TaxTMI 
TaxTMI 
2019 (5) TMI 1796
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....ee is general in nature and hence does not require adjudication. 4. Ground No. 2 raised by the assessee relates to determination of arms' length price by the Assessing Officer / TPO / DRP for management support services received by the assessee. 5. When this appeal was called out for hearing, the ld. Counsel for the assessee invited our attention to the order dated 04.04.2018, passed by the Tribunal in assessee's own case in I.T.A. No. 2489/Kol/2017, for assessment year 2013-14, whereby the issue of management support services (MSSA) have been discussed and adjudicated in favour of the assessee. The ld. Counsel for the assessee submitted that the present issue is squarely covered by the above said order of the Tribunal, a copy of which is also placed before the Bench. 6. The ld. DR relied upon the orders of the authorities below. 7. We see no reason to take any other view of the matter then the view so taken by the division bench of this Tribunal in assessee's own case vide order dated 04.04.2018. In this order, the Tribunal has inter alia observed as under: "6. We have heard the rival submissions and perused the materials available on record including the paper book of the a....
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....to advertising, sales promotion, public relations, market research (in particular, information and trends on the world market), labeling, packaging, shipping and forwarding, long-term export business and international public tendering and purchasing from Third parties; b. advice and support with respect to the supply of requirements of the Company from other resources ; c. financial, accounting and auditing matters relating to such subjects as: i. accounting and auditing principles and methods; ii. budgeting methods; iii. capital structure, loans, exchange risks, financial research, warranties and guarantees, credit management, the establishment and management of finance and lease companies and all further banking activities, including long-term finance plans; iv. development of data processing d. fiscal and legal matters , including patents, trademarks and customs duties, particularly in international transactions ; e. personal matters particularly with respect to : i. the selection and training of personnel ; ii. an adequate personnel policy; f. insurances; g. admittance at the Company's specific request and at mutually agreed terms of a reasonable number ....
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....nd by Philips if such amounts are due outside the Country with the exception of : a. taxes which can be claimed back or credited against tax by the Company in accordance with the legal provisions which shall be chargeable to the Company; and b. taxes which can be claimed back or credited against tax by Philips in accordance with the legal provisions, which shall be chargeable to Philips. The ld AR argued that the assessee had complied with the TDS obligations on the subject mentioned payments and the same has been accepted by the department. He also referred to the summary of emails from Pages 333 to 378 and further emails which are enclosed in Exhibit II from pages 800 to 854 of Paper Book. He also referred to the exclusion of 12000000 Euros towards the Shareholder function costs in the overall cost allocation to the assessee company which is enclosed in page 795 of the Paper Book. We find that the assessee had also furnished before the lower authorities , the details of specific benefits derived by it on each of the emails corresponded between the assessee and KPENV comprising of various services rendered by KPENV pursuant to the MSSA. In fact the benefits derived fro....
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....e term 'Royalty' under Article 12 of the DTAA. 4.3.3.4. From the above it would be clear that the receipts in respect of MSSA would be taxable either as FTS (to the extent they are services rendered) or Royalty (to the extent it is providing commercial know-how or commercial experience). As both FTS and Royalty are taxable at the same rate under the DTAA, it does not matter that there is no clear cut separation or quantification in the MSSA of the service and the know-how portions. The entire receipts would be chargeable to tax in India under the DTAA as well as the I.T. Act. 4.2.1. Hence based on the aforesaid order of ld DRP in the hands of KPENV for the Asst Year 2009-10, we find that the ld DRP had treated the receipts of Management Support Services Charges from assessee herein (i.e. Philips India Ltd) in the hands of KPENV as FTS or Royalty and made it taxable in India. So once the same is accepted as FTS or Royalty in the hands of KPENV, the nature of payment cannot be different in the hands of the assessee herein by simply placing reliance on the benefit test, even though the benefits derived by the assessee pursuant to MSSA has been elaborated in detail by the assessee ....
