TaxTMI 
TaxTMI 
2020 (6) TMI 42
X X X X Extracts X X X X
X X X X Extracts X X X X
.... manufacturing and sale of ready to eat cereals. During the period relevant to assessment year under appeal, the assessee had entered into international transaction with its AEs. Reference under section 92CA(1) of the Act was made to TPO for computation of Arm's Length Price(ALP) in relation to the international transactions entered into by the assessee. The TPO vide order dated 30/01/2015 made adjustment of Rs. 34.58 crores in respect of brand promotion and marketing expenditure. Apart from above transfer pricing adjustment, the Assessing Officer inter-alia made additions by reclassification of interest income and recomputation of depreciation under section 32 of the Act. Aggrieved against the draft assessment order dated 27/03/2015, the assessee filed objections before the DRP. The DRP vide directions dated 28/12/2015 partly accepted the objections raised by the assessee. The Assessing Officer vide impugned order dated 29/01/2016 gave effect to the direction of the DRP. Against the said assessment order both, the assessee and the Revenue are in appeal before the Tribunal. 4. Shri Hirali Desai appearing on behalf of the assessee submitted at the outset that he is not pre....
X X X X Extracts X X X X
X X X X Extracts X X X X
....egarding reclassification of interest income has been considered by the Tribunal in earlier assessment years in assessee's own case. The issue has been restored back to the file of Assessing Officer for re-examination. 7. We have heard the submissions made by rival sides and have perused the order of authorities below. The assessee in appeal has raised four grounds. The ld. Authorized Representative for the assessee has stated at the Bar that he is not pressing ground No.1 of the appeal. Thus, in view of the statement made by ld. Authorized Representative for the assessee, ground No.1 of the appeal relating to manner of recomputation of depreciation under section 32 of the Act is dismissed as not pressed. 8. The ground No.2 of the appeal is against reclassification of interest income. The assessee has earned interest income of Rs. 74,61,945/- and has offered the same to tax under the head 'Business Income'. The Assessing Officer has held that the interest income earned by the assessee is to be assessed under the head 'Income from Other Sources'. We find that in assessee's own case this issue has travelled to the Tribunal in earlier assessment years i.e. assessment year 200....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he ground No.1 of the appeal is against directions of DRP in deleting TP adjustment on account of advertising, marketing and sales promotion expenditure to the tune of Rs. 17,68,29,302/-. The ld.Authorized Representative of the assessee submitted that the issue raised in the appeal by the Revenue is squarely covered by the decision of Tribunal in assessee's own case in ITA No.2866/Mum/2014 for assessment year 2009-10 decided on 19/07/2019, wherein the entire adjustment has been deleted on the ground that there is no agreement or arrangement for incurring AMP expenditure. The ld.Authorized Representative for the assessee asserted that the facts in the assessment year under appeal are identical. 12.1 In respect of ground No.2 of the appeal by Revenue, the ld.Authorized Representative of the assessee submitted that Revenue has assailed order of DRP in deleting the disallowance of royalty expenditure amounting to Rs. 2,63,71,271/-. The ld.Authorized Representative of the assessee pointed that this issue was also subject matter of appeal before the Tribunal in ITA No.431/Mum/2011 for assessment year 2007-08. The facts in the assessment year under appeal are identical. The Tribunal de....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nsaction as defined under section 92B of the Act. In this regard, the contention of the assessee before the Transfer Pricing Officer was, since the assessee has incurred the AMP expenditure for products manufactured and sold by it in India, it does not come within the purview of international transaction. Further, the assessee has also submitted that since there is no arrangement/agreement between the assessee and the AE for incurring such expenditure to promote the brand of the AE, it cannot be said that there is an international transaction relating to AMP expenditure. It is worth mentioning, the Transfer Pricing Officer has also agreed with the assessee that the AMP expenditure was incurred with the third parties in India, hence, do not constitute international transaction. Having held so, the Transfer Pricing Officer has still proceeded to determine the arm's length price of the AMP expenditure on the reasoning that the compensation required in the arrangement between the assessee and the AE for improving the brand intangible of the owner has to be determined. Further, he has observed that the AMP expenditure incurred by the assessee not only benefits the assessee ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the product manufactured by the assessee, does not come within the purview of international transaction. 8. At this stage, it is relevant to observe, while deciding identical nature of dispute in assessee's own case for the assessment year 2011-12, learned DRP in direction dated 28 th December 2015, have deleted the adjustment made by the Transfer Pricing Officer on account of AMP expenditure by recording a factual finding that the Transfer Pricing Officer has failed to demonstrate that there is an agreement/arrangement between the assessee and the AE for incurring AMP expenditure. While doing so, learned DRP has relied upon the decision of the Hon'ble Delhi High Court in Maruti Suzuki India Ltd. (supra). Thus, viewed in the light of the ratio laid down in the decisions cited by the learned Authorised Representative, including the decision of the Hon'ble Delhi High Court in Martuti Suzuki India Ltd. (supra), it has to be concluded that the AMP expenditure incurred by the assessee in India cannot come within the purview of the international transaction. Hence, the Transfer Pricing Officer has no jurisdiction to determine the arm's length price of AMP ex....
