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2022 (2) TMI 1350 - AT - Income TaxTP Adjustment - ALP of aggregation of transaction including Royalty paid - separate analysis of Royalty as international transaction - as argued trading and manufacturing segments are intertwined and inter-related warranting a "Combined Transaction Approach" in arriving at the arm's length price - assessee submitted that assessee selected TNMM as the most appropriate method and operating margin at entity level after including royalty was compared with comparable companies - HELD THAT:- We note that assessee’s margins have been computed including royalty payment which is higher than the margin of the comparables. It is also not disputed by the revenue that the comparables in case of the comparables, the royalty, margins are computed after including royalty and research and development expenses. The view taken by the Coordinate Bench of this Tribunal in assessee’s own case [2014 (10) TMI 460 - ITAT BANGALORE] for A.Y. 2007-08 has been reproduced hereinabove wherein all these aspects have been considered. This Tribunal for A.Y. 2007-08 has deleted the adjustment made by the Ld.TPO in respect of royalty by separately bench marking the transactions. This has been fortified by the clarification given in a Miscellaneous Petition filed by the department which is also reproduced hereinabove. This view is also supported by various decisions of Coordinate Benches of this Tribunal as well 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. MAT computation u/s 115JB - provision towards warranty while computing the book profits under section 115JB - addition made as it is provision to meet contingent liability and is not an ascertained liability - AO allowed the same in normal computation - HELD THAT:- As relying on case of Toyota Kirloskar Motors P Ltd. [2013 (2) TMI 108 - KARNATAKA HIGH COURT] we remand this issue back to Ld.AO for verifying if there is any double deduction claimed by assessee. The Ld.AO is directed to carry out necessary verification and consider the claim in accordance with law. Needless to say that proper opportunity of being heard be granted to assessee.
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