TaxTMI 
TaxTMI 
2021 (9) TMI 975
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....ical grounds of appeals. Therefore, all appeals and cross-objection were taken up together and are being disposed of by way of a consolidated order, for the sake of brevity. 3. First we take up ITA No.2714/Del/2018 [Assessment Year 2012- 13] wherein the assessee has raised following grounds of appeal:- "Based on the facts and circumstances of the case and in law, the Appellant respectfully craves leave to prefer an appeal under section 253 of the Income-tax Act, 1961 ("the Act") against the order dated January 31, 2018 passed by the Learned Commissioner of Income-tax (Appeals) - 44, New Delhi ("referred to as Learned CIT(A)") against the assessment order dated May 25,2016 passed by the Assistant Commissioner of Income-tax, Circle 2(2), New Delhi ("referred to as learned AO") under section 143(3) the Act on the following grounds: 1. Based on the facts and circumstances of the case and in law, the Learned CIT(A) has erred in upholding the order passed by the learned AO without appreciating the facts of the case and law relating thereto and the various additions to the extent confirmed by the Learned CIT(A) deserve to be deleted. Part I - Transfer pricing....
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....ng the ground of the Appellant against the initiation of penalty proceedings under section 271 (1)(c) of the Act. The above grounds of appeal are mutually exclusive & without prejudice to each other. The Appellant prays for leave to add, alter, amend and / or modify any of the grounds of appeal at or before the hearing of the appeal. The Appellant prays for appropriate relief based on the said grounds of appeal and the facts and circumstances of the case." 4. The assessee has also raised the additional grounds which read as under:- 1. "The Appellant has filed an appeal vide ITA no. 2714/DEL/2018 against the order passed by the Learned Commissioner of Income Tax (Appeals) - 44, New Delhi ("Ld.CIT(A)") under section 250(6) of the Income-tax Act, 1961 ("Act") dated January 31, 2018 (pursuant to which a rectified order under section 154 r.w.s 250(6) of the Act dated April 17, 2018 was also passed) In respect of the Assessment Year 2012-13 ("Subject AY") on various grounds mentioned in the aforesaid Appeal. 2. In addition to the various grounds of appeals raised in the above-mentioned appeal, the Appellant craves leave of this Hon'ble Tribunal ....
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....ord. There is no dispute with regard to the fact that ground raised by the assessee is a legal ground related to allowability of education cess as a deduction u/s 37(1) of the Act. Therefore, respectfully following the ratio laid down in the case of National Thermal Power Corporation vs CIT (Supra), the additional ground raised by the assessee is hereby admitted for adjudication. 8. The facts giving rise to the present appeal are that Income Tax return declaring income of Rs. 2,12,33,10,464/- was e-filed on 29.11.2012 which was subsequently revised and a return declaring income of Rs. 2,12,92,84,620/- was filed on 31.03.2014. The case was selected for scrutiny assessment. In response to the Statutory notices, the Ld.AR of the assessee appeared and filed the details. Thereafter, a draft assessment order was passed on 17.03.2016 by the Addl.CIT, Range-2, New Delhi. Since, no objection to draft assessment was filed by the assessee, the Assessing Officer proceeded to make assessment. The Assessing Officer observed that the assessee company was a wholly owned subsidiary of American Express International Inc., USA and was engaged in the global business processing and support services ....
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.... assessee ought to have deducted correctly relocation expenses which formed part of the same secondment contracts. Therefore, the Assessing Officer made addition of Rs. 3,92,81,738/-. Hence, the Assessing Officer computed the income at Rs. 2,27,58,78,390/- against the profit before tax as declared by the assessee of Rs. 1,82,76,28,525/-. 9. Aggrieved against these additions, the assessee preferred appeal before Ld.CIT(A) who after considering the submissions, partly allowed the appeal of the assessee. Thereby, Ld.CIT(A) affirmed the view of TPO that the transaction of the appellant-assessee with the AEs with regard to receivable is an international transaction which would come under the purview of transfer pricing regulations. Any delay in receipt of money by the appellant leads to decrease its profitability and there is an opportunity cost of money received after a delay which has correctly been treated by the TPO as loan advance to the AE hence, an international transaction. However, the Ld.CIT(A) following the direction of the DRP and the judgement of Hon'ble Delhi High Court in the case of Kusum Healthcare Pvt.Ltd. in ITA No.6814/Del/2014 dated 26.03.2015, directed the Asses....
