Tribunal corrects errors in tax assessment, favors assessee in rectification application

The Tribunal allowed the assessee's misc. application seeking rectification in the order dated 17th February 2021 for ITA no.2214/Mum./2014, for the assessment year 2009-10. The Tribunal rectified errors related to transfer pricing adjustments on payment of service fees to Cadbury Holding Limited and corporate tax adjustments under section 80-IC of the Act. The Tribunal adopted findings from previous decisions, rectified mistakes, and pronounced the corrected order on 31.08.2021 in favor of the assessee.

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Issues:
1. Rectification sought in the order dated 17th February 2021 for ITA no.2214/Mum./2014, for the assessment year 2009-10.
2. Transfer pricing adjustment on payment of service fees to Cadbury Holding Limited.
3. Corporate tax adjustment due to alleged excess deduction under section 80-IC of the Act.

Issue 1: Rectification sought in the order dated 17th February 2021
The assessee filed a misc. application seeking rectification in the order dated 17th February 2021 for ITA no.2214/Mum./2014, for the assessment year 2009-10. The prayers included adopting findings for Ground no.11 and 13 similar to Ground no.8 to 10 and rectifying the error of remanding the matter back to the Assessing Officer for verification of "other overheads" under section 80-IC of the Act. The Tribunal found the mistake apparent on the record and proceeded to rectify the errors as requested by the assessee.

Issue 2: Transfer pricing adjustment on payment of service fees to Cadbury Holding Limited
Regarding the transfer pricing adjustment on payment of service fees to Cadbury Holding Limited, the Tribunal noted that the facts and issues in relation to services availed from Cadbury Schweppes Asia Pacific Pte Limited (CSAPL) and Cadbury Holding Limited (CHL) were similar. The Tribunal had allowed the payment of service fees to CSAPL in a previous order for AY 2009-10, stating that the TPO's method for making adjustments was not prescribed under the Act. As both transactions were benchmarked using TNMM, the Tribunal decided to apply the findings for CSAPL to CHL as well. The Tribunal rectified the mistake and allowed Grounds no.11 to 13 based on the consistent view taken in the earlier decision.

Issue 3: Corporate tax adjustment under section 80-IC of the Act
In the case of alleged excess deduction under section 80-IC of the Act, the Tribunal considered the reduction of the deduction in respect of the assessee's unit at Baddi, Himachal Pradesh. The AO had reduced the deduction by altering the allocation of certain items to the unit, which was similar to a reduction made in a previous year. The Tribunal had remitted the matter for verification of "other overheads" in the earlier year. The assessee argued that in the current year, all operational and establishment expenses were uniformly allocated, and there was no separate category of "other overheads" requiring verification. The Tribunal agreed with the assessee's submission and allowed Ground 28 for statistical purposes, noting that if no other overhead allocation was found, the issue would be decided in favor of the assessee.

In conclusion, the Tribunal allowed the misc. application, made necessary corrections in the order, and pronounced the order in the open court on 31.08.2021.

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