TaxTMI 
TaxTMI 
2023 (11) TMI 496
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....s of the case are that Gruner India is engaged in manufacturing of latching relays, solenoids and actuators (electromechanical products), used in electrical and electronic meter industry and automotive industry. Gruner India has the exclusive rights to manufacture the relays, actuators and solenoids in India under the brand name "Gruner" and has also obtained the licence to use the technical know-how of the associated enterprise (AE), i.e. Gruner AG. In this case, the return of income for AY 2017-18 was efiled on 30.11.2017 declaring a total income of Rs. 6,88,86,230/-. 2.1 As per the Transfer Pricing (TP) document furnished for the A.Y. 2017- 18, the assessee company has entered into the following international transactions with its Ass....
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....ty rate of 3% to be arms length rate for bench marking the transaction of payment of royalty while for fee for technical services followed DRP directions for A.Y. 2012-13. 4. Accordingly, draft assessment order u/s 144C was served upon which assessee for which assessee raised objection before DRP challenging the applicability of CUP Method instead of TNMM and applying 3% royalty rate, without undertaking any economic analysis and without explaining the manner of determining ALP of impugned transactions. 5. The DRP on the basis of its findings for A.Y. 2012-13 and 2013-14 directed to adhoc royalty rate of 3% for bench marking of the payment of royalty. It was also observed as far as the payment of technical services is concerned the TP....
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....nce of Rs. 3,89,49,560/-. 1.6 Applying the ALP rate for royalty @3% as held by Hon'ble Courts in certain case laws which is not a methodology prescribed by Rule 10B(1) & Rule 10C. 2. Ld. AO erred in charging interest u/s 234B, 234C and 234D under the facts & in law in the circumstances of the case. 3. Ld. AO erred by initiating the penalty proceedings u/s 270A. 4. The appellant craves add, amend, alter or vary the above ground of appeal at or before the time of hearing." 8. Heard and perused the record. 9. Ld. AR relying the order of co-ordinate Bench in ITA no. 4062/Del/2019 for A.Y. 2012-13 submitted that the issue of methodology to be adopted and arbitrary selection of royalty rate of 3% without ....
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....ricsson (374 ITR 118) 4. Denso India Ltd. (240 Taxman 713) and remanded the matter to the revenue. 10. We find that the turnover of finished goods is Rs.92 Cr. and export sales to AE was Rs.24 Cr. The import of raw materia! was Rs.28 Cr. Royalty has been paid on the total sales. 12. In the specific facts of this case and export of goods to AE, the TNMM is the MAM. The Id. DRP has determined royalty payment @ 3% instead of 8% considered by the assessee, taking into consideration, the royalty payment of Federal Mogul TPR India Ltd., Climate Systems India Ltd. and Eicher Motors Ltd. The moot argument of the Id. AR was that the FAR of these companies is different. 13. Having gone through the entire facts and ....