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of <h1>Assessee's Appeal Partly Allowed: Transfer Pricing Adjustments Deleted, Interest Upheld, Penalty Dismissed</h1> <h3>McCann Erickson India Pvt. Ltd., Versus Addl. Commissioner of Income Tax Range 6,</h3> McCann Erickson India Pvt. Ltd., Versus Addl. Commissioner of Income Tax Range 6, - TMI Issues Involved:1. Transfer Pricing Adjustments (Management Service Fees and Coordination Costs)2. Disallowance under Section 40(a) and 40(a)(i)3. Levying Interest under Section 234B4. Initiation of Penalty Proceedings under Section 271(1)(c)Detailed Analysis:1. Transfer Pricing Adjustments:The assessee contested the adjustments made by the TPO regarding management service fees and coordination costs, arguing that these services were integral to their advertising business. The DRP acknowledged the provision of services but directed the TPO to verify costs based on the assessee's allocation key, resulting in partial relief. The assessee argued that the TNMM method was the most appropriate for benchmarking all international transactions, as it had been consistently accepted in previous years. The Tribunal agreed, emphasizing that the entity-level benchmarking on TNMM was appropriate given the integrated nature of the assessee's business. The Tribunal found no justification for sustaining any addition and directed to delete the adjustment.2. Disallowance under Section 40(a) and 40(a)(i):The issues related to disallowances under sections 40(a) and 40(a)(i) were restored to the file of the Assessing Officer for a fresh decision. Both parties agreed to this approach.3. Levying Interest under Section 234B:The Tribunal held that charging interest under section 234B is mandatory and has a consequential effect. Therefore, this ground was dismissed.4. Initiation of Penalty Proceedings under Section 271(1)(c):The ground related to the initiation of penalty proceedings under section 271(1)(c) was deemed premature and accordingly dismissed.Conclusion:The appeal of the assessee was partly allowed for statistical purposes, with the Tribunal directing the deletion of transfer pricing adjustments and restoring the disallowance issues to the Assessing Officer for a fresh decision. The levy of interest under section 234B was upheld, and the initiation of penalty proceedings was dismissed as premature.
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