TMI Blog2017 (5) TMI 1358X X X X Extracts X X X X X X X X Extracts X X X X ..... y deplorable. Ld. counsel chosen not to point out any fallacies in the reasoning of the TPO or of the ALP analysis in the working of the ALP adjustment. The ld. counsel also failed to establish that the transaction royalty payment is closely linked with the other transactions carried out with AE. It is trite law that a justification should be shown for clubbing the transactions. In the absence of such justification clubbing other transactions is not possible. The onus always lies on the assessee-company to establish the justification for clubbing and aggregation of the transaction of payment of royalty with other transactions. As mentioned (supra) the assessee-company had failed to discharge such onus, in the circumstances we confirm the orders of the lower authorities in this respect of ALP adjustment on payment of royalty. - Decided against assessee. Deduction u/s 10A - reduction of the expenditure incurred under telecommunication freight and travelling incurred in foreign currency from export turnover - Held that:- This issue is covered in favour of the assessee-company by the decision of the jurisdictional High court in case of Tata Elxsi Ltd [2011 (8) TMI 782 - KARNATAKA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as to how and why the Appellant's data are not reliable or correct. 3. The Honourable DRP is not justified in impliedly upholding the action of the Learned TPO in stating that the data are not reliable or correct without even requiring the Appellant to show cause on this issue. D.As regards adjustment of ₹ 2,75,25,270/- directed under Section 92CA of the IT Act in respect of Royalty- paid to Associated Enterprises: 1. The Honourable DRP is not justified in upholding the action of the Learned TPO in making adjustment of ₹ 2,75,25,270/- under Section 92CA of the IT Act in respect of international transaction by way of royalty paid by the Appellant Company. 2. The Honourable DRP is not justified in impliedly upholding the action of the Learned TPO in making adjustment in breach of statutory provisions of Chapter X and Rules provided therein. 3. The Honourable DRP has failed to appreciate that the Learned TPO computed an adjustment of ₹ 2,75,25,270/- under Section 92CA of IT Act without even determining arm's length price. 4. The Honourable DRP has failed to appreciate that when the Learned TPO has accepted the ALP determined by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... account of transfer pricing. E.As regards exclusion of freight expense of ₹ 28,66,311/- and insurance expenses of ₹ 79,916/- from the export turnover: The Learned Assessing Officer is not justified in failing to follow the directions of the Honourable DRP as per the mandate under section 144C (13) of the IT Act, when the Honourable DRP has explicitly directed in para 5.2 that the freight expense of ₹ 28,66,311/- and insurance expenses of ₹ 79,916/- shall not be excluded from the export turnover when the said expenses arc incurred in Indian Rupee. F.The Honourable DRP is not justified in upholding the levy of interest under sections 234B 234C of IT Act when the conditions for levying such interest did not exist in the present case. For the above reasons and for such other reasons which may be allowed by the Honourable Members to be urged at the time of hearing, it is prayed that the aforesaid appeal be allowed. 4. Briefly the facts of the case are that the appellant is a company incorporated under the provisions of the Companies Act, 1956. It is engaged in the business of manufacturing of Magnetic based Electronic Coils, transfo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as under: Particulars Amount Gross Sales of the Assessee Company ₹ 55,51,87,248/- Material Cost ₹ 34,93,30,137/- Value addition due to operations using Technology and knowhow leased out by the AE M/s. Falco Ltd. ₹ 20,58,57,111/- Royalty payable @ 8 percent on value addition ₹ 1,64,68,568/- The Royalty paid by the Assessee Company ₹ 4,39,93,839/- Therefore the excess Royalty paid by the Assessee Company being adjustment u/s 92CA ₹ 2,75,25,270/- 8. The AO passed the draft assessment order u/s. 143(3) r.w.s. 144C of the IT Act vide order dated 28.02.2014 after incorporating the above TP adjustment. After receipt of draft assessment order the appellant company filed an objection before the Hon ble DRP contending that the TPO was not justified in rejecting the TP study and further contended that when the appellant company adopted the TNMM at entity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... O had not applied TNMM at entity level. The TP study report submitted by the assessee company had been rejected by the TPO. This action of the TPO is confirmed by the Hon ble DRP. But the TPO proceeded to bench mark the transaction of the royalty payment on stand alone basis. In the process, the cost of production or other transactions are not subjected to bench marking by the TPO. Therefore the contention of the ld. counsel that when the TNMM was applied at the entity level, there was no necessity of separate bench marking in respect of royalty transactions cannot be accepted. This submission made by the assessee-company is factually incorrect. On mere perusal of order of the ld. TPO it is manifest that the TPO had picked up the transaction royalty alone for the purpose of bench marking. The statement made by the ld. Counsel for the appellant is nothing but attempt to mislead the court. This conduct on the part of the counsel is highly deplorable. It is a fundamental duty of an advocate / counsel to assist the court in adjudicating the matter before the court in accordance with the law. It is highly unbecoming of counsel to mislead the court. We leave the issue here with these obs ..... X X X X Extracts X X X X X X X X Extracts X X X X
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