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TMI Blog2019 (12) TMI 1533X X X X Extracts X X X X X X X X Extracts X X X X ..... rcumstances of the case and in law, the Hon'ble Dispute Resolutions Panel ('DRP') erred in directing and the Assistant Commissioner of Income-tax, Range-l(2)(2), Mumbai, ('AO') / the Deputy Commissioner of Incometax, Transfer Pricing Officer- 1(2)(1), Mumbai ('TPO') erred in making an adjustment of Rs. 2,95,54,1707- on account of write off of bridge fees and Rs. 6,65,15,9407- on account of service fees for purchase of merchandise, under Chapter X of the Income-tax Act, 1961 ('Act'). 2. On the facts and in the circumstances of the case and in law, the Hon'ble DRP erred in directing and the learned AO 7 TPO erred in treating the accounting entry of write off of advances as a separate international tra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee in this ground is against the order DRP upholding the order of the TPO determining the arm length price of the international transactions without following any of the prescribed method as prescribed under section 92C of the Act. 4. The Ld. A.R. took us through the order of TPO at page No.3, para 6.1.4 wherein the Ld. A.R. submitted that ALP of the international transactions of writing off bridge fees amounting to Rs. 3,32,54,170/- was taken as nil and accordingly an adjustment of the same amount was proposed to be made in the aggregate value of international transactions reported by the assessee without following any prescribed method. The Ld. A.R. also took us through para No.6.2.4 of TPO's order wherein the ALP of the inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore same may kindly be quashed. 6. The Ld. D.R., on the other hand, submitted that tough it is not mentioned in the TPO's order as to which method was followed for ascertaining the ALP of the international transactions but apparently an incidental cup method has been followed by the TPO. The Ld. D.R. submitted that the case laws relied on by the assessee are not applicable as in all these cases the disallowances were made on adhoc basis whereas in the present case the facts are different. The Ld. D.R. relied on the order of DRP and TPO/AO and prayed that the same may kindly be affirmed. 7. We have heard the rival submissions of both the parties and perused the material on record. The only dispute raised before us that TPO has not followed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tax Rules. However, the aforesaid exercise of determining the ALP in respect of the royalty payable for technical know how has not been carried out as required under the Act. Further, as held by the CIT(A) and upheld by the impugned order of the Tribunal, the TPO has given no reasons justifying the technical know how royalty paid by the Assessing Officer to its Associated Enterprise being restricted to 1% instead of 2%, as claimed by the respondent assessee. This determination of ALP of technical know how royalty by the TPO was ad-hoc and arbitrary as held by the CIT(A) and the Tribunal, (e) In the above view, the question as proposed does not give rise to any substantial question of law. Thus, not entertained." Similarly, in the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s appeal. However, we make it clear that issues of law which has been raised in the present appeal are left for consideration in an appropriate case. 12. In view of the above, the questions as formulated in the peculiar facts and circumstances of the case, would make the entire exercise academic. Therefore, the questions as proposed do not give rise to any substantial question of law. Thus, not entertained. The appeal is dismissed. No order as to costs." 8. In both the decisions, the Hon'ble Bombay High Court has held that it is obligatory on the TPO to follow one of the method as mandated by provisions of section 92C of the Act and therefore we are inclined to set aside the order of DRP/TPO and direct the AO to delete the additions.Th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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