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2016 (4) TMI 88 - BOMBAY HIGH COURT

2016 (4) TMI 88 - BOMBAY HIGH COURT - [2016] 385 ITR 612 - Appeal admitted on the substantial question of law at question no. (c). - Whether on the facts and circumstances of the case and in law, the Tribunal was justified in allowing the payment of Royalty by holding that any payment made with the approval of RBI has to be considered as being at Arm's Length Price ? - Income Tax Appeal No. 2218 of 2013 - Dated:- 28-3-2016 - M. S. Sanklecha And A. K. Menon, JJ. For the Petitioner : Mr. Ashok .....

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ibunal was justified in treating M/s. Gillanders Arbuthnot & Co. Ltd. as a comparable ? (b) Whether on the facts and circumstances of the case and in law, the Tribunal was justified in excluding the case of M/s. Engineers India Ltd. from the list of comparables ? (c) Whether on the facts and circumstances of the case and in law, the Tribunal was justified in allowing the payment of Royalty of ₹ 4,29,03,966/by holding that any payment made with the approval of RBI has to be considered a .....

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had imported equipments from its AEs aggregating to ₹ 23.48 crores and also exported equipments to its AEs aggregating to ₹ 82.23 crores. The respondent assessee benchmarked these international transactions by adopting Transactional Net Margin Method (TNMM) as the most appropriate method to arrive at its Arms Length Price (ALP). (b) The respondent assessee had selected the following four comparables as benchmark to determine its ALP : Sr. No. Comparables Operating Profit Margin for F .....

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rojects. Moreover, the TPO added Engineers India Ltd. and Sriram EPC to the list and benchmarked the ALP on the basis of the following six comparables as under : Sr. No. Company OP/TC% OP/Sales% 1 Tata Projects 4.98 4.74 2 Walchandnagar Inds. 11.74 10.5 3 Mcnally Bharat 11.92 10.65 4 Engineers India Ltd. 14.17 12.42 5 TRF Ltd. 20.85 17.25 6 Sriram EPC 12.69 11.26 Average 12.72 11.13 (d) On the basis of the TPO order, the Assessing Officer passed a draft assessment order dated 11th November, 2011 .....

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eptember, 2012. (e) Being aggrieved, the respondent assessee carried the issue in appeal to the Tribunal. By the impugned order, the Tribunal held that M/s. Gillanders Arbuthnot & Co. Ltd. be included in the list of the comparable and M/s. Engineers India Ltd. be dropped from the list of comparables to arrive at the ALP of the respondent's International Transactions. 4. Re. question (a) : (a) The grievance of the respondent assessee before the Tribunal was that M/s. Gillanders Arbuthnot .....

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he Tribunal records the fact that the total revenue of M/s. Gillanders Arbuthnot & Co. Ltd. from its Engineering Division was ₹ 74.17 crores. The impugned order of the Tribunal records the fact that the TPO had erroneously proceeded on the basis that M/s. Gillanders Arbuthnot & Co. Ltd. was not engaged in execution of turnkey project business. (b) Moreover, the impugned order also records the fact that the segment level Revenue from the Engineering Segment by M/s. Gillanders Arbuth .....

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that M/s. Gillanders Arbuthnot & Co. Ltd. were not engaged in the business of executing turnkey projects. (e) Thus, question (a) as framed does not give any rise to any substantial question of law. Hence, not entertained. 4. Re question (b) : (a) The grievance of the respondent assessee before the Tribunal was that M/s. Engineers India Ltd. has been erroneously introduced as a comparable by the TPO for determining the ALP of the respondent assessee's International Transactions. The impu .....

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