TaxTMI 
TaxTMI 
2025 (10) TMI 1006
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....re taken up together and disposed of by this common order for the sake of convenience. 3. The additional ground raised by the assessee for AYs 2011-12, 2012-13, 2013-14, 2014-15, 2018-19 claiming deduction of education cess was stated to be not pressed by the ld AR at the time of hearing. Accordingly, the said additional ground is not even admitted herein. 4. The ld AR filed a detailed chart containing various issues spreading across years, some of which are identical and common. With the consent of the both the parties, we proceed to dispose of the appeals, issue wise by giving corresponding reference of the relevant grounds numbers in each of the AYs under consideration. 5. The first issue to be decided is with regard to transfer pricing adjustment made on account of advertisement, marketing and sales promotion (AMP) expenses. Ground Nos. 4 to 4.7 for AY 2011-12 (assessee's appeal) Ground Nos. 4 to 4.7 for AY 2012-13 (assessee's appeal) Ground Nos. 5 to 5.12 for AY 2013-14 (assessee's appeal) Ground Nos. 5 to 5.12 for AY 2014-15 (assessee's appeal) Ground Nos. 1 to 2 for AY 2011-12 (revenue's appeal) Ground Nos. 2 to ....
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.... d. shop, sales, execution, remuneration Rs. 125,53,76,689/- e. trade discount on invoices Rs. 1658,73,81,046/- Total Rs. 1200,72,66,766/- 5.5 The ld TPO sought to treat the AMP expenses as an international transaction within the meaning of Section 92B of the Act. For this purposes, he undertook benchmarking analysis of AMP expenditure applied Bright Line Test by comparing ratio of AMP expenditure to the sales of the assessee with that of the comparable companies and held that any expenditure in excess of bright line was for promotion of the brand/ trade name owned by the AE, requiring suitable compensation from the AE. The ld TPO for applying bright line test compared AMP expenditure incurred by the assessee as percentage of total turnover @9.56% with average AMP expenses of of 3.69% of various comparable companies. The TPO concluded that AMP expenditure incurred by the assessee was for brand promotion and development of marketing intangible for the AE. The ld TPO charged a mark up of 12.26% and proposed a transfer pricing adjustment of Rs. 809,06,65,961/- on account of alleged brand building activity undertaken by the assessee for the AE as und....
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....erein:- "Sub: Written submission in the above case-reg. In addition to written submission made during the course of hearing on 23.01.2025 ( copy enclosed) and in support of order of the TPO, wherein detailed discussion has been made on legal and factual aspects of the case based on observations in TP Study Report(TPSR) and various agreements, following further submission is being made in respect of issue of TP adjustment on account of Advertisement, Marketing and Publicity (AMP) expenses based on the arguments made during the course of hearing:- 1. Hon'ble Special Bench, ITAT, DELHI BENCH in the case of L.G. Electronics India (P.) Ltd. Vs. Assistant Commissioner of Income-tax, Circle 3, Noida] [29 taxmann.com 300] had held that AMP expenses incurred by the assessee constitute International Transaction withing the meaning of section 92B of the I.T. Act. Appeal of the assessee against the said decision of the Hon'ble Special Bench is still pending before Hon'ble Allahabad High Court implying that the said decision of Special Bench has not been overruled by subsequent High Court decision in the case of assessee till now. While delivering the said....
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....in para 51 to 57 of its decision. While upholding the same, the Hon'ble High Court had observed that in most cases, the assessed had claimed that international transaction between them and their AEs had included AMP expenses. In other words, the International Transaction declared by those assessed included element of AMP expenses. 3. In the present case too, the assessee on its own has shown part reimbursement of AMP expenses as International Transaction. In other words, the assessee itself is admitting that international transaction shown by it in TP Study Report also included AMP expenses. Therefore, in light of such peculiar similarity, the ration of the decision in case of Sony Ericsson (supra), will squarely apply to facts of the instant case and AMP expenses will qualify as International Transaction. There is one more way of appreciating this aspect. As per assessee's own submission, the reimbursement of AMP expense by AE is shown as an International Transaction. It means that the assessee has provided some the AMP related services to its AE and there were some transactions between two parties on this count. So, now only question which remains to be ....
