ITAT affirms CIT (A) decisions on royalty, corporate charges, deductions. Additional claims allowed.

The ITAT upheld the CIT (A)'s decisions on various issues including royalty, corporate guarantee charges, loan to AE, receivables, deductions under sections 80IB and 80IC, PF, ESI & EPS contributions, and notional expenditure on exempted income. The ITAT also allowed additional claims by the assessee for excise duty refund and stock option scheme expenses, remanding them for adjudication. The appeals were allowed for statistical purposes, emphasizing consistency with previous rulings and judicial discipline.

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Issues Involved:
1. Deletion of additions made by the AO on account of interest on corporate guarantee, royalty, interest on loan advanced, interest on bills receivable, deduction under sections 80IB and 80IC, PF, ESI & EPS contribution, and notional expenditure on exempted income.
2. Reciprocal arrangement and Transfer Pricing Analysis regarding brand royalty and corporate guarantee.
3. Non-admission of additional grounds of appeal by CIT (A) despite remand report.

Detailed Analysis:

1. Royalty (Grounds No. 1 to 5 of assessee's appeal and Ground No. 2 of Revenue's appeal):
The AO noted that the assessee did not receive any royalty from its Associated Enterprises (AEs) during the year, despite historical payments. The AO computed royalty based on sales to the AEs. The CIT (A) referenced ITAT's earlier decisions, directing the AO/TPO to delete or adjust the royalty charges as per the established rates: nil for Dabur Nepal (P) Ltd., 0.75% for Dabur International UAE, and 0.75% for Asian Consumer Care Ltd. The ITAT upheld this approach, emphasizing judicial discipline and consistency with previous rulings.

2. Corporate Guarantee Charges (Grounds No. 6 to 8 of assessee's appeal and Ground No. 1 of Revenue's appeal):
The TPO determined the arm's length price for corporate guarantees at varying rates. The CIT (A) adjusted these rates to 0.50% for all guarantees. The ITAT, following its earlier decisions, directed rates of 0.30% for guarantees to HSBC Bank Egypt SAE, NSGB Bank Egypt, and Royal Bank of Scotland, UAE, aligning with previous years' rulings.

3. Loan to AE (Ground No. 3 of Revenue's appeal):
The TPO adopted an interest rate of 14.88% for a loan to Dermoviva Skin Essentials, USA. The CIT (A) referred to the Hon'ble jurisdictional High Court decision in CIT vs. Cotton Naturals (I) Pvt. Ltd., directing the use of LIBOR for benchmarking. The ITAT upheld the CIT (A)'s decision, emphasizing consistency with the High Court's ruling and previous ITAT decisions.

4. Receivables (Ground No. 4 of Revenue's appeal):
The TPO applied a 14.88% interest rate for receivables from the AE. The CIT (A) noted that the assessee did not charge interest from unrelated parties and had higher net margins than comparables, thus no separate benchmarking was required. The ITAT upheld this approach, agreeing with the CIT (A)'s reasoning.

5. Deduction under Sections 80IB and 80IC (Ground No. 5 of Revenue's appeal):
The AO restricted deductions by reallocating Head Office expenses. The CIT (A) granted relief, noting that similar adjustments were consistently deleted in previous years. The ITAT upheld the CIT (A)'s decision, referencing its earlier rulings.

6. PF, ESI & EPS Contribution (Ground No. 6 of Revenue's appeal):
The CIT (A) deleted the addition for belated payments, referencing ITAT Delhi Benches' decisions that such payments are allowable if made before filing the return. The ITAT upheld this deletion.

7. Notional Expenditure on Exempted Income (Ground No. 7 of Revenue's appeal):
The AO made a disallowance under section 14A read with Rule 8D. The CIT (A) deleted this addition, following ITAT's previous decisions. The ITAT upheld the CIT (A)'s deletion, noting the absence of exempt income.

8. Non-Admission of Additional Grounds (Grounds No. 11 & 12 of assessee's appeal):
The CIT (A) did not admit additional claims for excise duty refund and stock option scheme expenses, citing the need for a revised return. The ITAT admitted these claims and remanded the issues to the AO for adjudication, consistent with its earlier decisions.

Conclusion:
The ITAT upheld the CIT (A)'s decisions on most issues, emphasizing consistency with previous rulings and judicial discipline. The additional claims by the assessee were admitted and remanded for adjudication. The appeals were allowed for statistical purposes.

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