TMI Blog2021 (7) TMI 338X X X X Extracts X X X X X X X X Extracts X X X X ..... LIANCES LTD.' [ 2012 (4) TMI 346 - DELHI HIGH COURT] and 'CIT Vs. LEVER INDIA EXPORTS LTD', [ 2017 (2) TMI 120 - BOMBAY HIGH COURT]. The Transfer Pricing Officer cannot derive any benefit from the transaction. Besides that, the finding recorded by the Tribunal that the international transaction of payment of royalty ought to be bench marked in an aggregated manner at entity level on application of transactional net margin method has not been challenged by the revenue before this Court. Therefore, the issue involved in this appeal is covered by the decisions of Bombay as well as Delhi High Court. - Decided in favour of assessee. - I.T.A. NO.296 OF 2017 - - - Dated:- 29-6-2021 - HON BLE MR. JUSTICE ALOK ARADHE AND HON BLE ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h marked the international transaction of payment of royalty along with other international transactions at entity level by choosing the transactional net margin method as the most appropriate method. In this behalf, the Transfer Pricing Officer picked up the international transaction of payment of royalty for determination of Arms Length Price and rejected the method adopted by the assessee of aggregating all the transactions in an independent manner. On the basis of the application of comparable uncontrolled price method, the Transfer Pricing Officer determined the Arms Length Price of the said transaction as NIL and held that the assessee has not shown any proof that other group concerns or third parties are charging identical royalty an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer and the Transfer Pricing Officer does not have jurisdiction to examine the allowability of the claim by applying the benefit test or the conditions as provided under Section 37 of the Act. Accordingly, the appeal preferred by the revenue was dismissed and the cross-objection filed by the assessee was disposed of. In the aforesaid factual background, this appeal has been filed. 4. Learned counsel for the revenue submitted that the Tribunal erred in holding that the Transfer Pricing Officer is not right in treating the Arms Length Price of royalty as NIL even though the Transfer Pricing Officer had clearly established that the assessee had not derived any benefit out of royalty payment. It is further submitted that the Tribunal oug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tted that the issue that the Transfer Pricing Officer can only determine the Arms Length Price of an international transaction in the manner prescribed under the Act and the Rules framed thereunder is no longer res integra and is covered by the decisions of High Court of Delhi and Bombay in 'CIT Vs. EKL APPLIANCES LTD.' and 'CIT Vs. LEVER INDIA EXPORTS LTD.'. It is also submitted that concurrent finding of fact has been recorded by the authorities which has not been demonstrated to be perverse. 6. We have considered the submissions made on both sides and have perused the record. The issue whether the Transfer Pricing Officer, while exercising the jurisdiction under Section 92KA(3) of the Act, can only determine the Ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the expenditure. This exercise has to be done, if at all, by the Assessing Officer in exercise of his jurisdiction to determine the income of the assessee in accordance with the Act. In the present case, the Assessing Officer has not disallowed the expenditure but only adopted the TPO's determination of ALP of the advertisement expenses. Therefore, the issue for examination in this appeal is only the issue of ALP as determined by the TPO in respect of advertisement expenses. The jurisdiction of the TPO is specific and limited i.e. to determine the ALP of an International Transaction in terms of Chapter X of the Act read with Rule 10A to 10E of the Income Tax Rules. The determination of the ALP by the respondent assessee of its adv ..... X X X X Extracts X X X X X X X X Extracts X X X X
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