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....ary, Ld. Counsel for the assessee in re-joinder submitted that under the identical facts, the Tribunal was pleased to decide the issue in favour of the assessee. 17. We have heard the rival contentions and perused the material available on record and gone through the orders of the authorities below. Ld. Counsel for the assessee in re-joinder, submitted that in assessee's own case in ITA No.2577/Del/2014 pertaining to Assessment Year 2009-10 vide order dated 03.08.2018 was dismissed on account of low tax effect. The Department preferred appeal for the Assessment Year 2010-11. The Department did not raise this issue. However, in Assessment Year 2010- 11, the Tribunal again deleted the disallowance. He also relied on the decision the Tribunal in assessee's own case in ITA No.355/Del/2016 pertaining to Assessment Year 2011-12. The Revenue could not controvert these averments of the assessee by placing and contrary binding precedent of the Hon'ble High Court or the Hon'ble Apex Court. 18. We find that the Tribunal in the case of assessee itself for Assessment Year 2010-11 in ITA No.1426/Del/2015 vide order dated 17.07.2019 has held as under:- 37. "Now coming to Ground No.....
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....ly granted deduction as the same could not be FTS by any stretch of imagination and no disallowance u/s 40(1)(i) of the Act is justified. Ld. Counsel for the assessee submitted that in respect of reimbursement to AE towards relocation charges of employees seconded to assessee entity from AE. it is submitted that firstly, there is no estoppels against law and it would be incorrect to contend that as assessee had deducted tax on salary reimbursement for same seconded employees it was necessary for assessee to deduct tax on reimbursement of relocation charges also relating to same seconded employees. Reliance was placed on the decision of Hon'ble Supreme Court in the case of CIT, Madras vs V.Mr.P.Firm, Maur 56 ITR 67 wherein it has been held that there is no estoppels against law. He submitted that in law, the assessee is not liable to deduct tax. The assessee cannot be forced to deduct tax by estoppels merely on the ground that the assessee has deducted tax in earlier year. He submitted undisputedly, the make available clause of India US DTAA is not satisfied in present case and reimbursement cannot be characterized as FTS. Hence, no tax is deductible in law and no disallowance could....
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.... 2. In addition to the various grounds of appeals raised in the above-mentioned appeal, the Appellant craves leave of this Hon'ble Tribunal to raise the following additional ground of appeal and prays that the same may be admitted and be heard and considered as part of the Captioned Appeal while adjudicating the same. Ground 5: Deduction in respect of Education Cess "That on the facts and in the circumstances of the case, the Appellant prays that education cess and secondary higher education cess on income-tax paid for the year under consideration, i.e. Assessment Year 2012-13 ought to be allowed as a deduction under section 37(1) of the Income Tax Act, 1961 while computing the total income." The Appellant craves leave to add, alter, delete or modify the above ground of appeal. 3. The Appellant humbly submits that the above-mentioned ground may kindly be admitted as it does not require any fresh examination of facts and can be adjudicated on the basis of material on record It goes to the root of the matter and is required to be adjudicated In order to determine the correct tax liability of the Appellant Reliance is also placed on the....
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....hat in the light of the Hon'ble Bombay High Court decision in the case of Sesa Goa Ltd. vs JCIT (supra), disallowance was not justified. Further, it is contended that the Circular issued by CBDT has clearly stated that no disallowance could be made. 27. We have considered the rival submissions. The Revenue has not disputed about the Circular issued by CBDT which has been relied by Ld. Counsel for the assessee. Moreover, the Hon'ble Bombay High Court has considered all the case laws on this point and has ruled in favour of the assessee. Therefore, we do not see any reason to take a different view. Respectfully following the judgement of Hon'ble Bombay High Court in the case of Sesa Goa Ltd. vs JCIT (supra), we direct the Assessing Officer to delete the addition. Thus, additional grounds raised by the assessee are allowed. 28. In the result, the appeal of the assessee is partly allowed. 29. Now, we take up ITA No.4487/Del/2018 [Assessment Year 2012- 13] wherein the Revenue has raised following ground of appeal:- 1. "In the facts and circumstances of the case, the Ld.CIT(A) has erred in deleting the Transfer Pricing adjustment made on account of delay in receipt of r....
