TS Tech Sun India Pvt. Ltd., New Delhi V. DCIT, New Delhi

ITA 1943/DEL/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 3134 (ITAT-DELHI)
• Duration Of Justice: 8 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-12-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I1
• Next Hearing Date: 12-06-2017
• Assessment Year: 2012-2013
• Appeal Filed On: 31-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NIAMRATA
• Keywords: Depreciation; Transfer pricing; International transaction
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : I-1 : NEW DELHI BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SHRI K. NARASIMHA CHARY, JUDICIAL MEMBER ITA NO.1943/DEL/2017 ASSESSMENT YEAR : 2012-13 TS TECH SUN INDIA PVT. LTD., A-47, LOWER GROUND FLOOR, HAUZ KHAS, NEW DELHI. PAN: AAACT4324M VS. DCIT, CIRCLE-25(2), NEW DELHI. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI AJAY VOHRA, SR. ADVOCATE, SHRI NEERAJ JAIN, ADVOCATE, SHRI RAMIT KATYAL, CA & SHRI SAHIL SHARMA, CA DEPARTMENT BY : SHRI NIAMRATA PANDAY, SR. DR DATE OF HEARING : 07.12.2017 DATE OF PRONOUNCEMENT : 13.12.2017 ORDER PER R.S. SYAL, VP: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE FINAL ASSESSMENT ORDER PASSED BY THE AO U/S 143(3) READ W ITH SECTION 144C OF ITA NO.1943/DEL/2017 2 THE INCOME-TAX ACT, 1961 (HEREINAFTER ALSO CALLED THE ACT) ON 24.01.2017 IN RELATION TO THE ASSESSMENT YEAR 2012- 13. 2. THE ONLY ISSUE RAISED IN THIS APPEAL IS AGAINST THE ADDITION OF RS.9,93,69,480/- MADE BY THE ASSESSING OFFICER ON A CCOUNT OF TRANSFER PRICING ADJUSTMENT. 3. SUCCINCTLY, THE FACTUAL MATRIX OF THE CASE IS TH AT THE ASSESSEE WAS INCORPORATED IN INDIA IN 1996 AS A 74:26 JOINT VENT URE BETWEEN TS TECH. CO., JAPAN AND SUN VACUUM FORMERS PVT. LTD., A COMP ANY REGISTERED UNDER THE INDIAN COMPANIES ACT, 1956. THE ASSESSEE STARTED ITS OPERATIONS IN INDIA IN 1997 AND IS ENGAGED IN MANUF ACTURING AUTO ANCILLARIES. IT MANUFACTURES CAR SEATS, DOOR TRIMS , SEAT FRAMES, ETC. FOR HONDA CARS AND TWO-WHEELERS IN INDIA. THE ENTIRE M ANUFACTURING IS DONE BY THE ASSESSEE FROM ITS PLANTS LOCATED IN NOIDA, M ANESAR ALONG WITH A NEW PLANT IN PATHREDI SET UP DURING THE YEAR UNDER CONSIDERATION FOR TWO- WHEELER SCOOTER SEATS. THE ASSESSEE FILED RETURN O F INCOME ALONG WITH FORM NO.3CEB DECLARING 11 INTERNATIONAL TRANSACTION S. THE ASSESSING OFFICER (A.O) REFERRED THE QUESTION OF DETERMINATIO N OF ARMS LENGTH ITA NO.1943/DEL/2017 3 PRICE (ALP) OF THE INTERNATIONAL TRANSACTIONS TO TH E TRANSFER PRICING OFFICER (TPO). IN THE PRESENT APPEAL, WE ARE CONCE RNED ONLY WITH TWO INTERNATIONAL TRANSACTIONS, NAMELY, PAYMENT OF ROYA LTY AMOUNTING TO RS.6,46,47,851/- AND PAYMENT OF TECHNICAL KNOW-HOW FEES AMOUNTING TO RS.16,73,28,883/-. THE ASSESSEE APPLIED