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....chy details. In A.Y. 2011-12 too, the assessee did not furnish Transfer Pricing Policy of the group, AEs and same were not furnished (para 2.8.1 of TP order) This non-compliance from the side of assessee was specifically highlighted by the undersigned during the course of hearing, as it prevented the TPO from examining the factual aspect relevant to the issue, therefore such non-compliance should be viewed adversely against the assessee & presumption should be drawn that assessee did not produce such detail before TPO as the same could have unearthed the important role played by AE in deciding AMP activities in India. 7. Further, it is pertinent to mention here that Hon'ble High Court of Delhi in the case of Sony Ericsson Mobile Communications India (P.) Ltd. has clearly noted in Para 118 of its decision that assessed in those cases were engaged in both distribution and licensed manufacturing. Therefore, it would not be justified to restrict the ration of Delhi High court decision in case of Sony Ericsson Mobile Communications India (P.) Ltd (Supra) to a case of distributor only. The assessee is also engaged both as distributor and licenced manufacturer. 8. Th....
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.... evident from the perusal of above note and economic analysis forming part of the TP study report that these common transactions have effectively not being benchmarked by the assessee. Thus, the common transactions such as reimbursement advertising expenses, royalty paid, design and development fee paid have not been benchmarked either along with transactions mentioned in the assembly segment or transaction mentioned in distributor segment as they were not broken up and analysed segment wise and thus, no aggregated with or assigned to any of the segments. The assessee has basically presumed these common transactions to be at arm's length only because the transactions in distributor segment and assembly segment were found to be at arm's length. It is pertinent to mention here that the assessee has done segment wise benchmarking by using TNMM. Thus, when the assessee benchmarked the transactions of assembly or distribution segment by using TNMM, naturally it would have selected the comparables, which would have been in consonance or which would have been having similar FAR profile as the FAR profile of the assessee in these segments. Since the International Transaction catego....
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....by the comparable companies in assembly segment and distribution segment which is reproduced herein:- LG Electronics India Private Limited AY Assembly Segment LG Distribution Segment Limited Operating Margin of the appellant [OP/OR] Operating Margin of the comparables [OP/OR] Operating Margin of the appellant [OP/OR] Operating Margin of the comparables [OP/OR] 2011-12 3.57% * 4.47% 2.92% 3.42% 2012-13 3.61% 2.12% 3.35% 0.96% 2013-14 6.27% 2.86% 4.05% 0.26% 2014-15 7.56% 1.24% 7.18% 0.87% 2015-16 9.59% 1.82% 3.63% 1.04% AY Operating Margin of the appellant [OP/OR] Operating Margin of the comparables [OP/OR] 2017-18 12.60% 4.27% 2018-19 13.57% 4.72% 2020-21 14.34% 3.15% 5.9 Further, it is pertinent to note that the ld TPO in the instant case had not disputed the aggregate/ combined benchmarking analysis undertaken in the transfer pricing study in respect of all the international transactions. This is evident from the fact that the international transactions of the assessee were accepted by the ld TP....
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....approach is unwarranted and would amount to judicial legislation. During the course of arguments, it was accepted by the Revenue that the TPOs/Assessing Officers have universally applied bright line test to decipher and compute value of international transaction and thereafter applied Cost Plus Method or Cost Method to compute the arm's length price. The said approach is not mandated and stipulated in the Act or the Rules. The list of parameters for ascertaining the comparables for applying bright line test in paragraph 17.4 and, thereafter, the assertion in paragraph 17.6 that comparison can be only made by choosing comparable of domestic cases not using any foreign brand, is contrary to the Rules. It amounts to writing and prescribing a mandatory procedure or test which is not stipulated in the Act or the Rules. This is beyond what the statute in Chapter X postulates. Rules also do not so stipulate." 11. Respectfully following the judgment of the Hon'ble High Court of Delhi [supra], we hold that BLT has no mandate under the Act and accordingly, the same cannot be resorted to for the purpose of ascertaining if there exists an international transaction of brand pro....
