Court affirms decisions on tax, disallowance, & royalties; rejects office objection; allows appeal on ALP adjustments.

The Court upheld previous decisions on issues 1, 2, and 3, finding no substantial question of law regarding withholding tax, disallowance calculation, and royalty determination. Issue 4 was rejected due to non-removal of office objection. However, the Court admitted the appeal on issue 5, related to the calculation of adjustments to ALP under section 92C, directing further proceedings to the Tribunal.

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Issues:
1. Interpretation of Section 40(a)(ia) of the Income Tax Act regarding withholding tax on interest payment.
2. Applicability of Rule 8D of Income Tax Rules for disallowance calculation.
3. Determination of whether a payment constitutes Royalty.
4. Consideration of interest income earned on a loan for calculation of ALP margin.
5. Calculation of adjustment to ALP after giving credit of 5% margin u/s 92C.

Issue 1:
The appellant challenged the Tribunal's order regarding the applicability of Section 40(a)(ia) of the Income Tax Act, arguing that tax should have been withheld on interest payments made to HQ/Overseas branches. However, the Court noted that a similar issue had been decided in a previous appeal, and as it did not raise any substantial question of law, it was not entertained.

Issue 2:
The Court determined that Rule 8D of the Income Tax Rules would not apply for the assessment year in question, based on a previous decision. Therefore, the issue of working out the disallowance without following Rule 8D did not give rise to any substantial question of law and was not entertained.

Issue 3:
Regarding the question of whether a payment of a certain amount constituted Royalty, the Court found that this issue had already been decided against the Revenue in a previous case. As it did not raise any substantial question of law, the Court did not entertain this issue.

Issue 4:
The Tribunal had directed the TPO/AO to make adjustments in respect of services performed by the Assessee for a foreign currency loan. The appellant argued against this decision, citing a previous appeal that was rejected due to non-removal of office objection. As the Revenue had accepted the Tribunal's view on this issue in another case, the Court concluded that the proposed question did not raise any substantial question of law.

Issue 5:
The Court admitted the appeal on the substantial question of law related to the calculation of the adjustment to ALP after giving credit of 5% margin u/s 92C. The Registry was directed to communicate the order to the Tribunal for further proceedings.

This comprehensive analysis of the judgment addresses all the issues involved and provides a detailed overview of the Court's decisions on each matter raised in the appeal.

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