TMI Blog2023 (11) TMI 496X X X X Extracts X X X X X X X X Extracts X X X X ..... given thoughtful consideration to the facts and submissions, and at the very outset has no hesitation to not sustain the submission of Ld. DR about adopting comparables as per law as the order indicate that instead of making analysis on the parameters merely following judicial precedent in the case of Federal Mogul [ 2012 (7) TMI 971 - DELHI HIGH COURT] and Climate Systems India Ltd. case [ 2009 (10) TMI 116 - DELHI HIGH COURT] the 3% royalty has been adopted. As decided in [ 2023 (7) TMI 1318 - ITAT DELHI] for A.Y. 2012-13 has observed as follows arbitrary selection of royalty rate of 3% by the Id. DRP is without brining any correct comparables on record. With regard to payment of FTS in A.Y. 2012-13, the Id. DRP agreed that the TPO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... international transactions with its Associated Enterprises (AE):- S. No. Nature of Transaction Value (in Rs.) Method Applied 1 Import Raw Materials, spares consumables 29,24,75,200 TNMM 2 Export-Finished Goods 6,64,97,974 TNMM 3 Purchase of Plant Machinery 58,78,746 TNMM 4 Royalties 5,37,08,967 TNMM 5 Fees for technical Services (Paid) 6,90,94,370 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the applicability of CUP Method instead of TNMM and applying 3% royalty rate, without undertaking any economic analysis and without explaining the manner of determining ALP of impugned transactions. 5. The DRP on the basis of its findings for A.Y. 2012-13 and 2013-14 directed to adhoc royalty rate of 3% for bench marking of the payment of royalty. It was also observed as far as the payment of technical services is concerned the TPO/ AO has not applied CUP correctly in terms of the directions of the Tribunal and has not searched the comparables for the purpose of bench marking and merely stated that payment of technical fee is not justified as the AE is charging itself. 6. Thereon, following its order for A.Y. 2012-13 the panel direct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tiating the penalty proceedings u/s 270A. 4. The appellant craves add, amend, alter or vary the above ground of appeal at or before the time of hearing. 8. Heard and perused the record. 9. Ld. AR relying the order of co-ordinate Bench in ITA no. 4062/Del/2019 for A.Y. 2012-13 submitted that the issue of methodology to be adopted and arbitrary selection of royalty rate of 3% without bringing any correct comparables has been considered and Coordinate bench has set aside the adjustments. 9.1 Ld. DR however submitted that in the present assessment year the case of comparable in form of Federal Mogul and Climate Systems India Ltd. have been considered to apply the rates therefore the facts are different. 10. The Bench has give ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is the MAM. The Id. DRP has determined royalty payment @ 3% instead of 8% considered by the assessee, taking into consideration, the royalty payment of Federal Mogul TPR India Ltd., Climate Systems India Ltd. and Eicher Motors Ltd. The moot argument of the Id. AR was that the FAR of these companies is different. 13. Having gone through the entire facts and circumstances of the case, we find that the arbitrary selection of royalty rate of 3% by the Id. DRP is without brining any correct comparables on record. With regard to payment of FTS in A.Y. 2012-13, the Id. DRP agreed that the TPO failed to apply CUP correctly and is determination of ALP at Nil is incorrect. The Hon'ble High Court of Delhi in Magneti Marelli held that if segr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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