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....he decision in Sony Ericsson 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 Assessee's whose cases have been disposed of by that judgment and who did not dispute the existence of an international transaction regarding AMP expenses. XXX 60. As far as clause (a) is concerned, SMC is a non-resident. It has, since 2002, a substantial share holding in MSIL and can, therefore, be construed to be a non-resident AE of MSIL. While it does have a number of 'transactions' with MSIL on the issue of licensing of IPRs, supply of raw materials, etc. the question remains whether it has any 'transaction' concerning the AMP expenditure. That brings us to clauses (b) and (c). They cannot be read disjunctively. Even if resort is had to the residuary part of clause (b) to contend that the AMP spend of MSIL is "any other transaction having a bearing" on its "profits, incomes or losses", for a 'transaction' there has to be two parties. Therefore for the purposes....
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....inding of the Hon'ble High Court, before embarking upon a benchmarking analysis, the Revenue needs to demonstrate on the basis of tangible material or evidence that there exists an international transaction between the assessee and the AE. Needless to mention, that the existence of such a transaction cannot be a matter of inference. 15. The Hon'ble Delhi High Court in case of Whirlpool of India Ltd vs DCIT 381 ITR 154 has held that there should be some tangible evidence on record to demonstrate that there exists an international transaction in relation with incurring of AMP expenses for development of brand owned by the AE. In our considered opinion, in the absence of such demonstration, there is no question of undertaking any benchmarking of AMP expenses. The relevant findings of the Hon'ble High Court in the case of Whirlpool of India Ltd [supra] read as under: "32. Under Sections 92B to 92F, the pre-requisite for commencing the TP exercise is to show the existence of an international transaction. The next step is to determine the price of such transaction. The third step would be to determine the ALP by applying one of the five price discovery methods s....
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....d conjectures of the TPO. XXX 47. For the aforementioned reasons, the Court is of the view that as far as the present appeals are concerned, the Revenue has been unable to demonstrate by some tangible material that there is an international transaction involving AMP expenses between WOIL and Whirlpool USA. In the absence of that first step, the question of determining the ALP of such a transaction does not arise. In any event, in the absence of a machinery provision it would be hazardous for any TPO to proceed to determine the ALP of such a transaction since BLT has been negatived by this Court as a valid method of determining the existence of an international transaction and thereafter its ALP." 16. The case of the Revenue is that Indian subsidiary incurred certain expenses for the promotion of brands in India and for development of the Indian market and the creation of marketing intangibles in India which remain the functions of the parent company which is the entrepreneur. The brands are owned by the parent company. The Indian subsidiary only acts on behalf of the parent company. The Revenue alleges that eventual beneficiary of the acts of the....
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....the AE. We find support from the decision of the Hon'ble Delhi High Court in the case of Honda Seil Power Products Ltd vs DCIT ITA No 346/2015. 20. The Hon'ble Delhi Court in its recent decision in the case of CIT vs Mary Kay Cosmetic Pvt Ltd (ITA No.1010/2018), too, dismissed the Revenue's appeal, following the law laid down in its earlier decision (supra) and held as under: "We have examined the assessment order and do not find any good ground and reason given therein to treat advertisement and sales promotion expenses as a separate and independent international transaction and not to regard and treat the said activity as a function performed by the respondent-assessee, who was engaged in marketing and distribution. Further, while segregating / debundling and treating advertisement and sales promotion as an independent and separate international transaction, the assessing officer did not apportion the operating profit/ income as declared and accepted in respect of the international transactions." 21. In our understanding of the facts and law, mere agreement or arrangement for allowing use of their brand name by the AE on products does not lead to an inf....
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....ce of raw material purchased from AE, payments in respect of copyrights and patents payable to the AE. Even their product pricing is not completely independent. Linder such circumstances, the benefits emanating from the AMP function cannot be enjoyed by the assessee alone. The assessee is not an independent manufacturer who takes all the risks and enjoys all the benefits of the functions performed by them. b) The assessee is not engaged only in manufacture. It is also engaged in distribution of goods by its own admission. In fact, the assessee has a dual function of manufacturer and distributor. In any case, given its distribution function, the assessee is covered by the judgement of Hon'ble Delhi High Court in M/s Sony Ericsson. c) The benefits to the AE from AMP function continue to be the same as in the case of distributor like increase in sale of raw material, components and spare parts, increase in dividend, and increase in copyright and patent payments apart from creation/enhancement of Brand value. Therefore, the argument advanced by the assessee would not have any bearing on the existence of 'international transaction' just because it is engaged in manufac....