TRANSAC TIONAL NET MARGIN METHOD (TNMM) ON ENTITY LEVEL AS THE MOST APPROPRIA TE METHOD TO DEMONSTRATE THAT ALL ITS INTERNATIONAL TRANSACTIONS INCLUDING THE TRANSACTIONS OF PAYMENT OF ROYALTY AND TECHNICAL KN OW-HOW FEES WERE AT ALP. THE TPO ACCEPTED THE OTHER INTERNATIONAL T RANSACTIONS AT ALP. HE, HOWEVER, DID NOT ACCEPT THE AGGREGATION APPROAC H ADOPTED BY THE ASSESSEE FOR BENCHMARKING THESE TWO INTERNATIONAL T RANSACTIONS. AFTER ENTERTAINING OBJECTIONS FROM THE ASSESSEE, HE APPLI ED COMPARABLE UNCONTROLLED METHOD PRICE (CUP) IN RESPECT OF THE T WO INTERNATIONAL TRANSACTIONS UNDER CHALLENGE. FOR THIS PURPOSE, HE COMPUTED SELLING, ADMINISTRATION AND GENERAL EXPENSES/SALES (SAG EXPE NSES/SALES) RATIO OF THE ASSESSEE AT 8.59%. 14 COMPARABLES TAKEN BY T HE ASSESSEE WERE CONSIDERED INITIALLY. THEIR AVERAGE SAG EXPENSES/S ALES RATIO WAS COMPUTED AT 11.81%. LATER ON, THE TPO NOTICED IN P ARA 49 OF HIS ORDER ITA NO.1943/DEL/2017 4 THAT ONLY SUCH COMPANIES SHOULD BE TAKEN AS COMPARA BLE WHOSE SAG EXPENSES/SALES RATIO WAS NEAR ABOUT THE ASSESSEE CO MPANYS. THAT IS HOW, FOUR COMPARABLES WERE SHORTLISTED WITH THEIR MEAN SAG EXPENSES /SALES RATIO OF 8.59%, AS UNDER:- S.NO. NAME OF COMPARABLES SGA EXPENSES/SALES (%) 1. BIMETAL BEARINGS LTD. 7.95% 2. FIEM INDUSTRIES LTD. 7.71% 9. MOTHERSON SUMI SYSTEMS LTD. 8.62% 14. UNITECH MACHINES LTD. 11.81% TESTED PARTY 8.59% 4. THEREAFTER, THE TPO WORKED OUT ROYALTY AND TECHN ICAL KNOW-HOW FEES TO SALES RATIO OF THESE FOUR COMPANIES AS UNDE R:- S.NO. NAME OF COMPARABLES SALES ROYALTY AND TECHNICAL KNOW-HOW FEES ROYALTY SALES (%) 1. BIMETAL BEARINGS LTD. 1,88,80,93,318 0.00% 2. FIEM INDUSTRIES LTD. 5,79,85,42,859 50,00,000 0.09% 3. MOTHERSON SUMI SYSTEMS LTD. 38,88,00,00,000 17,70,00,000 0.46% 4. UNITECH MACHINES LTD. 8,07,95,44,000 0.00% AVERAGE 0.14% TESTED PARTY 2,60,99,05,616 23,19,76,734 8.89% ITA NO.1943/DEL/2017 5 5. CONSIDERING THE ASSESSEES RATIO OF ROYALTY AND TECHNICAL KNOW- HOW FEES/SALES RATIO AT 8.89% AND THAT OF THE COMPA RABLES FINALLY SELECTED AT 0.14%, THE TPO WORKED OUT EXCESS PAYMEN T MADE BY THE ASSESSEE, WARRANTING TRANSFER PRICING ADJUSTMENT, A T RS.22,84,43,734/-. THE ASSESSEE APPROACHED THE DISPUTE RESOLUTION PANE L (DRP). VIDE ITS DIRECTION DATED 17.01.2017, THE DRP DID NOT APPROVE THE ASSESSEES APPROACH OF AGGREGATION AND AFFIRMED THE ADOPTION O F CUP AND ALSO THE MECHANISM ADOPTED BY THE TPO FOR DETERMINING THE AL P OF THE INTERNATIONAL TRANSACTION OF ROYALTY AND TECHNICAL SERVICES FEES UNDER SUCH METHOD. HOWEVER, A DIRECTION WAS GIVEN TO RES TRICT THE DISALLOWANCE TO THE AMOUNT DEBITED TO THE PROFIT & LOSS ACCOUNT. THIS WAS NECESSITATED BECAUSE THE ASSESSEE PAID TECHNICA L KNOW-HOW FEES AND CAPITALIZED THE SAME. A PART OF SUCH EXPENDITU