TMI Blog2014 (3) TMI 533X X X X Extracts X X X X X X X X Extracts X X X X ..... rference then all the international transactions are at ALP – the decision in LG Electronics India Pvt. Ltd. Vs ACIT [2013 (6) TMI 217 - ITAT DELHI] followed – thus, the approach adopted by the assessee in combining so many international transaction for determining ALP on a consolidated basis, is incorrect. Determination of ALP – Projected operating profit margin considered - Held that:- The requirement under the relevant provisions of the Act along with the rules is to consider the `actual' figures and not any `projected' figures - It is beyond the comprehension as to how the projected figures can be substituted for the actuals when the requirement is to benchmark actual international transactions at ALP – thus, the methodology adopted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng Officer u/s 143(3) read with section 144C on 05.12.2013 in relation to the assessment year 2009-10. 2. The major issue involved in this appeal is against the addition on account of transfer pricing adjustment. Briefly stated the facts of the case are that the assessee is a Joint Venture Company between Magneti Marelli Powertrain Spa, Itlay, Maruti Suzuki India Ltd. and Suzuki Motor Corporation, Japan. This company was set up in India to manufacture and sell Engine Control Units (ECUs). The assessee reported six international transactions including `Payment of technical assistance fee' to the tune of Rs. 38,58,80,000/-. Only this transaction is in dispute inasmuch as the other five international transactions have not been questione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rall operating profit was more than the comparables, it could not be inferred that all the international transactions were at ALP. He, therefore, rejected the `entity level approach' adopted by the assessee to benchmark its international transactions including that of `Technical assistance fees' amounting to Rs. 38.58 crores. In the opinion of the TPO, it was Comparable Uncontrolled Price (CUP) method which was required to be applied. He, therefore, rejected the assessee's TNMM and sought to apply CUP method. Accordingly, ALP of this transaction was determined at Rs. Nil as against the amount paid by the assessee at Rs. 38.58 crore. The assessee was unsuccessful before the DRP. In the final order passed u/s 144C(13), the A.O mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egment of 'Manufacturing of the automotive components' and analyzed all such transactions on a combined basis. This type of combined benchmarking of all the international transactions is not in accordance with law. The mere fact that the overall profit earned by the assessee is more, would not ipso facto lead to the interference then all the international transactions are at ALP. The Special Bench of the Tribunal in the case of LG Electronics India Pvt. Ltd. Vs ACIT 2013 140 ITD 41 (Delhi) (SB) has held to this extent. Thus, the approach so adopted by the assessee in combining so many international transaction for determining ALP on a consolidated basis, is incorrect. 7. The next major flaw in the assessee's calculation is th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... approach adopted by the TPO is also not correct. He rejected TNMM as applied by the assessee by holding that CUP method was applicable. However, he computed the ALP of such transaction under CUP as Nil. There is no dispute on the fact that the assessee did receive technical information in respect of ECUs to be manufactured by it for four different models of cars pertaining to Maruti, Fiat and Tata. When technical information was admittedly obtained, it could not be said that the assessee ought not to have paid any consideration for that to its A.E. The TPO seems to have gone wrong by considering that the foreign A.E contributed capital to the tune of Rs. 20 crores and odd and took away a sum of Rs. 38 crores and odd in the shape of fees fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etermination of ALP in correct perspective. In such a situation, the order passed by the A.O making addition proposed by the TPO, cannot be upheld. In our considered opinion, the ends of justice would meet adequately if the impugned order on this issue is set aside and the matter is restored to the file of AO/TPO for a fresh determination of ALP of this international transaction. We order accordingly. The ld. AR has agreed to assist the TPO in providing data of certain comparable cases which could assist in the determination of ALP. In such fresh proceedings, the TPO will ascertain as to which method can be correctly applied and then decide the question before him. Needless to say, a reasonable opportunity of being heard will be given to th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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