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....ties that increase the value of that intangible will depend principally on the substance of the rights of that party. For example, a distributor may have the ability to obtain benefits from its investments in developing the value of a trademark from its turnover and market share where it has a long-term contract of sole distribution rights for the trademarked product. In such cases, the distributor's share of benefits should be determined based on what an independent distributor would obtain in comparable circumstances. In some cases, a distributor may bear extraordinary marketing expenditures beyond what an independent distributor with similar rights might incur for the benefit of its own distribution activities. An independent distributor in such a case might obtain an additional return from the owner of the trademark, perhaps through a decrease in the purchase price of the product or a reduction in royalty rate." 28. The Hon'ble High Court in the case of Sony Ericsson Mobile Communications India Pvt Ltd (supra) has further held that no transfer pricing adjustment in respect of AMP expenses can be made where the assessee (Indian entity) has economic ownership of the bran....
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....fers economic ownership. This can happen upon termination of the distribution-cum-marketing agreement or when economic ownership gets transferred to a third party. Transfer Pricing valuation, therefore, would be mandated at that time. The international transaction could then be made a subject matter of transfer pricing and subjected to tax. 154. Brand or trademark value is paid for, in case of sale of the brand or otherwise by way of merger or acquisition with third parties................. Re-organisation, sale and transfer of a brand as a result of merger and acquisition or sale is not directly a subject matter of these appeals. As noted above, in a given case where the Indian AE claims economic ownership of the brand and is deprived or transfers the said economic ownership, consequences would flow and it may require transfer pricing assessment." (emphasis supplied) 29. As held by the Hon'ble Delhi High Court in the case of Sony Ericsson Mobile Communications (supra), if the Indian entity is the economic owner of the brand and is incurring AMP expenses for the purpose of promotion of such brand, benefit is only received by the Indian entity. It wa submi....
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....as a separate international transaction without bifurcation/segregation, it would as noticed above, lead to unusual and incongruous results as AMP expenses is the cost or expense and is not diverse. It is factored in the net profit of the inter-linked transaction. This would be also in consonance with Rule 10B(1)(e), which mandates only arriving at the net profit margin by comparing the profits and loss account of the tested party with the comparable. The TNM Method proceeds on the assumption that functions, assets and risk being broadly similar and once suitable adjustments have been made, all things get taken into account and stand reconciled when computing the net profit margin. Once the comparables pass the functional analysis test and adjustments have been made, then the profit margin as declared when matches with the comparables would result in affirmation of the transfer price as the arm's length price. Then to make a comparison of a horizontal item without segregation would be impermissible." 33. Considering the aforementioned findings of the Hon'ble Jurisdictional High Court of Delhi In the case in hand, the operating profit margin of the assessee is at 5.....
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.... We have heard the rival submissions and perused the material available on record. As per the transfer pricing study report, the assessee company has made payment of royalty to LG Electronics Korea for providing right to use technology knowledge, know how, process, specification, layout, design, drawing and quality standards, standard calculation, data and information, development pertaining to production, assembly and sale of Colour Televisions, washing machines, air conditioners, refrigerators and micro wave oven and other products agreed between tax payers and the licensor; for commitment to supply to the taxpayer capital goods, moulds, dyes, jigs, tool, CVUs, SKD/ CKD assemblies, components, raw material and spares of capital goods and agreed products etc for right to export finished goods manufactured by the tax payers; for the use of LG Brand name and trade mark for the licensed products manufactured in India; for commitment of assistance by the licensor to set up, develop and improve of R&D facilities; commitment of assistance in selection of foreign exports including South Korean for employment in India by the taxpayer in the field of production, quality control, process en....
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....3/Del/2012 dated 14.01.2019; for AY 2009-10 in ITA 953/Del/2014 dated 15.02.2019 and AY 755/Del/2015 dated 16.08.2022. We direct accordingly. 6.3 For AY 2012-13, the same is directed to be adopted for the year under consideration also. For AY 2012-13, the assessee had paid royalty @4.16% on sales. The same was within the tolerance range +/- 5% and accordingly transaction was considered to be at arm's length. We direct accordingly. 6.4 For AY 2013-14, the assessee paid royalty @4.12% on sales. The same was within the tolerance range of +/- 3% and accordingly the transaction was considered to be at arm's length. We direct accordingly. 6.5 For AY 2014-15, the assessee paid royalty @1.89% on sales. This is also supported by royalty certificate issued by a Chartered Accountant. This transaction was considered to be at arm's length. We find that this document of royalty certificate has been filed by the assessee as additional evidence before us. The said additional evidence is hereby admitted. Hence, in the interest of justice and fair play, we deem it fit and appropriate to restore this issue to the file of the ld AO to decide the same in the light of additional evidence submit....