RE WAS CLAIMED AS DEPRECIATION. THE TPO, IN HIS ANALYSIS, CONSIDERED THE ENTIRE AMOUNT OF TECHNICAL KNOW-HOW FEES CAPITALIZED FOR THE PURPOSE OF COMPUTING TRANSFER PRICING ADJUSTMENT, WHICH ACTION WAS RESTR ICTED BY THE DRP TO ONLY SUCH AMOUNT OF TECHNICAL KNOW-HOW AS WAS AMORT IZED BY WAY OF A DEBIT TO THE PROFIT & LOSS ACCOUNT. OUT OF THE FOU R COMPARABLES TAKEN ITA NO.1943/DEL/2017 6 BY THE TPO, THE DRP EXCLUDED BIMETAL BEARINGS LTD. AND UNITECH MACHINES LTD., BEING, THE COMPANIES WHICH HAD NOT P AID ANY ROYALTY AND TECHNICAL KNOW-HOW FEES. PURSUANT TO THE DIREC TIONS GIVEN BY THE DRP, THE TPO, VIDE HIS ORDER DATED 12.01.2017, REDU CED THE AMOUNT OF TRANSFER PRICING ADJUSTMENT TO RS.9,93,69,480/- FRO M THE ORIGINALLY PROPOSED ADJUSTMENT AT RS.22.84 CRORE. THE FRESH A MOUNT OF TRANSFER PRICING ADJUSTMENT WAS DETERMINED BY CONSIDERING RO YALTY AND TECHNICAL KNOW-HOW FEES/SALES RATIO OF THE TWO EXIS TING COMPARABLES, NAMELY, FIEM INDUSTRIES LTD. AND MOTHERSON SUMI SYS TEMS LTD. AT 0.28%. THE ASSESSEES ACTUAL EXPENSES OF ROYALTY A ND TECHNICAL SERVICES FEES (AFTER RESTRICTING IT TO THE AMOUNT O F DEPRECIATION CLAIMED) WERE DETERMINED AT RS.10.68 CRORE AND THE RATIO OF SUCH EXPENSES TO SALES WAS DETERMINED AT 3.91%. EXCESS OF THE ASSES SEES ROYALTY/TECHNICAL SERVICES FEE TO SALES RATIO OVER AND ABOVE THE ARMS LENGTH ROYALTY/TECHNICAL SERVICES FEE TO SALES RATI O OF THE TWO COMPARABLES, WAS TREATED AS FOUNDATION FOR THE TRAN SFER PRICING ADJUSTMENT. THE ASSESSING OFFICER, IN THE IMPUGNED ORDER, MADE ADDITION FOR THIS AMOUNT. THE ASSESSEE IS AGGRIEVE D AGAINST THE ADDITION. ITA NO.1943/DEL/2017 7 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. IT IS VIVID THAT THE ASSESSEE A PPLIED THE TNMM TO SHOW THAT ALL OF ITS INTERNATIONAL TRANSACTIONS INC LUDING ROYALTY AND TECHNICAL SERVICES FEE WERE AT ALP ON ENTITY LEVEL. THE TPO DID NOT APPROVE THE AGGREGATION OF ALL THE INTERNATIONAL TR ANSACTIONS AND APPLIED THE CUP AS THE MOST APPROPRIATE METHOD IN THE MANNE R DISCUSSED ABOVE FOR DETERMINING THE ALP OF THE INTERNATIONAL TRANSA CTIONS OF ROYALTY AND TECHNICAL SERVICES FEE. 7. THE LD. AR CONTENDED THAT FIRSTLY, THE TPO APPLI ED THE CUP METHOD IN A MANNER UNKNOWN TO LAW AND SECONDLY, HE ERRED IN DISREGARDING THE AGGREGATE APPROACH. 8. WE ESPOUSE THE FIRST CONTENTION TO EXAMINE IF THE TPO APPLIED THE CUP METHOD IN CORRECT PERSPECTIVE. IT CAN BE SEEN T HAT HE WORKED OUT THE MEAN PERCENTAGE OF 0.28% OF TWO COMPARABLES, NAMELY , FIEM INDUSTRIES LTD. AND MOTHERSON SUMI SYSTEMS LTD. WITH THE NUMER ATOR OF TOTAL OF ROYALTIES AND TECHNICAL SERVICES FEES AND DENOMINAT OR OF SALES. IT IS THIS 0.28% WHICH HAS BEEN CONSIDERED FOR MAKING TRA NSFER PRICING ITA NO.1943/DEL/2017 8 ADJUSTMENT OF RS.9.93 CRORE. IN