ITAT remands trademark charges & subvention treatment back to TPO for fresh verification. Appeal allowed for statistical purposes.

The ITAT remanded the issues concerning trademark charges and the treatment of subvention money back to the TPO for fresh verification based on new evidence presented. The appellant's appeal was allowed for statistical purposes, emphasizing the importance of a thorough review of the matters in question.

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Issues involved:
1. Challenge to final assessment order on Arm's Length Price (ALP) for trademark charges.
2. Adequate opportunity of being heard before passing transfer pricing order.
3. Treatment of subvention money as income.

Issue 1: Challenge to final assessment order on ALP for trademark charges
The appellant contested the final assessment order by the TPO/DCIT concerning the determination of ALP at Nil for trademark charges. The appellant argued that the cost allocation for trademark license fees to its AE was in line with the Group pricing policy, providing tangible benefits in terms of services income and customer base. However, the TPO found the appellant's evidence lacking and set the ALP at Nil due to insufficient documentation. The DRP upheld this decision, noting the absence of a formal request to admit additional evidence supporting the trademark charges. Before the ITAT, the appellant presented the agreement and invoices supporting the trademark fees, which were not before the TPO during the initial assessment. Consequently, the ITAT remanded the issue to the TPO for fresh verification based on the new evidence presented.

Issue 2: Adequate opportunity of being heard before passing transfer pricing order
The appellant raised concerns about the TPO not providing sufficient opportunity to be heard before finalizing the transfer pricing order. The DRP confirmed that although the appellant submitted additional documents post the TPO's order, they did not formally request their admission as evidence. As a result, the DRP did not consider these documents, leading to the affirmation of the TPO's decision. However, before the ITAT, the appellant successfully demonstrated that crucial evidence supporting the trademark charges was not available to the TPO during the initial assessment. Consequently, the ITAT remanded the issue to the TPO for a fresh examination based on the new evidence.

Issue 3: Treatment of subvention money as income
The appellant, for the first time before the ITAT, raised the issue of treating subvention money as income based on a legal ground citing a Supreme Court decision. The appellant had historically treated the subvention money as income, but the Supreme Court ruling indicated otherwise. Since this issue was not presented before the TPO, the ITAT decided to remand it to the TPO for verification in line with the Supreme Court's directive. The appellant was granted the liberty to provide additional evidence to support their claim regarding the treatment of subvention money. Consequently, the ITAT allowed this ground for statistical purposes.

In conclusion, the ITAT remanded the issues related to trademark charges and subvention money back to the TPO for fresh verification based on new evidence presented before the tribunal. The appellant's appeal was allowed for statistical purposes, highlighting the need for a comprehensive review of the issues at hand.

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