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TMI Blog2019 (7) TMI 312X X X X Extracts X X X X X X X X Extracts X X X X ..... ical data, to merely conclude that the payment of higher royalty was not justified only because it did not result in any tangible benefit to the Assessee was not be the right approach. With the DRP having accepted the change in the average royalty percentage payment in the travel industry for the following AY at 5.6%, the direction issued by the ITAT to the TPO to adopt the same percentage for the AY in question does not appear to be unreasonable or give rise to any substantial question of law. - ITA 760/2018 - - - Dated:- 3-7-2019 - S. MURALIDHAR AND TALWANT SINGH JJ. Appellant Through: Mr. Zoheb Hossain, Senior Standing Counsel for Revenue. Respondent Through: Mr. Rhishabh Jetley and Mr. Shubham Jain, Advocate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hod for determining the ALP. According to Assessee, payments of royalty up to 8% of exports and 5% of domestic sales under the Automatic Route in terms of press note No. 2 dated 24.06.2003 was permissible and therefore the royalty payments made by the Assessee to its AE @ 6% during the AY in question was at ALP. 7. The TPO did not accept the explanation offered by the Assessee on the ground that when compared to the earlier AYs, the Net Profit Ratio of the Assessee had in fact dropped during AY in question. Therefore, the higher payment of royalty by the Assessee to its AE was not justified. In particular, according to the TPO, the payment of such higher royalty did not result in any benefit to the Assessee whatsoever. The TPO no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... give an indication as to the trend in the royalty payment. That could give reasonable indication whether the payment of royalty by the Assessee to its AE for the AY in question was unreasonable. In the absence of such empirical data, to merely conclude that the payment of higher royalty was not justified only because it did not result in any tangible benefit to the Assessee was not be the right approach. With the DRP having accepted the change in the average royalty percentage payment in the travel industry for the following AY at 5.6%, the direction issued by the ITAT to the TPO to adopt the same percentage for the AY in question does not appear to be unreasonable or give rise to any substantial question of law. 10. The appeal is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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