TaxTMI 
TaxTMI 
2024 (2) TMI 290
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.....03.2023 of the CIT(Appeals)-12, Bangalore for the AYs 205-16 & 2016-17 respectively. 2. The assessee, subsidiary of TMC, is a private limited company and is set up in India to manufacture and sell MUV and Passenger car. It has obtained license & technology to manufacture and sell passenger vehicles from TMC. It also imports certain models of cars as CBU and sells them in India. The assessee purchases various spares/components from AEs, which form part of these vehicles and are sold as spare parts as part of post sales service activity. The assessee pays royalty for technology transferred by TMC. 3. For AY 2015-16, a brief summary of the TP analysis conducted by the assessee and the TPO are as under:- Particulars Assessee's TP Study (Pg....
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....ed at 2.04%. Accordingly, TP adjustment was computed at Rs.225,43,63,920/- in respect of royalty payment. As there was error in computation, the TPO passed a rectified order wherein the TP adjustment was recomputed to Rs.196,65,18,080/-. 6. The assessee filed appeal before the CIT(Appeals) and submitted detailed written submissions against the additions made by the AO. The CIT(A) rejected combined transaction approach of the assessee and upheld the action of TPO to separately benchmark the royalty payment. With respect to computation of ALP for royalty, the CIT(A) rejected assessee's contention of inclusion of Tata Motors Ltd and Mahindra & Mahindra Ltd as comparables for the purpose of computation of royalty ratio. The CIT(A) directed the....
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....ments. The 'other expenses' of Rs. 1158.65 crores are considered as part of operating expenses by the TPO. Thus, it is clear that royalty is included as part of the operating cost while computing the ALP under TNMM. He submitted that this view has been accepted by the Bangalore Tribunal in assessee's own case for AY 2013-14 [ITA No.2016/Bang/2018, dated 18.08.2021]. Further, the said decision is relied by Bangalore Tribunal in assessee's own case for AY 2012-13 and AY 2014-15 [IT(TP)A No.150/Bang/2017 & IT(TP)A No.320/Bang/2019 dated 02.12.2022]. Based on the above, the ld. AR for the assessee submitted that the action of the lower authorities of separately benchmarking the royalty payment is bad in law and liable to be quashed. He accordin....
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....as various High courts, Cojoint reading of these orders, we direct the Ld.AO/TPO to delete the adjustment proposed for royalty as a separate international transaction. Respectfully following the above view, we direct the Ld.AO/TPO to delete the adjustment proposed towards royalty as a separate international transaction. Accordingly, ground nos. 10 to 12 raised by assessee stands allowed. 13.1 The ld.DR relied on the order of the lower authorities and he submitted that since the assessee has adopted TNMM and the TPO has also accepted the methods for calculation ALP, the TPO has not made separate adjustment in regard to payment of royalty, therefore, this issue should not be raised by the assessee. 13.2 After hearing both the sides, we ....