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TMI Blog2020 (3) TMI 1191X X X X Extracts X X X X X X X X Extracts X X X X ..... umstances of the case and in law, the learned TPO / AO erred and the Hon'ble DRP further erred in not accepting the computation of arm's length price carried out by the Appellant which was in accordance with the Transactional Net Margin Method prescribed under Section 92C(J) of the Income-tax Act, 1961 ('the Act') read with Rule 10B(l)(e) of Income-tax Rules,1962 ('the Rules'). 1.3. On the facts and circumstances of the case and in law, the learned TPO acted beyond his jurisdiction and contrary to the express provisions of law while determining the arm's length price in respect of Technical knowhow fees to be 'NIL'. 1.4. On the facts and circumstances of the case and in law, the learned TPO / AO and Hon'ble DRP have overlooked the relevant material, information and evidence in support of payment of Technical know-how fees and instead based their conclusion on such material and evidence which is either factually incorrect or irrelevant rendering their order to be perverse, illegal and bad in law. The Appellant prays that the said international transaction be considered to be at arm's length. With regard to Ground 2 to 4, while ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y assessee to its AE. At the outset of hearing, the Ld.AR of the assessee submits that this ground of appeal is also covered in favour of assessee and against the revenue by the order of Tribunal in assessee's own case for AY 2013-14 in ITA No.6318/Mum/2017 dated 27-09-2019. The Ld.AR of the assessee, further invited our attention to para 5.3 of direction of DRP wherein the order of TPO was affirmed by Ld.DRP by following its order for AY 2013-14 dated 25-04-2017. The Ld.AR of the assessee further submits that the TPO while making benchmarking of international transactions related with payment of technical assistance fees to its associated enterprises (AE) has not followed the method for benchmarking the arm's length price (ALP) as prescribed under section (u/s) 92C read with Rules 10B. Similar method was adopted by AO for assessment year 2013-14 which was affirmed by DRP for the year under consideration, the DRP followed the order for 2013-14 which has been set aside by Tribunal. Therefore, the issue raised by assessee is squarely covered in favour of the assessee by the order of Tribunal. 6. The Ld.AR for the assessee further submits that the contention of Ld. DR to restore the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The assessee, vide its reply dated 20-06-2017, furnished detailed reply. In the reply, the assessee stated that they have entered into technology licence agreement with its AE in UAE wherein AE granted exclusive right to use technical information in India. The services provided by its AE under the agreement, the assessee was required to pay a technical know-how fees at the rate equal to 2% of gross export revenue. The assessee also furnished the details of gross export revenue and the working of payment for technical knowhow fees. The assessee further stated that it has utilised advance management technique technology know-how received from its AE in its day today business. This technique / know how enabled assessee to render a comprehensive package delivery services to its customer in more convenient and finished manner, which constitutes of data line system of real time tracking of segments to enable feasibility to the customers on the movement of goods and provide delivery confirmation for the shipments. This technology not only arms assessee track shipment, but also allows allied function such as regarding shipment liable details and revenue in various billing and trade receiva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payment is in the nature of a profit distribution though done under the head of technical knowhow. It is a definite concern expressed in OECD guidelines as well that the transactions between associated enterprises can be arranged in such a manner that do not reflect the substance of the transaction; and in the instance case, the same is a clear example. The amount passed on to the AE does not satisfy the benefit test and hence, the of the same is treated to be zero." 11. Though assessee filed objection before DRP, the upheld the action of TPO by relying on the order of their predecessor for assessment year 2013-14. 12. We have noted that in appeal for AY 2013-14, on similar set of facts for similar payment of technical assistance fees to its AE, similar treatment was met out by AO, and on objection before DRP it was upheld. On further appeal the Tribunal, after considering the similar submission, passed the following order:- "6.1. We find that the Id. TPO having not determined the ALP in conformity with the statutory provision and in the process having failed to demonstrate that ALP shown by the assessee is incorrect, the contentions of the Id. DR to restore the issue to the f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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