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....sessing Officer cannot step into the shooes of a business man. In our considered view, an item of expenditure has to be incurred wholly and exclusively for the purpose of business of the assessee and whether the assessee has derived any benefit from incurring such expenditure is, according to us, irrelevant consideration for the purpose of determination of ALP. 54. There is no dispute that the brand LG is owned by LG Korea but such expenses are incurred for undertaking marketing or promoting sale of the group companies which includes the assessee. Therefore, it can be safely concluded that the same has been incurred for the purpose of the business of the assessee in ordinary course of its business. 55. We have already decided the quarrel relating to the aggregate bench marking while deciding Ground No. 4 relating to AMP expenses and the same reasoning would fully apply here also. 56. In so far as relevancy of the documents is concerned, we find that the following evidence and documents placed in the paper book, relate to the year under consideration: S. No. Particulars Page Number Remarks 1 2010 Marketing Capability Building Program 2....
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....India - July, 2009. Report contains Marketing Plan, Training Schedule etc. 13 Marketing Presentation dated July, 2009 2699-2807 (Vol 7) Presentation/ Report dated July 7, 2009 on Marketing Strategy, Product strategy and Design Lab and Corporate design. Contains analysis of marketing strategy of competitors 14 Email dated 3 October, 2009 2124-2142 (Vol 6) Promotional and marketing material for launch of Borderless Series of TV. 57. In so far as allocation of expenses in proportion to sale is concerned, we find that the same is supported by the decision of the Hon'ble Madras High Court in the case of Manjushree Plantations Ltd 130 ITR 908 which has been approved by the Hon'ble Apex Court in the case of Consolidated Coffee 248 ITR 432 and also supported by the Hon'ble Delhi High Court in the case of EHPT India Pvt Ltd 350 ITR 41. 58. Considering the facts of the case in totality in light of the judicial decisions discussed hereinabove, and considering the past history of the assessee, we do not find any merit in the transfer pricing adjustment in respect of allocation of Asian Regional Headquarter expenses and direct the Assessing ....
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....oes not benchmark this transaction and even otherwise, the margin of the assessee is less than that of the comparable companies. The ld. DR also contended that adjustment relating to products such as monitors compressors which are not covered under royalty agreement should be sustained. 73. After considering the rival contentions, we are of the considered view that the assessee, as an independent distributor, has sold the products purchased from the AE in the domestic market and has earned profit margin of 5.78% from such sale. In our considered opinion, warrantee is an inherent obligation of the assessee while selling products to third party customers. To discharge such obligation, the assessee has engaged third party service providers and entire functions related to rendering of such warranty services are performed by such third party service providers. 74. It is an undisputed fact that the products are imported from the AE, which is the manufacturer and, therefore, the ultimate warranty liability/cost is to be borne by manufacturing entity i.e. the AE. In such a scenario, the assessee is only acting as a pass through. The entire cost incurred in providing warra....
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....in light of the specifications provided by the assessee. 79. It is the say of the ld. counsel for the assessee that design and development fee specification relates to the customization of products specific to the assessee. The ld. counsel for the assessee vehemently stated that the AE performs R&D activities on a global basis to develop platform technologies for new products. However, modifications and customization of these products are needed for certain markets as per their local regulations and cultural needs. 80. The ld. counsel drew our attention to the license agreement dated 01.07.2001 entered into by the assessee with the AE and pointed out that it clearly provides for additional and separate consideration for new models designed and developed by the AE for the assessee as provided under clause 4.2 of the agreement. 81. The ld. counsel for the assessee further pointed out that out of the total design and development fee of Rs. 43,46 crores, a sum of Rs. 16,01 crores relates to products such as monitors and compressors which are not covered under royalty agreement. 82. Strong reliance was placed on the decision of the co-ordinate bench i....