X X X X Extracts X X X X
X X X X Extracts X X X X
....was not required to be done for the purposes of TDS in terms of provisions of Section 10(6A). CIT(A) rejected the same on the ground that Provisions of Section10(6A) were applicable only up to 31/05/2002 and the present AY being 2007-08, the benefit thereof was not available to the assessee. Aggrieved, the assessee is in appeal before us. 5.3 The Ld. AR drew our attention to the fact that the provisions of Section 10(6A) has been misunderstood/misapplied by lower authorities to arrive at the conclusion that benefit thereof was not available to the assessee. The assessee fulfilled all the conditions of the said section and was squarely entitled for the benefit of the same. The Ld. DR paced reliance on stand of lower authorities. We have heard rival contentions. The short dispute is with regard to correct interpretation of Section IO(6A) which is extracted below:- "(6A) where in the case of a foreign company deriving income by way of royalty or fees for technical services received from Government or an Indian concern in pursuance of an agreement made by the foreign company with Government or the Indian concern after the 31st day of March, 1976 but before th....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the result, appeal of the Revenue is dismissed. ITA NO.2314/Mum/2017, A.Y.2012-13: 18. The assessee in appeal has raised as many as seven grounds. The ld. Authorized Representative for the assessee submitted that the issue raised in ground No.1 & 2 of the appeal are squarely covered by the decision of the Tribunal in assessee's own case for assessment year 2009-10. The ld. Authorized Representative for the assessee submitted that ground No.1 of the appeal is with respect to TP adjustment on account of AMP expenditure of Rs. 33,14,18,410/-. The ld. Authorized Representative for the assessee submitted that this issue is identical to ground No.1 raised in the appeal by the Department in assessment year 2011-12. The submissions made therein would equally apply to the present ground of appeal. The ld AR pointed that DRP in para-2.12 of the directions has observed that there is no arrangement/agreement between the assessee and its ASSOCIATED ENTERPRISE for incurring AMP expenditure. The DRP has further observed that in the immediately preceding assessment year the DRP has decided the issue in favour of the assessee. However, the DRP in the current assessment year decided the....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... interest under section 234C of the Act. The ld. Authorized Representative for the assessee submitted that interest under section 234C of the Act is to be computed on returned income and not assessed income. The ld. Authorized Representative for the assessee submitted that appropriate directions may be given to the authorities below for computation of interest under section 234C in accordance with the settled position. 18.6 In ground No.7 of the appeal assessee has assailed initiation of penalty proceedings under section 271(1)(c) of the Act. The ld. Authorized Representative for the assessee submitted that this ground of appeal is consequential in nature. 19. The ld. Departmental Representative vehemently defended the impugned order. However, the ld. Departmental Representative fairly admitted that the issues raised by the assessee in ground No.1 & 2 of the appeal are similar to the one raised in assessment year 2011-12 in the appeals by the Revenue and the assessee, respectively. 20. Both sides heard Orders of the authorities below perused. Both sides are unanimous in admitting that ground No.1 of the appeal relating to TP adjustment on account of AMP expenditure Rs. 33,....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e decision of the Hon'ble Gujarat High Court in the case of General Motors India Ltd. (supra) has allowed the assessee to set off unabsorbed depreciation in accordance with the amended provisions of section 32(2) of the Act. As per amended provision of section 32(2), the unabsorbed depreciation can be carry forward and set off without any time limit. Thus, in the light of the settled position we find merit in the contentions of the assessee and direct the Assessing Officer to allow set off of brought forward unabsorbed depreciation pertaining to assessment year 2007-08 against the profits of the current year's assessment. 23. Ground No.4 of the appeal is against charging of interest under section 234B of the Act. Charging of interest under section 234B is consequential and mandatory. Accordingly, ground No.4 of the appeal is dismissed. 24. The ground No.5 of the appeal is in respect of computation of interest under section 234B of the Act. The contention of the assessee is that interest under section 234B has been computed without set off of credit of MAT tax paid for assessment year 2009-10, 2010-11 and 2011-12. It is no more res-integra that interest under section....