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.... expenses incurred for assessee's own employees were also part and parcel of the same Secondment Agreement by which the expenses of expatriates have been reimbursed. c. Since TDS u/s 195 of the Income-tax Act, 1961 is required to be deducted for expenses mentioned in the Secondment Agreement, following that logic, TDS is also required to be deducted on expenses incurred for own employees. d. For the AY 2011-12, the Hon'ble DRP in assessee's own case had directed disallowance of these relocation expenses since no TDS had been deducted." 36. Ground Nos. 1.1 to 1.3 of the Revenue's appeal relate to allowability of working capital adjustment. Since this issue, we have decided in favour of the assessee by following the judgement of Hon'ble Delhi High Court in the case of Kusum Healthcare Pvt.Ltd.(supra) and also the decision of Tribunal in earlier years. Therefore, we do not see any infirmity in the finding of Ld.CIT(A) and the same is hereby affirmed. Thus, Ground Nos.1.1 to 1.3 raised by the Revenue are rejected. 37. Ground No.2 raised by the Revenue relates to allowance of payment of travelling expenses. Similar ground was raised by the assessee in....
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....e on outstanding receivable does not fit within the meaning of international transaction as continuing debit balance is not an international transaction but is a result of international transaction. The above grounds of cross-objections are mutually exclusive and without prejudice to each other. The Respondent craves leave to add, alter, amend and / or modify any of the grounds of cross objections either before or during the course of the appellate proceedings before the Hon'ble Tribunal." 41. It is stated that the grievances of the assessee raised in the present Cross Objection, has been addressed by Ld. CIT(A) in the earlier order passed in ITA No.4487/Del/2018 relating to Assessment Year 2012-13. Hence, the grounds raised in the cross-objection by the assessee do not survive. 42. In the result, the Cross-objection filed by the assessee is dismissed as rejected. 43. Now, we take up ITA No.3769/Del/2018 [Assessment Year 2013- 14] wherein the assessee has raised following ground of appeal:- "Based on the facts and circumstances of the case and in law, the Appellant respectfully craves leave to prefer an appeal under section 253 of the Income-tax Act, ....
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....or appropriate relief based on the said grounds of appeal and the facts and circumstances of the case." 44. Ground No.1 raised by the assessee is general in nature, needs no adjudication. 45. Ground Nos.2.1 to 2.3 raised by the assessee are against the disallowance of relocation expenses u/s 40(1)(i) of the Act. The similar ground has been decided vide Ground No.3 in ITA no.2714/Del/2018 relating to Assessment Year 2012-13 by observing as under:- 22. "We have heard the rival contentions and perused the material available on record and gone the orders of the authorities below. Ld.CIT(A) confirmed the view of the Assessing Officer by relying on the decision of the Hon'ble Delhi High Court in the case of Centrica Offshore Pvt.Ltd. vs CIT (supra) dated 25.04.2014. It is contended by the Ld. Counsel for the assessee that as per India US DTAA, he make available clause is not satisfied in the present appeal. Therefore, the reimbursement cannot be characterized at earliest. We find that this aspect has not been examined by Ld.CIT(A), therefore, the finding of Ld.CIT(A) is set aside and this issue is restore to Ld.CIT(A) to decide it afresh after having considered the submiss....
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....ocation expense also since it also formed part of the same Secondment Agreement. b. The terms and salary terms of the agreement are in the nature of services which are 'Fee for Technical Services'(FTS). Hence chargeable to tax both under the provisions of section 9 (1) (vii) of the Income -tax Act, 1961 as well as under the provisions of article 12(4) of Indo-USA DTAA. c. For the AY 2011-12, the Hon'ble DRP in assessee's own case had directed disallowance of these relocation expenses since no TDS had been deducted." 50. Ground Nos. 1.1 to 1.3 raised by the Revenue working capital adjustment. The similar ground was decided vide Ground Nos. 1.1 to 1.3 in ITA No.2834/Del/2018 relating to Assessment Year 2012-13 by observing as under:- 36. "Ground Nos. 1.1 to 1.3 of the Revenue's appeal relate to allowability of working capital adjustment. Since this issue, we have decided in favour of the assessee by following the judgement of Hon'ble Delhi High Court in the case of Kusum Healthcare Pvt.Ltd.(supra) and also the decision of Tribunal in earlier years. Therefore, we do not see any infirmity in the finding of Ld.CIT(A) and the same is hereby a....