INCOME TAX ACT, 1961

Section 92C

Transfer pricing - Computation of ALP - Value of royalty payments whether to be valued at nil value by applying benefit test -

Revenue challenged order of Tribunal holding that the value of royalty payment would be at Rs. nil by using benefit test, as was considered by Coordinate Bench of Tribunal in case of Toyota Kirloskar Auto Parts (P) Ltd. v. ACIT. In that case Tribunal, had followed other decisions of Delhi High Court and observed that benefit test could not be adopted and royalty payment could not be determined at Rs. nil. Held: Tribunal gave a finding that assessee used technologies supplied by its AE in its manufacturing process and for such use of technology, it paid the royalty. Tribunal then referred to decisions of Toyota Kirloskar Auto Parts (P) Ltd. In a similar case, Tribunal had remitted issue to file of AO to determine ALP of royalty by adopting TNMM after giving fair opportunity for hearing. Thus, Tribunal only remitted matter back to file of AO/TPO and did not adjudicate anything in appeal and it allowed appeal only for statistical purpose. Court was not inclined to admit appeal since after remand order passed by Tribunal, the matter will again be gone into as per its directions and fresh assessment would be made after complying principles of natural justice.

Followed:Toyota Kirloskar Auto Parts (P) Ltd. v. ACIT 2015 TaxPub(DT) 0375 (Bang-Trib)

REFERRED :

FAVOUR : In assessee's favour

A.Y. :

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