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..... Reliance in this regard is placed on the decision of the Hon'ble Supreme Court in the case of Radhasaomi Satsang vs CIT reported in (1992) 193 ITR 321 (SC) . 4.6. We find that the decision relied upon by the ld AR on the Hon'ble Delhi High Court in the case of CIT vs Cushman and Wakefield (India) (P) Ltd reported in (2014) 367 ITR 730 (Del) is well founded wherein it was held that :- "35. The Transfer Pricing Officer's report is, subsequent to the Finance Act, 2007, binding on the Assessing Officer. Thus, it becomes all the more important to clarify the extent of the Transfer Pricing Officer's authority in this case, which is to determining the arm's length price for international transactions referred to him or her by the Assessing Officer, rather than determining whether [such services exist or benefits have accrued. That exercise - of factual verification is retained by the Assessing Officer under Section 37 in this case.] Indeed, this is not to say that the Transfer Pricing Officer cannot -after a consideration of the facts - state that the arm's length price is 'nil' given that an independent entity in a comparable transaction would not pay any am....
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....lled transaction with the Taxpayer would have charged amounts lower, equal to or greater than the amounts claimed by the AEs, has to perforce be tested under the various methods prescribed under the Indian TP provisions. In the context of cost sharing arrangement, the Hon'ble High Court opined that concept of base erosion is not a logical inference from the fact that the AEs have only asked for reimbursement of cost. This being a transaction between related parties, whether that cost itself is inflated or not only is a matter to be tested under a comprehensive transfer pricing analysis. The basis for the costs incurred, the activities for which they were incurred, and the benefit accruing to the Taxpayer from those activities must all be proved to determine first, whether, and how much, of such expenditure was for the purpose of benefit of the Taxpayer, and secondly, whether that amount meets ALP criterion. In the present case however, the arrangement between the AE and the Assessee is not a cost sharing arrangement but a payment for specific services rendered. To this extent the above observations of the Hon'ble High Court may not be relevant to the present case. 28. The....
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....es supra. 4.9. In view of the aforesaid findings and respectfully following the judicial precedent relied upon hereinabove, we hold that the determination of ALP for Management Support Services at Rs NIL is unwarranted and accordingly the upward adjustment made by the ld TPO in the sum of Rs. 125,27,30,863/- is deleted. Accordingly, the Ground Nos 2 & 3 raised by the assessee are allowed. We find that there is no change in the facts and circumstances during the year under appeal with regard to MSSA when compared to that in the earlier years and hence respectfully following the judicial precedents relied upon hereinabove, we hold that the determination of ALP for Management Support Services at Rs NIL is unwarranted and accordingly the upward adjustment made by the ld TPO in the sum of Rs. 300,40,09,360/- is deleted. Accordingly, the Ground Nos. 2, 4.1. and 4.3. raised by the assessee are allowed. " 8. As the issue is squarely covered in favour of the assessee by the decision of Coordinate Bench in assessee's own case (supra) in I.T.A. No. 2489/Kol/2017 forA.Y 2013-14, and there is no change in facts and law and the revenue is unable to produce any material to controvert the abov....
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....does not represent the international transaction between the AE's therefore no question of determining the ALP of AMP transactions. We find force in the argument of the ld. AR in the given facts and circumstances. Therefore, in our considered view the AMP cannot be regarded as international transaction. In holding so we find the support & guidance from the judgment of Hon'ble Delhi High Court in the case of Maruti Suzuki India Limited vs. CIT reported in 381 ITR 117 wherein it was held as under: "51. The result of the above discussion is that in the considered view of the court the Revenue has failed to demonstrate the existence of an international transaction only on account of the quantum of AMP expenditure by MSIL. Secondly, the Court is of the view that the decision in Sony Ericsson Mobile Communications India (P) Ltd. case (supra) holding that there is an international transaction as a result of the AMP expenses cannot be held to have answered the issue as far as the present Assessee MSIL is concerned since finding in Sony Ericsson to the above effect is in the context of those Assessees whose cases have been disposed of by that judgment and who did not dispute the exi....
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..... We have heard the rival contentions & perused the materials available on record. In this regard we find that the ld. DRP has deleted the addition made by the TPO in own cases of the assessee pertaining to other assessment years as discussed above. Thus, the assessee has been claiming the IT expenses for the last several years and the same was not denied and therefore in our view principle of consistency should be applied in the instant case. In this connection we are relying on the decision of Hon'ble Supreme Court in the case of Radhasoami Satsang vs. Commissioner of Income Tax (1992) 193 ITR 0321 (SC) "We are aware of the fact that, strictly speaking, res judicata does not apply to IT proceedings. Again, each assessment year being a unit, what is decided in one year may not apply in the following year but where a fundamental aspect permeating through the different assessment years has been found as a fact one way or the other and parties have allowed that position to be sustained by not challenging the order, it would not be at all appropriate to allow the position to be changed in a subsequent year. One these reasoning, in the absence of any material change justifying the ....
