The Bangalore bench of the Income Tax Appellate Tribunal (ITAT) granted relief to Toyota Kirloskar Motor on transfer pricing adjustment for royalty payments. However, the appellate body dismissed Toyota Kirloskar’s appeal against the payment of dividend distribution tax (DDT) using the India-Japan Double Taxation Avoidance Agreement (DTAA).
The ITAT approved the company’s royalty payment of ₹646 crore at 6% of local value addition and rejected the transfer pricing officer’s estimate of ₹437 crore at 2.62% of net sales. Additionally, it upheld Toyota Kirloskar’s method of combining all its international transactions to determine the arm’s length price for the royalty payment.
Read more at: NewsClick Shifts Legal Battle from Supreme Court to ITAT in Income Tax Case