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....en as a whole, are so interrelated that consideration of multiple transactions is the most reliable means of determining the arm's length consideration for the controlled transactions. Generally, transactions will be aggregated only when they involve related products or services. The US regulations gives examples. One of the examples which is relevant to the issue is reproduced below: "Enters into a license agreement with SI. Its subsidiary, which permits SI to use a proprietary manufacturing process anil to sell the output from this process throughout a specified region. SI uses the manufacturing process and sells its output to S2, another subsidiary of P, which in turn resells (he output to uncontrolled parties in the specified region. In evaluating the arm's length character of the royalty paid by SI to P, it may be appropriate to consider the arm's length character of the transfer prices charged by SI to S2 and the aggregate profits earned by SI and S2 from the use of the manufacturing process and the sale to uncontrolled parties of the products produced by SI" 87. Rule 10A(d) of the Rules provides that closely linked transactions can be consi....
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....rom applying the TNM Method on entity level basis. The focus of this method is on net profit amount in proportion to the appropriate base or the PLI. In fact, when transactions are inter-connected, combined consideration may be the most reliable means of determining the arm's length price. There are often situations where closely linked and connected transactions cannot be evaluated adequately on separate basis. Segmentation may be mandated when controlled bundled transactions cannot be adequately compared on an aggregate basis. Thus, taxpayer can aggregate the controlled transactions if the transactions meet the specified common portfolio or package parameters. For complex entities or where one of the entities is not 'plain vanilla distributor', it should be applied when necessary and applicable comparables on functional analysis, with or without adjustments are available. Otherwise, the TNM Method should not be adopted or applied on account of being an inappropriate method. XXXXX 101. However, once the Assessing Officer/TPO accepts and adopts TNM Method, but then chooses to treat a particular expenditure like AMP as a separate international transaction w....
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....nsactions, it was not open to the TPO to subject only one element i.e. payment of technical assistance to an entirely different method. The Hon'ble High Court held as under: "17. As far as the second question is concerned, the TPO accepted TNMM applied by the assessee, as the most appropriate method in respect of all the international transactions including payment of royalty. The TPO, however, disputed application of TNMM as the most appropriate method for the payment of technical assistance fee of 38,58,80,000 only for which Comparable Uncontrolled Price ("CUP ) method was sought to be applied. Here, this court concurs with the assessee that having accepted the TNMM as the most appropriate, it was not open to the TPO to subject only one element, i.e payment of technical assistance fee, to an entirely different (CUP) method. The adoption of a method as the most appropriate one assures the applicability of one standard or criteria to judge an international transaction by. Each method is a package in itself as it were, containing the necessary elements that are to be used as filters to judge the soundness of the international transaction in an ALP fixing exercise. If th....
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....841/- paid to the said 42 expatriates by holding that the said expatriates were of the holding company/AE LG Korea and were serving the business interest of the holding company and, therefore, salaries paid to such expatriates by the assessee was not incurred wholly and exclusively for the business interests of the assessee. 105. Before us, the ld. counsel for the assessee stated that there is no dispute that the expatriates were employees of LG Korea earlier and therefore, continued to have lien on their employment with LG Korea. But during the year under consideration were in total employment with, and were working under the direct control and supervision of the assessee. It is the say of the ld. AR that the assessee was legal and economic owner of such expatriates during the year under consideration. 106. The ld. counsel drew our attention to the employment letters and Form No. 16 issued by the assessee. The ld. counsel further stated that while employing these expatriates, the assessee has followed a strict, well defined recruitment process, headed by the HRD of the assessee and expatriates hired by the assessee had to go through recruitment process of the ass....
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....essee. 112. Process of recruitment, as exhibited at page 405 of the paper book Volume II, shows that a requisition for recruitment is raised to the HRD and on such a receipt of such a requisition, the HRD evaluates job requirement and requisite skills and competencies to fill vacant posts. Thereafter, requisition is made to LG Korea. Based on job profile, LG Korea nominate its employees and thereafter HRD of the assessee shortlists the employees from pool of names suggested by LG Korea and conducts independent interviews and finally the assessee takes final decision of recruitment. 113. Considering the entire factual matrix, the only logical conclusion that can be drawn is that, such expatriates were employees of the assessee during the year under consideration and worked under the direct control and supervision of the assessee for the purpose of business of the assessee, and for such services they were paid remuneration directly by the assessee, on which tax was deducted at source as per the relevant provisions of the Act, which part has not been disputed by the revenue. 114. The decision of the Hon'ble Supreme Court in the case of Carborandum [supra....