ORDER TO EVALUATE THE STAND POINT OF THE TPO, IT IS RELEVANT TO CONSIDER THE MANDATE OF RULE 10B(1)(A) WHICH DEALS WITH THE DETERMINATION OF ALP UNDER THE CUP M ETHOD, AS UNDER :- (A) COMPARABLE UNCONTROLLED PRICE METHOD, BY WHICH , (I) THE PRICE CHARGED OR PAID FOR PROPERTY TRANSFER RED OR SERVICES PROVIDED IN A COMPARABLE UNCONTROLLED TRAN SACTION, OR A NUMBER OF SUCH TRANSACTIONS, IS IDENTIFIED ; (II) SUCH PRICE IS ADJUSTED TO ACCOUNT FOR DIFFEREN CES, IF ANY, BETWEEN THE INTERNATIONAL TRANSACTION AND THE COMPA RABLE UNCONTROLLED TRANSACTIONS OR BETWEEN THE ENTERPRISE S ENTERING INTO SUCH TRANSACTIONS, WHICH COULD MATERIALLY AFFECT TH E PRICE IN THE OPEN MARKET ; (III) THE ADJUSTED PRICE ARRIVED AT UNDER SUB-CLAUS E (II) IS TAKEN TO BE AN ARMS LENGTH PRICE IN RESPECT OF THE PROPERTY TRANSFERRED OR SERVICES PROVIDED IN THE INTERNATION AL TRANSACTION ; 9. A CAREFUL PERUSAL OF THE MECHANISM PROVIDED UNDE R RULE 10B(1)(A) FOR DETERMINING THE ALP OF AN INTERNATIONAL TRANSAC TION DIVULGES THAT UNDER SUB-CLAUSE (I), THE PRICE CHARGED OR PAID FOR SERVICES PROVIDED IN A COMPARABLE UNCONTROLLED TRANSACTION IS IDENTIFIED. UNDER SUB-CLAUSE (II), THE PRICE SO DETERMINED UNDER SUB-CLAUSE (I) IS ADJUSTED TO ACCOUNT FOR DIFFERENCES, IF ANY, BETWEEN INTERNATIONAL TRANSACT ION AND THE COMPARABLE UNCONTROLLED TRANSACTIONS. UNDER SUB-CLAUSE (III), THE ADJUSTED PRICE ITA NO.1943/DEL/2017 9 ARRIVED UNDER SUB-CLAUSE (II) IS TAKEN AS ALP IN RE SPECT OF PROPERTY TRANSFERRED OR SERVICES PROVIDED IN THE INTERNATION AL TRANSACTION. THUS, IT IS EXPLICIT FROM THE MANDATE OF SUB-CLAUSE (I) OF R ULE 10B(1)(A) THAT IT IS THE PRICE CHARGED OR PAID FOR THE SERVICES PROVIDED IN A COM PARABLE UNCONTROLLED TRANSACTION, WHICH IS TAKEN INTO CONSI DERATION. IT IS THIS ADJUSTED PRICE PAID FOR AVAILING SERVICES WHICH CONSTITUTES THE BENCHMARK FOR COMPARISON WITH THE PRICE PAID FOR AVAILING OF ANY SERVICES IN AN INTERNATIONAL TRANSACTION. COROLLAR Y OF THE ABOVE IS THAT THE PRICE PAID FOR AVAILING OF SERVICES IN A COMPARABLE UNCONTROLL ED TRANSACTION IS COMPARED WITH THE PRICE PAID IN AN INTERNATIONAL TRANSACTION. THE EMPHASIS UNDER THE CUP METHOD IS ON THE COMPARISON OF PRICE PAID FOR AVAILING SERVICES. 10. WHEN WE ADVERT TO THE FACTS OF THE INSTANT CASE , IT IS FOUND THAT THE TPO HAS SIMPLY COMPUTED RATIO OF THE EXPENSES OF RO YALTY AND TECHNICAL SERVICES FEES TO SALES OF THE COMPARABLES AT 0.28% AND, THEN, PROCEEDED TO APPLY SUCH BENCHMARK FOR DETERMINING T HE ALP OF THE TWO INTERNATIONAL TRANSACTIONS UNDER CONSIDERATION. IN THE ENTIRE EPISODE, ITA NO.1943/DEL/2017 10 THERE IS NO REFERENCE TO THE PRICE PAID BY THE COMPARABLES AS A YARDSTICK FOR COMPARING WITH THE PRICE PAID BY THE ASSESSEE. THE APPROACH ADOPTED BY THE TPO, AS