TaxTMI 
TaxTMI 
2025 (7) TMI 1166
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....see was referred to Transfer Pricing Officer ("TPO") for determination of Arm's Length Price ["ALP"] of such transactions. The TPO vide order dated 31.07.2021 u/s 92CA(3) of the Act proposed certain adjustments. The AO passed draft assessment order u/s 144(1)/144B wherein besides the adjustments proposed by TPO, certain other disallowances were proposed by the AO on account of lease hold expenses and e-shop expenses and accordingly, total income of the assessee was proposed to be assessed at INR 4,32,14,89,191/-. 3. Against this order, the assessee raised objections before Ld. DRP, who in terms of the order dated 30.05.2022 passed u/s 144C(5) of the Act, gave certain directions to the AO and accordingly, the objections raised by the assessee were decided. Subsequently, the AO passed the final assessment order u/s 143(3)/144C(13) of the Act on 27.07.2022 at the same income as has been computed in the draft assessment order at INR 4,07,29,84,576/- by making following additions/disallowances:- (i) TP adjustment of INR 35,02,39,074/-; (ii) Disallowance of lease hold expenses of INR 11,49,23,267/-; (iii) E-shopping expenses of INR 11,12,27,375/-. 4. Agai....
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....regarding the nature of AMP expenses incurred by the Appellant and incorrectly holding that such expenses resulted in a service rendered by the Appellant in nature of development of marketing intangibles for its AEs which needs to be reimbursed by the AEs along with mark-up. 5.4 Failing to appreciate the functional profile of the Appellant and its financial arrangement with DPIF/DDF. 5.5 Incorrectly benchmarking the AMP expenses incurred by the Appellant by undertaking intensity adjustment. 5.6 Incorrectly benchmarking the AMP expenses incurred by the Appellant by applying 'bright line method and computing protective adjustment thereof. 5.7 Making dual adjustment which is not allowed under the provisions of the Act. 5.8 Incorrectly concluding that Appellant has undertaken AMP expenses for the benefit of DPIF/DDF, whereas the Appellant is earning all the residual income from the business and only paying fixed royalty to the franchisors. 6. Without prejudice to the contentions stated in ground no. 5 supra, the impugned AMP adjustment is devoid of accuracy in as much as: 6.1. The additional comparable companies propose....
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....ithout passing a speaking order and without giving any cogent reasons. 9.1. That on facts of the case and in law, impugned draft order passed by the Ld. AO is cryptic and laconic in nature in as much as the same has been passed without following the directions of Ld. DRP. 9.2. That on facts of the case and in law, the Ld. AO/Ld. DRP erred in not appreciating that entire leasehold improvements expenditure claimed as revenue expenditure amounting to Rs. 11,49,23,267 is an allowable expenditure under section 37(1)/30(a)(i) of the Act. 9.3. That on facts of the case and in law, Ld. AO/ Ld. DRP failed to appreciate that the similar issue has been decided by the Hon'ble ITAT in Appellant's favour in its own case for AYs 2012-13 and 2013- 14 and further affirmed by the Hon'ble High Court. 9.4. Without prejudice to the above, Ld. AO erred in not allowing the expenditure of INR7.75.23.358 which has been considered as revenue expenditure as per the directions given by Hon'ble DRP and to this extent the adjustment made is excessive and has no legs to stand. 9.5. Without prejudice to the above, Ld. AO erred in not allowing depreciati....
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....of Global One Pvt. Ltd. vs DCIT reported in 112 taxmann.com 185 [Del. Trib.] wherein it is held that not following the directions of Ld.DRP is fatal error and therefore, assessment become null and void. He also placed reliance on the judgement of Co-ordinate Benches of Tribunal in following cases:- [i]. "Flextronics Technologies (India) Private Limited v. ACIT Circle 3(1) (1), Bangalore [IT(TP)A No.832/Bang/2017] [ii]. Software Paradigms Infotech (P.) Ltd. v. ACIT [2018] 89 taxmann.com 339 (ITAT Bangalore) [iii]. July Systems & Technologies Put. Ltd. v. DCIT [2018] IT(TP) A No. 368/Bang/2016 (ITAT Bangalore)." 8. On the other hand, Ld.CIT DR submits that the failure on the part of AO in not incorporating the directions given by DRP in the final assessment order is not a fatal error for which the order could be held as bad in law. Ld.CIT DR further submits that solely on this issue, the entire proceedings cannot be held bad in law. He placed reliance on the judgment of Hon'ble Jurisdictional High Court in the case of SRF vs NFAC, Delhi reported in 129 taxmann.com 174 [2021] (Del.) and also in the case of Anand NVH Products Ltd. vs N E Assessment Centre,....
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....ld be allowed as revenue expenditure. Apparently, the claim of the assessee found correct. The Hon'ble Jurisdictional High Court in the case of SRF vs NFAC (supra) and Anand NVH Products Ltd. vs NEAC, Delhi (supra) held that this kind of error does not lead to the assessment proceedings as fatal rather an opportunity should be given to the AO for correcting such error. In case of Hitachi Astemo Haryana Pvt.Ltd. (supra), the Co-ordinate Bench of ITAT, Delhi after considering the aforesaid orders of Hon'ble High Court set aside the final assessment order to the file of AO for incorporating DRP's directions. The Relevant observations as in para 6 to 8 of the said order are as under:- 6. "We have heard both the parties and perused the records. We have given very thoughtful consideration to the above submissions and case laws. We find that the ld. Counsel of the assessee relied upon the Tribunal decisions and one decision from Hon'ble Karnataka High Court (supra). On the other hand, ld. DR for the Revenue has relied upon three case laws from Hon'ble jurisdictional High Court and one decision from Hon'ble Madras High Court. We find that Hon'ble jurisdictional High Court is bindi....