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....Year 2008-09 ITA No. 6253/DEL/2012 and in Assessment Year 20009- 10 in ITA No. 953/DEL/2014. All the issues raised by the ld. counsel and the reliance on the decisions have been duly considered by this Tribunal in earlier Assessment Years. Therefore, we do not find any reason to divulge from the decision taken in the earlier years. 119. The findings given by this Tribunal in Assessment Year 2009-10 in ITA No. 953/DEL/2014 read as under: 41. An identical issue was considered and decided by the Tribunal in assessee's own case in ITA No. 6253/DEL/2012 for assessment year 2008-09 vide Ground No. 8 of that appeal. The relevant findings of the co-ordinate bench read as under: "78. We have given thoughtful consideration to the orders of the authorities below. We have also considered the orders of the coordinate bench in assessee's own case and the various judicial decisions relied upon by the ld. AR. In A.Y 2002-03, the coordinate bench in ITA No. 1404/DEL/2007 has held as under: "9. We have heard both the parties and gone through the material available on record. In this case the assessee had collected sales tax as a part of dealers' price. At the ....
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....rch, 2013 for a period of 15 years or till the time the exemption of sales tax was availed of to the extent of 200 per cent of fixed capital investment i.e. Rs. 1,02,75,90,892/- whichever was earlier. This certificate also provided the items i.e. Colour TV, Washing machine and Air-conditioners on which exemption from sales tax was provided. Another certificate was issued on 27th September, 2000 vide letter No. 1519 in respect of printed circuit voice for CTV number 8,12,000 and Micro-wave Oven 1,00,000. In this certificate, the sales tax exemption in first three years has been provided to the extent of 100 per cent, next three years 75 per cent, next two years 50 per cent and next two years 25 per cent. In all exemption from sales tax was provided for 10 years. 10. Neither the certificates issued by Greater Noida Industrial Development Authority nor the Notification issued by the State Govt. authorises the assessee to collect sales tax from its customers. The assessee has been exempted from collecting the sales tax from customers on the sales made with effect from 27th March, 1998. In fact, the ld. counsel for the assessee made a statement at the bar, during the course of ....
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.... findings of the CIT(A). Ground No. 8 is accordingly dismissed. 42. Respectfully following the precedent, we decline to interfere with the findings of the DRP. Ground No. 9 is accordingly dismissed." 120. Respectfully following the decision of the co-ordinate bench, Ground No. 12 is dismissed." 11.2 Both the parties before us stated that this issue is decided by the Tribunal against the assessee except in respect of Maharashtra Sales Tax Subsidy by treating as revenue receipt. However, with regard to Maharashtra Sales Tax Subsidy, the same is decided in favour of the assessee by this Tribunal in ITA No. 755/Del/2015 dated 13.10.2023 (which is passed in pursuant to MA proceedings in MA No. 285/Del/2022 dated 13.03.2023). The relevant operative portion of the order of this Tribunal is reproduced below:- "8. Further, we find that the ld AR on the impugned issue has raised rightly placed reliance on the decision of the Hon'ble Bombay High Court in the case of CIT Vs. Chaphalkar Brothers reported 33 taxmann. Com 431 which had been duly approved by the Hon'ble Supreme Court which reported in 88 taxmann.com 178. 9. Further, we also find that the ....
