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2023 (11) TMI 496 - ITAT DELHITP Adjustment - determining of “payment of royalty fee” - applicability of CUP Method instead of TNMM - DRP has held that ALP of royalty payment could not be taken as NIL and benefit test could not be applied and directed to adopt royalty rate of 3% for benchmarking the royalty payment - AR submitted that the issue of methodology to be adopted and arbitrary selection of royalty rate of 3% without bringing any correct comparables has been considered and Coordinate bench has set aside the adjustments HELD THAT:- The Bench has given thoughtful consideration to the facts and submissions, and at the very outset has no hesitation to not sustain the submission of Ld. DR about adopting comparables as per law as the order indicate that instead of making analysis on the parameters merely following judicial precedent in the case of Federal Mogul [2012 (7) TMI 971 - DELHI HIGH COURT] and Climate Systems India Ltd. case [2009 (10) TMI 116 - DELHI HIGH COURT] the 3% royalty has been adopted. As decided in [2023 (7) TMI 1318 - ITAT DELHI] for A.Y. 2012-13 has observed as follows arbitrary selection of royalty rate of 3% by the Id. DRP is without brining any correct comparables on record. With regard to payment of FTS in A.Y. 2012-13, the Id. DRP agreed that the TPO failed to apply CUP correctly and is determination of ALP at Nil is incorrect. The Hon'ble High Court of Delhi in Magneti Marelli [2016 (11) TMI 123 - DELHI HIGH COURT] held that if segregation approach is permissible, TNMM shall apply. Decided in favour of assessee.
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