APPROVED BY THE DRP, DOES NOT CONFO RM TO THE PRESCRIPTION OF RULE 10B(1)(A) INASMUCH AS HE SOUGH T TO COMPARE PERCENTAGE OF EXPENSES TO SALES RATHER THAN THE PRICE PAID UNDER A COMPARABLE UNCONTROLLED SITUATION. ERGO, WE CANNOT COUNTENANCE THE MECHANISM APPLIED UNDER THE CUP METHOD, WHICH IS NO T IN CONSONANCE WITH THE PROCEDURE PRESCRIBED UNDER THE RELEVANT RU LE. SIMILAR VIEW HAS BEEN TAKEN BY THE DELHI TRIBUNAL IN THE CASE OF GRUNER INDIA PVT. LTD. VS. DCIT [TS-202-ITAT-2016(DEL)-TP] VIDE ITS ORDER DATED 29.04.2016 IN ITA NO.6794/DEL/2015, WHOSE COPY HAS BEEN PLACED ON RECORD BY THE LD. AR. THAT CASE, BASED ON SIMILAR FACTS, ALSO PR OCEEDED IN THE SAME WAY AT THE HANDS OF THE TPO AS IS THE EXTANT CASE. IT HAS BEEN BROUGHT TO OUR NOTICE THAT THE SAID ORDER OF THE TRIBUNAL WAS CONTESTED BEFORE THE HON'BLE HIGH COURT. VIDE JUDGMENT DATED 20.12.2016 , THE HON'BLE DELHI HIGH COURT IN GRUNER INDIA LTD. VS. DIT (2016) 97 CCH 0179 DELHC DID NOT DISTURB THE OVERTURNING BY THE TRIBUNAL OF THE SIMILAR MECHANISM ADOPTED BY THE TPO OF APPLYING THE CUP ME THOD AND ITA NO.1943/DEL/2017 11 WORKING OUT THE TRANSFER PRICING ADJUSTMENT BY CONS IDERING THE ROYALTY AND TECHNICAL SERVICES FEE TO SALES RATIO OF THAT A SSESSEE AS WELL AS THE COMPARABLES. IT IS, THEREFORE, HELD THAT THE TPO DI D NOT CORRECTLY COMPUTE THE ALP OF THE INTERNATIONAL TRANSACTIONS O F ROYALTY AND TECHNICAL SERVICES FEE UNDER THE CUP METHOD. 11. THE LD. AR ACCENTUATED THE POINT THAT THE APPLI CATION OF THE TNMM UNDER THE AGGREGATE APPROACH ADOPTED BY THE AS SESSEE IN THE INSTANT CASE WAS CORRECT AND THE SAME OUGHT NOT TO HAVE BEEN DISCARDED AND SUBSTITUTED WITH THE CUP METHOD IN RESPECT OF T HE INTERNATIONAL TRANSACTIONS IN DISPUTE. FOR THIS PROPOSITION, HE R ELIED ON THE JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT IN GRUNER INDIA PVT. LTD. (SUPRA) . 12. ON GOING THROUGH THE ABOVE JUDGMENT, WE FIND THAT THE TRIBUNAL IN THAT CASE DID NOT APPROVE THE APPLICATION OF THE TN MM ON ENTITY LEVEL AND UPHELD THE APPLICATION OF THE CUP METHOD FOR D ETERMINING THE ALP OF THE INTERNATIONAL TRANSACTIONS OF ROYALTY AND TE CHNICAL SERVICES FEE. IT WAS ARGUED BY THE ASSESSEE BEFORE THEIR LORDSHIPS T HAT AGGREGATION APPROACH WAS THE CORRECT METHOD. AFTER CONSIDERING ITS EARLIER ITA NO.1943/DEL/2017 12 JUDGMENTS IN THE CASE OF SONY ERICSON MOBILE COMMUNICATION INDIA LTD. VS. CIT (2015) 374 ITR 118 (DEL) AND MAGNETI MARELLI POWERTRAIN INDIA PVT. LTD. VS. DCIT (2016) 290 CTR (DEL) 60, THE HON'BLE HIGH COURT REMITTED THE MATTER TO THE TPO FOR CONSIDERING THE QUESTION OF AGGREGATION AND APPLICATION OF THE CORRECT METHODS AFRESH IN THE HUE OF DISCUSSION MADE IN THE ORDER. FOLLOWING OBSERVATIONS OF THE HONBLE HIGH COURT MERIT MENTION IN THIS REGARD : - `10. IN THE LIGHT OF THE ABOVE DISCUSSION, IT IS HE LD THAT THE ENTIRE ISSUE AS TO WHETHER AGGREGATION IS WARRANTED IN THE CIRCUMSTANCES, SHOULD BE GONE INTO AFRESH IN VIEW OF THE LAW DECLARED IN SONY ERICSSON (SUPRA) AND CLARIFIED IN MAGNETI MARELLI (SUPRA) ABOVE. 