Assessee wins appeal on Club fees, discounts to distributors reexamined, expenses allowed.

The Tribunal allowed the assessee's appeal in the case, directing the Assessing Officer to allow the claim related to Club membership fees based on precedents establishing the revenue nature of such fees. The issue of disallowance under section 40(a)(ia) concerning discounts to distributors was set aside for re-examination to determine the nature of the relationship. Additionally, the disallowance of depreciation on payment to Foster's Australia and software charges was overturned, emphasizing statutory deductions and specific provisions. The Tribunal also instructed a fresh examination of interest disallowance and transfer pricing adjustments for a fair reassessment.

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Issues Involved:
1. Addition relating to the claim of Club membership fee.
2. Disallowance u/s 40(a)(ia) in respect of discount given to distributors.
3. Disallowance u/s 40(a)(i) r.w.s. 195 and 200 in respect of depreciation on payment to Foster's Australia.
4. Disallowance u/s 40(a)(i) of software charges for non-deduction of tax at source.
5. Disallowance of interest on advances given to group entities u/s 36(1)(iii).
6. Transfer pricing adjustment in respect of royalty payment to Associated Enterprises (AE).

Detailed Analysis:

1. Addition Relating to the Claim of Club Membership Fee:
The assessee contested the addition of Rs. 15,72,053/- related to the claim of Club membership fee, which included entrance fees and subscriptions paid for acquiring membership in clubs. The A.O. disallowed the amount, considering it a capital expense, relying on decisions from the Hon'ble Bombay High Court. The DRP confirmed this view. However, the Tribunal noted that a similar issue was decided in favor of the assessee in the case of Skol Breweries Ltd., where it was held that the rule of consistency should be followed as the facts were identical to previous years where the claim was allowed. Additionally, the Hon'ble Delhi High Court in CIT Vs. Samtel Color Ltd held that admission fees paid to clubs are revenue in nature. Therefore, the Tribunal directed the AO to allow the claim.

2. Disallowance u/s 40(a)(ia) in Respect of Discount Given to Distributors:
The A.O. disallowed Rs. 24,52,65,057/- for non-deduction of tax at source on "Sale Price Discounts" given to distributors, treating it as a commission expense under section 194H. The DRP upheld this view, considering the relationship between the assessee and distributors as 'Principal to Agent.' However, the Tribunal referred to its earlier decision in Skol Breweries Ltd., where it was held that the relationship was on a principal-to-principal basis. The Tribunal set aside the issue to the A.O. for re-examination, directing the A.O. to consider the decision of the Hon'ble Bombay High Court in CIT Vs. Intervet India Pvt Ltd, where it was held that sale promotion benefits availed by dealers are not commission payments.

3. Disallowance u/s 40(a)(i) r.w.s. 195 and 200 in Respect of Depreciation on Payment to Foster's Australia:
The A.O. disallowed the depreciation claim of Rs. 28,76,40,000/- on the payment made to Foster's Australia for the purchase of "Foster's Brand" and related intellectual property, due to non-deduction of tax at source. The DRP upheld this disallowance. The Tribunal, referring to its decision in Skol Breweries Ltd., held that depreciation is a statutory deduction on an asset and not an outgoing expenditure, thus not attracting the provisions of sec. 40(a)(i). The Tribunal directed the A.O. to delete the disallowance.

4. Disallowance u/s 40(a)(i) of Software Charges for Non-Deduction of Tax at Source:
The A.O. disallowed Rs. 33,60,435/- paid to SABMiller A & A (Pty) Ltd. for software-related expenses, treating it as royalty under sec. 9(1)(vi). The DRP upheld the A.O.'s view. The Tribunal noted that in the assessee's own case, it was held that the expenditure falls under Explanation 4 to sec. 9(1)(vi) and not Explanation 2, thus not attracting sec. 40(a)(i). The Tribunal directed the A.O. to delete the disallowance, agreeing with the assessee's contention regarding the applicability of amendments by the Finance Act, 2012.

5. Disallowance of Interest on Advances Given to Group Entities u/s 36(1)(iii):
The A.O. disallowed Rs. 36,56,856/- for interest on advances given to group entities at a lower interest rate than the borrowing rate. The DRP upheld this view. The Tribunal, consistent with its earlier decision in Skol Breweries Ltd., restored the issue to the A.O. for fresh examination, directing the A.O. to verify whether the advances were given out of own funds or borrowed funds.

6. Transfer Pricing Adjustment in Respect of Royalty Payment to Associated Enterprises (AE):
The assessee sought to undertake a fresh Transfer Pricing study following Tribunal directions for AY 2007-08. The Tribunal set aside the order of the A.O. and directed a fresh examination by making a reference to the TPO, considering the fresh set of comparables furnished by the assessee.

Conclusion:
The appeal filed by the assessee was treated as allowed for statistical purposes, with various issues being set aside for re-examination or directed for allowance based on precedents and detailed analysis. The Tribunal provided comprehensive directions to the A.O. to ensure a thorough and fair re-evaluation of the contested issues.

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