Delhi ITAT order In LG Electronics Ltd., that, ALP determined on Transaction-by-Transaction Basis (ITA No. 5140/Del/2011) (Transfer Pricing Case)

World Tax January 08, 2021

Income Tax Appellate Tribunal, New Delhi Benches, New Delhi

Case Details

Appeal Number - ITA 5140 / DEL / 2011

Filed On – 17/11/2011

Assessment Year - 2007-08

Case Status – In favour of Revenue

Date of Tribunal Order - 08-12-2014

Appellant - LG Electronics India Pvt. Ltd. Uttar Pradesh

Respondent – ACIT - Noida

- Where international transaction of royalty payment was a separate transaction and not closely linked with other transactions including import of raw materials, import of services spare, export of finished goods, export of services spare, commission, design & development fee, and import of production equipment etc. with which assessee had merged it, such merger could not be allowed for the purpose of determination of its ALP in entity-level under TNMM rate of royalty approved by RBI cannot be binding as it has a persuasive value in process of determination of ALP of royalty for a particular case and cannot be considered as conclusive. Assessee can ask for inclusion of new companies list of comparable for the first time before DRP provided such companies conform to comparability criterion. Where international transactions were for payment of royalty under a perpetual agreement and comparable uncontrolled transactions had fixed-term agreements commanding uncontrolled transactions had to be adjusted so to bring it at par with the international transaction under consideration. Where a transaction of royalty could not be considered as closely linked with other international transactions as clubbed by assessee, APL of royalty payment was required to be determined separately, justifying departure from contrary view taken in preceding year. In absence of any positive and speaking evidence of having availed services from its AEs and deduction for commission was rightly disallowed.