TMI Blog2023 (3) TMI 1023X X X X Extracts X X X X X X X X Extracts X X X X ..... parts of car are different. At least this is what any layman would understand. Revenue has given no technical input as to how the two technologies are the same in the circumstance that they relate to the same project of vehicle manufactured/assembled. It is abundantly clear therefore that the comparable selected by the assessee is the correct comparable being payment of royalty for technology acquired for identical activity as availed by the assessee, while that of the TPO are for totally different activity We uphold the benchmarking done by the assessee by adopting internal CUP and delete the adjustment made to the ALP of royalty transaction - Ground raised by the assessee is allowed. - IT(TP)A No.1294/Ahd/2015 - - - Dated:- 23-11-2022 - SMT.ANNAPURNA GUPTA, ACCOUNTANT MEMBER AND SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER For the Assessee : Shri SN Soparkar, Sr.Advocate and Shri Parin Shah, AR For the Revenue : Shri Alok Kumar, CIT-DR ORDER PER ANNAPURNA GUPTA, ACCOUNTANT MEMBER Present appeal has been filed by the assessee against order passed by the Addl. Commissioner of Income-Tax (Transfer Pricing Officer)-1, Ahmedabad [hereinafter referred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ugned transaction of the appellant. 4.3. The AO/ TPO erred in law and on facts in making adjustment to the royalty transaction without providing corresponding effect for determination of arm's length price of other transaction which have been analysed using Transactional Net Margin Method. 3. Drawing our attention to the chronology of events leading to the present appeal, the ld.counsel for the assessee pointed out that initially , during assessment proceedings ,on a reference made under section 92CA(1) of the Act for the computation of ALP in relation to the international transactions carried out by the assessee, the TPO had dealt with international transaction of royalty paid by the assessee to its AE, GMDAT. The TPO had noted the fact of the royalty having been paid as per the technology licence agreement with GMDAT at the rate of 5%, amounting in all to Rs.12,24,01,259/-. He further noted that the assessee had justified the transaction to be at arm s length, benchmarking it with internal CUP available , being similar agreement of the assessee with third party i.e. Isuzu Motors Ltd., Japan to obtain certain technical information and assistance in relation to manu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that detailed submissions had been made in the first round against comparables selected by the TPO which had not been considered by the ITAT, and therefore, the order of the ITAT was in error in observing that the assessee did not have much to say on the external comparable given by the TPO. The ITAT found merit in the contentions of the assessee and allowed MA filed by the assessee, recalling its order on the issue of adjustment made to the income of the assessee on account of determination of ALP of royalty payment made to GMDAT as raised vide ground no.4 of the appeal. Copies of all the orders of the TPO ,DRP and ITAT referred to were placed before us in a Condensed Paper Book comprising 166 pages. 4. Having stated the background of the present appeal; and having stated the chronology of events as above, the ld.counsel for the assessee pointed out that sole issue to be adjudicated is, whether comparables selected by the assessee for benchmarking ALP of its transaction was correct, as opposed to comparables selected by the TPO. In this regard, he clarified again that the assessee had selected an internal comparable relating to a licence agreement entered into by the very same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore us in PB at Page No.67- 68 as under: 6. We have heard the rival contentions. The solitary issue to be adjudicated is determination of ALP of the international transaction of the royalty paid by the assessee to its AE, GMDAT. The facts of the case are that the assessee had paid royalty at the rate of 5% to GMDAT amounting to Rs.12,24,01,259/- in the impugned year. The assessee has justified and benchmarked this transaction by internal CUP referring to transaction of an independent party i.e. Isuzu carried out with the same entity GMDAT for transfer of technology for assembling of vehicle and agreeing to pay royalty at the rate of 5% of the net selling price. The contention of the assessee being that this internal CUP is completely comparable with the case of the assessee as both the agreement related to royalty being paid for transfer of technology for assembling entire vehicles. The Revenue on the other hand has identified two comparable instances of the royalty payment being Delphi-Zinzhou Namyang-Henglong and held them to be true comparable since they are in relation to transfer of same technology as was agreed to be transferred by GMDAT to the assessee in the ..... 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