DCIT Vs Toyota Kirloskar Motor Pvt Ltd (ITAT Bangalore)
ITAT Bangalore held that no separate benchmarking of royalty payment required when the margin is accepted to be at arms length price (ALP) by the TPO. Thus, appeal of the revenue dismissed.
Facts- The assessee is a subsidiary of Toyota Motor Corporation, a company incorporated under the laws of Japan. The assessee filed their return of income on 29/09/2008 declaring a total income of Rs. 365,08,48,458/-. Thereafter, the return was processed u/s. 143(1) of the Act. Later on a reference u/s. 92CA of the act was made to the TPO. TPO, insofar as the royalty payment is concerned, had concluded that the assessee had not demonstrated any economic benefit and therefore he computed the arms length price at Nil. Finally, he has treated the royalty payment of Rs. 97,82,11,238/- as transfer pricing adjustment.
The only dispute arises in the appeal is whether the royalty can be separately benchmarked when the margin was accepted by the TPO to be at arms length price.
Conclusion- On similar facts and circumstances, in the assessee’s own case, in respect of the A.Y. 2018-19 in IT(TP)A No. 863/Bang/2023 dated 22/01/2024, the Tribunal had followed the earlier order of the Tribunal for the A.Ys. 2015-16 & 2016-17 dated 21/12/2023 wherein the Tribunal had held that no separate benchmarking of royalty payment is required.