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.... by the TPO on a without prejudice basis in respect of the other segments namely consumer Lifestyle Distribution, Healthcare distribution and Healthcare contract Manufacturing division. 23. When this this was called out for hearing the ld. Counsel for the assessee invited our attention to the order dated 07.02.2018, passed by the Tribunal in assessee's own case in I.T.A. No. 612/Kol/2017 for assessment year 2012-13, whereby the issue of objection pertaining to adjustments made by the TPO on a without prejudice basis in respect of the other segments namely consumer Lifestyle Distribution, Healthcare distribution, Healthcare contract Manufacturing division etc, have been discussed and adjudicated in favour of the assessee. The ld. Counsel for the assessee submitted that the present issue is squarely covered by the above said order of the Tribunal, a copy of which is also placed before the Bench. 24. The ld. DR relied upon the orders of the authorities below. 25. We see no reason to take any other view of the matter then the view so taken by the division bench of this Tribunal in assessee's own case vide order dated 07.02.2018. In this order, the Tribunal has inter alia observed as....
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....essee's own case in I.T.A. No. 2489/Kol/2017, for assessment year 2013-14, order dated 04.04.2018, wherein the Tribunal has inter alia observed as under: "14. The Ground no. 7 raised by the assessee does not require any specific adjudication in view of our decisions rendered for the other grounds on the issue of transfer pricing." 27. As the issue is squarely covered in favour of the assessee by the decision of Co-ordinate Bench in assessee's own case (supra) in I.T.A. No. 612/Kol/2017 for ay 2012-13, and there is no change in facts and law and the revenue is unable to produce any material to controvert the above said findings of the Co-ordinate Bench. We find no reason to interfere in the said order of the Co-ordinate Bench and the same is hereby upheld. 28. Ground No. 8 raised by the assessee relates to use of non-contemporaneous data by the TPO. At the outset itself, the ld. Counsel for the assessee informs the Bench that the assessee does not want to press this ground, therefore we dismiss the ground as not pressed. 29. Ground No. 9 raised by the assessee relates to disallowance of Rs. 15,52,53,987/- being lease rent paid in respect of motor cars treating the same as capi....
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....ment towards lease transactions including interest. 15.1. The ld AR argued that this issue is covered by the decision of the Hon'ble Supreme Court in the case of ICDS Ltd vs CIT reported in (2013) 350 ITR 527 (SC) wherein it was held that :- 'the lessor i.e the assessee is the owner of the vehicles. As the owner, it used the assets in the course of its business, satisfying both requirements of section 32 of the Act and hence, is entitled to claim depreciation in respect of additions made to the trucks, which were leased out." The ld AR stated that the assessee herein is a lessee and is entitled for deduction towards lease rentals paid towards cars taken on finance lease. He also stated that the lessor had confirmed that it had claimed depreciation in the relevant Asst year on the said cars which were leased out to the assessee. He further placed reliance on the decision of the Hon'ble Rajasthan High Court in the case of Rajshree Roadways vs UOI reported in 263 ITR 206 (Raj) wherein it was held that the lessee would be entitled to the deduction of rent paid by him and the benefit of the depreciation shall be available to owner of the asset. Further the Special Leave Petition (....
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....he rival submissions. The ld AR stated that the moulds were owned by the assessee and used for the purpose of its business. Further, the moulds were exclusively used in the plastic factory by the job workers / co-makers to whom moulds were given by the assessee to be used in the plastic factory, under its control and supervision and prayed that depreciation @ 30% would be eligible on the said moulds. We find that this issue has been considered by this tribunal in assessee's own case for the Asst Year 2011-12 in ITA Nos. 863 & 539/Kol/2016, dated 15.12.2017 wherein it was held as under:- "27. We have heard the rival contentions and perused the material available on record. In the instant case, issue relates to depreciation claimed by the assessee @ 30% on moulds on the ground that these are used in plastic factories. However, the amount of depreciation claimed by the assessee on moulds was disallowed by the assessee on the ground that higher rate of depreciation on moulds is available only if these are used in the plastic factory. The view taken by the AO was subsequently confirmed by the Ld. DRP. Now the issue before us arose whether assessee is eligible for depreciation on mould....