Tribunal grants partial relief to assessee on transfer pricing, disallows Revenue's appeal on depreciation.

Anheuser Busch In Bev India Ltd., (Earlier known as SAB Miller India Ltd.) Versus Asstt. Commissioner of Income Tax, Circle–11 (1) (2), Mumbai And Vice Versa

Anheuser Busch In Bev India Ltd., (Earlier known as SAB Miller India Ltd.) Versus Asstt. Commissioner of Income Tax, Circle–11 (1) (2), Mumbai And Vice ... Issues Involved:
1. Transfer Pricing Adjustment on Payment of Management Fee to Associated Enterprise (AE).
2. Disallowance under Section 40(a)(ia) for Sales Scheme Expenditure.
3. Disallowance of Commission Paid.
4. Short Grant of TDS Credit.
5. Disallowance under Section 40(a)(ia) for Depreciation on Foster’s Brand.
6. Disallowance of Tax Deducted on Interest Expenditure Incurred in Foreign Currency.

Detailed Analysis:

1. Transfer Pricing Adjustment on Payment of Management Fee to Associated Enterprise (AE)
The core issue involved the addition of Rs. 26,22,23,865 due to transfer pricing adjustment on the payment of management fees to AE. The assessee, engaged in brewing and selling beer, had entered into a General Service Agreement (GSA) with SABMiller Management (IN) B.V. for various business services. The Transfer Pricing Officer (TPO) questioned the arm's length nature of these payments, demanding proof of the benefits derived and the cost base. Despite the assessee providing extensive documentation, the TPO determined the arm's length price as nil. The tribunal noted that the TPO did not follow any prescribed methods under Section 92C r/w Rule 10B and failed to conduct an independent benchmarking. Citing precedents, the tribunal held that the adjustment made by the TPO was contrary to statutory provisions and deleted the addition.

2. Disallowance under Section 40(a)(ia) for Sales Scheme Expenditure
The assessee challenged the disallowance of Rs. 34,81,60,500 under Section 40(a)(ia), arguing that the discount offered to distributors was not commission and thus not subject to TDS under Section 194H. The tribunal noted that similar issues in the assessee's previous years had been remanded for fresh adjudication. Given that the Assessing Officer (AO) had allowed similar claims in the past, the tribunal restored the issue to the AO for fresh adjudication, emphasizing that there should be no difficulty in allowing the claim if similar facts were established.

3. Disallowance of Commission Paid
The issue involved the disallowance of Rs. 2,30,66,201 on the grounds that the assessee did not deduct TDS on accrued commission. The assessee contended that TDS was deducted and deposited in subsequent years upon receipt of invoices. The tribunal restored the issue to the AO for verification of the assessee's claim and directed a fresh adjudication.

4. Short Grant of TDS Credit
The assessee raised the issue of short grant of TDS credit amounting to Rs. 33,558. The tribunal directed the AO to verify the TDS as per Form 26AS and grant the appropriate credit in accordance with the law.

5. Disallowance under Section 40(a)(ia) for Depreciation on Foster’s Brand
The Revenue challenged the deletion of disallowance of Rs. 12,13,48,125 under Section 40(a)(ia) related to depreciation on Foster’s Brand. The tribunal noted that similar disallowances in previous years had been deleted by the tribunal. Upholding the DRP's decision, the tribunal dismissed the Revenue's ground, maintaining consistency with earlier rulings.

6. Disallowance of Tax Deducted on Interest Expenditure Incurred in Foreign Currency
The Revenue contested the deletion of disallowance of Rs. 78,03,184 related to tax deducted on interest expenditure. The tribunal observed that the borrowing arrangement with Standard Chartered Bank was on a net-of-tax basis, and the tax liability was borne by the assessee. The tribunal found no infirmity in the DRP's directions and dismissed the Revenue's ground.

Conclusion:
- The assessee's appeal was partly allowed, with significant relief granted on the transfer pricing adjustment and other disallowances.
- The Revenue's appeal was dismissed, affirming the DRP's decisions on the disallowance of depreciation and interest expenditure.

Order Pronounced:
The order was pronounced in the open Court on 18.02.2020.