Honda Motorcycle and Scooter India Pvt. Ltd. Vs ACIT (ITAT Delhi)
The assessee appealed against the assessment order passed under Section 143(3) pursuant to the directions of the Dispute Resolution Panel (DRP) for AY 2017-18, challenging several transfer pricing and corporate tax adjustments, including adjustments relating to export commission, model fee, royalty, signage expenditure, sales tools expenditure, Section 80G deduction, Section 80JJAA deduction, technical know-how expenditure, gratuity, and education cess.
On the transfer pricing adjustment relating to export commission, the assessee submitted that commission paid to its parent entity under the Export Agreement for access to overseas markets was intrinsically linked to its manufacturing and export business and therefore could not be benchmarked separately. The assessee contended that the TPO had wrongly rejected the combined transaction approach under TNMM, adopted the CUP method, and determined the arm’s length price (ALP) at Nil. It was also argued that the issue had already been decided in the assessee’s favour in earlier assessment years. The Tribunal found that the issue was fully covered by its own decisions in the assessee’s earlier years. Following those precedents, it held that the export commission adjustment was unsustainable and directed the TPO/AO to delete the transfer pricing adjustment.
