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2018-TII-24-ITAT-BANG-TP

TOYOTA KIRLOSKAR AUTO PARTS PVT LTD Vs DCIT: BANGALORE ITAT (Dated: September 13, 2017)

Income Tax - Sections 92CA, 143(3), 144C, 234 & 254.

Keywords - ALP - AE - Excess 'royalty' - MAM - Short credit of TDS & TNMM.

The Assessee-a domestic company, engaged in the business of manufacturing and sale of automobile parts. The Assessee had filed its return for the relevant AY declaring certain amount as its income. In the course of the assessment proceeding, the AO noted that the Assessee had entered into an international transactions with its AE therefore, the AO made a reference u/s 92CA to the TPO in order to determine ALP. On reference, the TPO, after examining the Assessee's TP study, proposed a TP adjustment with regard to the excess value of royalty paid. Accordingly, the assessment was completed u/s 143(3) r.w.s 144C wherein, the Assessee's income was determined at Rs. 123,37,62,090/- in view of the TP adjustment of Rs. 22,50,30,371/- and thereby, the draft assessment order was passed. Aggrieved Assessee filed its objections before the DRP wherein, the DRP issued its directions u/s 144(5), rejecting the Assessee's objections and accordingly, upheld the TP adjustment made in the draft assessment order. Following the directions issued by the DRP, the AO completed the final order of assessment u/s 143(3) r.w.s 144C determining the Assessee's income which included the TP adjustment on account of excess value of Royalty paid to its AE and also granted short credit of TDS which was lower than what the Assessee had claimed.

On appeal, the Tribunal held that,

Whether TPOs can adopt a diverse yardstick of benchmarking, while dealing with an identical issue of the same assessee for different assessment years - NO: ITAT

+ it is seen that an identical issue to the one under consideration, has been dealt with by a co-ordinate bench of this Tribunal in the Assessee's own case for AY 2007-08 in IT(TP)A No.1356/Bang/2011. The co-ordinate bench in the said order held that "... the TPOs cannot have a diverse yardstick while dealing with an identical issue of the same assessee for different assessment years. Accordingly, the issue is remitted back on the file of the TPO/AO with a direction to adhere to the ratio of the findings of the earlier Bench of this Tribunal and also directions contained in DRP's order..." thereofre, the issue was remitted back to the file of AO/TPO for determining the ALP of royalty payments by the Assessee to its AE;

+ the said finding rendered by the co-ordinate bench in its order for AY 2007-08 has been followed by other co-ordinate benches of this Tribunal in the Assessee's own case for AY's 2008-09, 2009-10 and 2010-11. In fact, on this very issue, the co-ordinate bench in its order in the Assessee's own case for AY 2010-11 in IT(TP)A Nos.298 & 554/Bang/2015, has followed the decision of the co-ordinate bench for AY 2007-08. Following the decisions of the co-ordinate bench of this Tribunal for AY's 2007-08 and 2010-11 in the Assessee's own case, we remit the issue of determination of the ALP of royalty payments by the Assessee to its AE in the year under consideration, by adopting TNMM as the MAM, to the file of the AO/TPO with the direction to adhere to the ratio of the findings rendered by the co-ordinate benches for AY 2007-08 and 2010-11. While doing so, the TPO shall keep in view and follow the order of the TPO passed u/s 254 r.w.s 92CA dated 22/3/2016 for AY 2007-08;

+ the Assessee contends that the AO has erred in granting short credit of TDS amounting to Rs.2,11,863/- (Viz. granting TDS credit amounting to Rs.7,77,39,30 5/- as against Rs.7,79,51,168/- claimed by the Assessee). This issue is remitted back to the file of the AO for examination and verification of the Assessee's claim of grant of short credit of TDS to the extent of Rs.2,11,863/- in accordance with law, after affording the Assessee opportunity of being heard.

Case Remanded