TaxTMI 
TaxTMI 
2016 (2) TMI 1306
X X X X Extracts X X X X
X X X X Extracts X X X X
....he making of addition of Rs. 1,99,53,876/- on account of transfer pricing adjustment on the international transaction of 'Payment of Corporate expenses.' 3. Briefly stated, the facts of the case are that the assessee, initially set up in April, 1993 as a joint venture between Hilton Rubbers Ltd., India and A/S Roulunds Fabriker (RF), Denmark, is engaged in manufacture and marketing of Wrapped B-belts, Raw edge V-belts and Industrial hoses. Six international transactions were reported in audit report in Form No. 3CEB which, inter alia, include payment of 'Corporate expenses' amounting to Rs. 1,99,53,876/-. The assessee employed Transactional Net Margin Method (TNMM) as the most appropriate method on aggregate basis for all the international....
X X X X Extracts X X X X
X X X X Extracts X X X X
....dditional evidence before the Tribunal in support of its claim on the disallowance of payment of 'Corporate expenses.' The Tribunal vide its order dated 29.8.2014 in ITA No.5765/Del/2012, has admitted the additional evidence and remitted the matter to the file of AO/TPO for a fresh determination of the ALP of this international transaction in the light of such additional evidence. A copy of such order has been placed on record. In the absence of any distinguishing feature in the facts of the instant year vis-à-vis the preceding year and respectfully following the precedent, we also admit the additional evidence and send the matter back to the file of AO/TPO for fresh determination of the ALP of this international transaction, after a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....w-how received from its AEs were also exported to the AEs. He further observed that the assessee was purchasing raw material from AEs, goods were manufactured in India and, then, a part of the same were exported to these AEs alone. Payment of royalty as a percentage of sales to the AEs was treated as uncalled for, as in the opinion of the TPO, the assessee was acting like a contract manufacturer on behalf of these AEs. He, therefore, treated ALP of the international transactions relating to payment of royalty for exports to AEs amounting to Rs. 33,04,471/- at Nil. The DRP, in turn, noticed on perusal of Agreements between the assessee and these AEs that there was a constant inward and outward flow of technology and know-how between the asse....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ng out any independent analysis or evaluation as to whether or not such use of technical know-how was required/availed by the assessee in terms of section 37(1) of the Act. The ld. AR fairly admitted that there is no independent discussion in the assessment order about the disallowance of royalty payment, except for reproduction of the relevant parts from the order of the TPO. 9. The Hon'ble Delhi High Court in CIT v. Cushman & Wakefield (India) (P.) Ltd. (2014) 367 ITR 730(Del) has held that the authority of the TPO is limited to conducting transfer pricing analysis for determining the ALP of an international transaction and not to decide if such services exist or benefits did accrue to the assessee. Such later aspects have been held ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s transaction unconcerned with the fact, if any benefit accrued to the assessee and thereafter, it was for the AO to decide the deductibility of this amount u/s 37(1) of the Act. 11. Since the authorities below have acted in contradiction to the ratio laid down in Cushman & Wakefield (supra), we set aside the impugned order on this score and remit the matter to the file of AO/TPO for deciding it in conformity with the law laid down by the Hon'ble jurisdictional High Court in the case of Cushman & Wakefield (India) (P.) Ltd. (supra). 12. Before parting with this issue, we want to clarify that we have desisted from examining the correctness of any aspect of this international transaction, be it the calculation of the amount paid as roya....