M/s. Toyota Kirloskar Motor Pvt. Ltd., Bangalore V. The Deputy Commissioner of Income Tax, LTU, Circle-1, Bangalore

MA 21/BANG/2021

• Counselvise Citation: [2021] 104 COUNSELVISE.COM (IT) 5523 (ITAT-BANGALORE)
• Duration Of Justice: 11 month(s) 9 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 27-12-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 17-01-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: PADAMCHAND KHINCHA
• Section: 13; 92CA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL ‘A’ BENCH : BANGALORE BEFORE SHRI. B.R. BASKARAN, ACCOUNTANT MEMBER AND SMT. BEENA PILLAI, JUDICIAL MEMBER M.P. No. 21/Bang/2021 (in IT(TP)A No. 256/Bang/2016) Assessment Year : 2011-12 M/s. Toyota Kirloskar Motor Pvt. Ltd., Plot No. 1, Bidadi Industrial Area, Ramanagar Taluk, Bidadi, Bangalore Rural Dist. – 562 109. PAN: AAACT5415B Vs. The Deputy Commissioner of Income Tax, LTU, Circle – 1, Bangalore. APPELLANT RESPONDENT Assessee by : Shri Padamchand Khincha, CA Revenue by : Shri Kannan Narayanan, JCIT (DR) Date of Hearing : 16-07-2021 Date of Pronouncement : 28-12-2021 ORDER PER BEENA PILLAI, JUDICIAL MEMBER Present Miscellaneous Petition is seeking rectification in order dated 06/03/2020 assed by this Tribunal in above referred appeal. 2. The Ld.AR submitted that assessee vide Ground 4(c) to 4(f) contended that royalty cannot be separately benchmarked and that it is interlinked with the trading and manufacturing segment. It is contended that this Tribunal observed in para 13 of the order that the Ld.AR did not object for royalty being considered separately in view of the observation of this Tribunal in assessee’s own case in preceding assessment year. Page 2 of 4 M.P. No. 21/Bang/2021 (in IT(TP)A No. 256/Bang/2016) 3. It is submitted that this observation is a mistake apparent on record as the Ld.AR did not concede that royalty can be separately bench marked. It was submitted that the order by this Tribunal in assessee’s own case pertained to assessment year 2007-08, it was concluded that royalty need not be separately benchmarked. We have perused the submissions advanced by both sides in light of records placed before us. 4. We note that the submission of the Ld.AR that he did not concede that royalty can be separately bench marked is correct. We therefore delete the relevant sentence from paragraph 13 of the order. Henceforth para 13 would read as under: “13. In respect of addition made to royalty, it is observed that, this transaction was also considered to be interlinked with trading and manufacturing segment. The Ld.AR submitted that, in preceding assessment years, Ld.TPO considered ALP of transaction to be at ‘nil’, whereas there is a slight departure in the method of computing ALP, for year under consideration. He submitted that, during the year under consideration, Ld.TPO on an ad hoc basis computed adjustment in respect of royalty paid by assessee to its AE at 2%” 5. The next issue raised by assessee is regarding a direction to be given for computing ALP of royalty transaction. We note that in para 16 this Tribunal observed that the Ld.TPO adopted royalty percentage on ad hoc basis of 2% which is not in accordance with the section 92CA of the Act. This Tribunal therefore directed the Ld.TPO to recompute the ALP of the transaction in accordance with law. Page 3 of 4 M.P. No. 21/Bang/2021 (in IT(TP)A No. 256/Bang/2016) 6. It is submitted that the Ld.TPO considered two different set of comparables, and therefore a specific direction is required in respect of selection of comparables. We have perused the submissions advanced by both sides in light of records placed before us. 7. Based on the orders passed by coordinate bench of this Tribunal in assessee’s own case in preceding assessment years, para 17 shall be henceforth read as under: “17.We therefore direct the Ld.TPO to recompute the ALP of the transaction by applying the methods recognized under the Act. The Ld.TPO is directed to carry out fresh search for comparables based on the MAM selected. It may be noted that ALP cannot be computed at ‘nil’. In the event the average margin of the comparables selected is within 3% to 5% range, no adjustment is warranted. Needless to say that proper opportunity of being heard is to be granted to assessee in accordance with law.” Accordingly, the miscellaneous petition filed by assessee stands allowed. In the result the M.P filed by assessee stands allowed. Order pronounced in the open court on 28 th December, 2021. Sd/- Sd/- (B.R. BASKARAN) (BEENA PILLAI) Accountant Member Judicial Member Bangalore, Dated, the 28 th December, 2021. /MS / Page 4 of 4 M.P. No. 21/Bang/2021 (in IT(TP)A No. 256/Bang/2016) Copy to: 1. Appellant 4. CIT(A) 2. Respondent 5. DR, ITAT, Bangalore 3. CIT 6. Guard file By order Assistant Registrar, ITAT, Bangalore