11. AS FAR AS THE ISSUE OF MOST APPROPRIATE METHOD IS C ONCERNED, THIS COURT IS OF THE OPINION THAT NO DEFINITIVE RUL ING OUGHT TO BE GIVEN AT THIS STAGE. AS TO WHETHER IN THE EVENT OF DE-SEGREGATION THE CUP METHOD IS THE MOST APPROPRIATE RATHER THAN TNM METHOD SHOULD IN OUR OPINION BE LEFT OPEN FOR CONSIDERATIO N DEPENDING ON THE DETERMINATION OF THE ISSUE OF AGGREGATION/ DE-S EGREGATION ITSELF. IN OTHER WORDS, THAT WHETHER IN THE EVENT O F DE-SEGREGATION, WHICH WOULD BE THE APPROPRIATE METHOD, SHOULD BE LE FT TO THE TPO TO DECIDE, AFTER HEARING COUNSEL FOR THE PARTIES. H OWEVER, WE CLARIFY THAT IN THE EVENT IT IS HELD THAT AGGREGATI ON IS PERMISSIBLE IN THE FACTS OF THIS CASE, THE FINDINGS OF THE REVE NUE AUTHORITIES AND THE TRIBUNAL THAT THE TNMM METHOD WAS WARRANTED , WOULD NOT BE DISTURBED. 12. IN THE LIGHT OF THE ABOVE FINDINGS, THE APPEAL IS PARTLY ALLOWED. THE MATTER IS REMITTED FOR RE-CONSIDERATION BY THE CONCERNED TPO, ITA NO.1943/DEL/2017 13 WHO SHALL HEAR COUNSEL FOR THE PARTIES AND RENDER F INDINGS ON BOTH ASPECTS. 13. SINCE THE FACTS AND CIRCUMSTANCES OF THE INS TANT CASE ARE MUTATIS MUTANDIS SIMILAR TO THOSE OF GRUNER INDIA PVT. LTD. (SUPRA) , RESPECTFULLY FOLLOWING THE PRECEDENT, WE ALSO SET ASIDE THE IMPU GNED ORDER AND REMIT THE MATTER TO THE FILE OF ASSESSING OFFICER/TPO FOR A FRESH ADJUDICATION IN THE LIGHT OF THE GUIDANCE PROVIDED IN THE CASE O F GRUNER INDIA PVT. LTD. (SUPRA) . 14. SOME SUBMISSIONS WERE ADVANCED BY THE LD. AR IN SUPPORT OF THE CONTENTION THAT EVEN IF THE CUP METHOD IS APPLIED T O THE INTERNATIONAL TRANSACTIONS OF ROYALTY AND TECHNICAL KNOW-HOW FEE, STILL NO TRANSFER PRICING ADJUSTMENT WOULD BE CALLED FOR. TOWING THE LINE LAID DOWN IN GRUNER INDIA (SUPRA) , WE DO NOT PROPOSE TO RECORD OR DEAL WITH SUCH SUBMISSIONS AS THE MATTER IS BEING SENT BACK TO THE TPO FOR FIRSTLY, EXAMINING THE QUESTION OF AGGREGATION OR SEGREGATIO N OF THE INTERNATIONAL TRANSACTIONS AND THEN APPLYING THE CORRECT METHOD F OR DETERMINING THE ALP OF THE TWO INTERNATIONAL TRANSACTIONS, IF THESE ARE NOT TO BE ITA NO.1943/DEL/2017 14 CONSIDERED IN A COMBINED MANNER WITH OTHER INTERNAT IONAL TRANSACTIONS ON ENTITY LEVEL. 15. IN THE RESULT, THE APPEAL IS ALLOWED FOR STA TISTICAL PURPOSES. THE ORDER PRONOUNCED IN THE OPEN COURT ON 13.12.201 7. SD/- SD/- [K. NARASIMHA CHARY] [R.S. SYAL] JUDICIAL MEMBER VICE PRESIDENT DATED, 13 TH DECEMBER, 2017. DK COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT AR, ITAT, NEW DELHI.