TaxTMI 
TaxTMI 
2023 (3) TMI 1023
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....hort] for the Asst.Year 2007-08. 2. At the outset itself, the ld.counsel for the assessee pointed out that the present appeal has come before us in the 3rd round. It was pointed out that the assessee had filed a Miscellaneous Application seeking rectification in the order passed by the ITAT in second round on account of the issue of adjustment made to the income of the assessee by the Transfer Pricing Officer (TPO for short ) ,on account of determination of arm's length price ("ALP" for short) of the international transactions of royalty paid by the assessee to its AE, GM Daewoo Auto & Technology Company ("GMDAT" for short)), having been adjudicated by the ITAT noting incorrect facts to the effect that the assessee had nothing to say to th....
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.... the impugned transaction of the appellant. 4.3. The AO/ TPO erred in law and on facts in making adjustment to the royalty transaction without providing corresponding effect for determination of arm's length price of other transaction which have been analysed using Transactional Net Margin Method." 3. Drawing our attention to the chronology of events leading to the present appeal, the ld.counsel for the assessee pointed out that initially , during assessment proceedings ,on a reference made under section 92CA(1) of the Act for the computation of ALP in relation to the international transactions carried out by the assessee, the TPO had dealt with international transaction of royalty paid by the assessee to its AE, GMDAT. The TPO had....
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....ng in upward adjustment of royalty payment amounting to Rs.4,89,60,504/-. The assessee objected to this upward adjustment to the DRP who dismissed the objection of the assessee upholding order of the TPO in this regard. The matter thereafter travelled upto the ITAT, and the ITAT vide their order dated 2.8.2013 in ITA No.3308/Ahd/2011, noted that the DRP had not analysed the contention put forth by the assessee and had not considered the relevant terms and conditions of the agreement relied upon by both the assessee and the TPO of the respective comparables selected by them while deciding the issue. The ITAT therefore was of the view that the matter needed to be considered afresh and accordingly restored the issue back to the file of the TPO....
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.... is, whether comparables selected by the assessee for benchmarking ALP of its transaction was correct, as opposed to comparables selected by the TPO. In this regard, he clarified again that the assessee had selected an internal comparable relating to a licence agreement entered into by the very same party, GMDAT with Isuzu an independent unrelated party for payment of royalty for specific technology for assembling vehicle "Tavera" in the said case. Agreement provided payment of royalty at the rate of 5% of the net selling price. In the case of the assessee, the ld.counsel for the assessee pointed out that the agreement for payment of royalty was of entire vehicle "Optra" and the royalty was agreed to be of 5% of the net assessable value. Th....
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.... that internal CUP chosen by the TPO therefore was not correct comparable. 5. The ld.DR, on the other hand, relied on the order of the TPO in the second round reiterating that comparables selected by the TPO was correct being for transfer of technology for M-150 and M-200 projects for which projects the assessee also had paid royalty for transfer of technology . He drew our attention to the finding of the TPO in the second round and placed before us in PB at Page No.67- 68 as under: 6. We have heard the rival contentions. The solitary issue to be adjudicated is determination of ALP of the international transaction of the royalty paid by the assessee to its AE, GMDAT. The facts of the case are that the assessee had paid royalty at the rate....
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....lected by the TPO were not correct comparables, had not been considered by the DRP while upholding the order of the TPO. Accordingly, the issue has been restored to the TPO who in the second round upheld the order passed by him in the first round noting that the assessee had nothing new to say. 7. We have considered the contentions of both the parties and have also gone through copies of the agreement of all the comparable cases selected by both the assessee and the TPO, and we find merit in the contentions of the ld.counsel for the assessee. It is a fact on record and has not been denied by the Revenue, that the assessee's agreement for payment of royalty was for transfer of technology for assembling of entire vehicle and similarly also i....