmark based on royalty stat database. The Assessing Officer rejected the assessee's approach of discounted cash flow/present value methodology for the purpose of valuation of technical and intellectual property. After discussion, TPO held that the assessee has not followed proper procedure for benchmarking international transaction. Hence he determined value of international transaction of royalty paid in the current year at Rs. Nil. Hence, the Assessing Officer computed adjustment of Rs. 52,35,76,599.49 to the total income of the assessee. 5. The assessee filed objection before DRP. The assessee, inter alia, filed additional evidence with separate benchmarking international transaction and claimed it to be at arm's length price. For this purpose, assessee has used r....
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....ave inquired from the number given or address given or from their website mentioned therein. Hence, prayed that appropriate direction may be given to TPO to consider benchmarking analysis report submitted by the assessee. 9. Per contra, learned Departmental Representative relied upon the orders of the authorities below. 10. Upon careful consideration, we find that TPO in this case has asked the assessee to submit benchmark analysis report done on the basis of royalty research database. The assessee could not provide the same when proceedings were going on before the TPO. The same could be provided only before DRP. Learned DRP asked for the remand report from the TPO. Learned TPO refused to offer any comment on the documents submitted by the assessee on the ground that the same was not submitted earlier before him. Despite this learned DRP accepted the additional evidence and proceeded to observe that the report was unauthenticated in as much as it was unsigned and did not contain seal of the reporting party. We have gone through the copy of the said report submitted. We find that the said report is submitted by Altus International. It contains covering letter which contains ful....
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....oyalty at 'nil', he also recommended to the Assessing Officer to withdraw corresponding claim of depreciation, on account of royalty having been capitalized by the assessee ( in its books). Thereafter, learned DRP upheld the action of the Assessing Officer. 14. Against the above order, the assessee is in appeal before us. 15. Learned Counsel of the assessee submitted that the authorities below denied depreciation on asset acquired and put to us by the assessee during the relevant previous year. He submitted that the assessee has put to use said asset in the relevant previous year and had conducted trial run. That prototype engines were manufactured by taking trial run and then sold for validation testing. He submitted that said sale of prototype engines Rs. 52,47,878/- has been duly reflected in the audited annual accounts. Further submission of the assessee on this issue is as under :- The learned DRP has observed that the said sale was not reflected in the accounts. It is submitted that the said sale income has been taken to the Balance Sheet in the books of account as per accounting standard and reduced from the expenditure on project to be capitalized in the accounts. It....