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....on u/s 80JJAA amounting to Rs. 40,79,577/- in respect of Noida Unit and Rs. 96,65,389/- in respect of Pune unit. The Assessing Officer, following the findings given in earlier Assessment Years, allowed the claim of deduction to the extent of Rs. 20,01,771/- and disallowed Rs. 1,17,43,195/-. 133. We find that an identical quarrel arose in Assessment Year 2008-09 and 2009-10 and this Tribunal in ITA No. 6253/DEL/2012 and in Assessment Year 20009-10 followed in ITA No. 953/DEL/2014 has decided this issue as under: "92. Ground Nos. 12 & 12.1 relate to disallowance of deduction under section 80JJAA of the Act to the extent of Rs. 29,06,091/- 93. Facts on record show that the assessee claimed deduction u/s 80JJAA of the Act amounting to Rs. 44,50,635/-. The said amount pertained to deduction in respect of additional wages paid in financial years 2005-06, 2006-07 and 2007-08. The Assessing Officer has allowed the deduction in respect of claim pertaining to the A.Y under consideration amounting to Rs. 15.44 lakhs and disallowed the claim of deduction pertaining to A.Y 2006-07 and 2007-08 amounting to Rs. 29.06 lakhs. 94. Before us, the ld. AR contended t....
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....e considered provided that the period of employment of such workmen is equal to or more than 300 days in the relevant previous year. What the assessee contends is that new workmen, who did not fall in the category of "regular workmen", on account of employment being for less than 300 days in the year of appointment, should be considered as "regular workmen" in the subsequent year, provided such workmen continue to be employed with the company and the total period of their employment is equal to or more than 300 days in the subsequent year. Thought this contention of the assessee has been take care of by the second proviso, but the same has been given effect from 1.4.2019. 98. If the effect of the second proviso is given retrospectively, then the assessee's claim of deduction is allowable. Memorandum explaining provisions of Finance Bill 2018 states that the amendment is intended to rationalize the deduction of 30% of additional wages "by allowing the benefit for a new employee who is employed for less than the minimum period during the first year but continues to remain employed for the minimum period in subsequent year. 99. In our considered opinion, this amendme....
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....re, retrospective. The Gujarat High Court in the above case held the amendment to be curative and explanatory and hence retrospective. The Patna High Court has also held the amendment inserting the first proviso to be explanatory in the case of Jamshedpur Motor Accessories Stores v. union of India and Ors. ([1991] 189 ITR 70.), It was held that amendment inserting first proviso to be retrospective. The special leave petition from this decision of the Patna High Court was dismissed. The view of the Delhi High Court, therefore, that the first proviso to section 43B will be available only prospectively does not appear to be correct. As observed by G.P. Singh in his Principles of statutory Interpretation, 4th Edn. Page 291, "It is well settled that if a statute curative or merely declaratory of the previous law retrospective operation is generally intended." In fact the amendment would not serve its object in such a situation unless it is construed as retrospective. The view, therefore, taken by the Delhi High Court cannot be sustained." 100. Similar view was taken by the Hon'ble Supreme Court in the case of CIT Vs. Alom Extrusions Ltd 319 ITR 306 wherein the Hon'ble S....
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....und No. 10 relates to disallowance of Rs. 97,71,71,875/- out of aggregate royalty amounting to Rs. 1,39,59,59,821/- paid to LG Electronics, Korea holding the same to be in the nature of capital expenditure. 44. A similar issue was decided in favour of the assessee by the Tribunal in assessee's own case in ITA No. 6253/DEL/2012 for assessment year 2008-09 vide Ground No. 10 of that appeal. The relevant findings of the co-ordinate bench read as under: "88. We find that the Tribunal in assessee's own case for A.Y. 2007-08 has decided this issue in favour of the assessee and against the Revenue. Respectfully following the findings of the coordinate bench, we direct the Assessing Officer to treat royalty payment of Rs. 85.75 crores as revenue expenditure. Ground No. 10 is allowed." 45. Respectfully following the precedent, we direct the Assessing Officer/TPO to delete the impugned disallowance. Ground No. 10 is allowed. 124. Respectfully following the decision of the co-ordinate bench, we direct the Assessing Officer to delete the impugned disallowance. Ground No. 13 is, accordingly, allowed." 13.2 Respectfully following the same, the grounds raise....
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....wing the findings of the coordinate benches, we direct the Assessing Officer to delete the addition of Rs. 38,02,141/-. Ground No. 9 is allowed." 14.2 Respectfully following the same, the grounds raised by the assessee in this regard are allowed. 15. Ground No. 12 raised by the assessee for AY 2011-12 is challenging the action of the ld AO in restricting the credit of TDS. This issue requires factual verification. Hence, this issue is restored to the file of the ld AO with a direction to give credit of TDS after due verification of the return of income as per law. Accordingly, ground No. 12 raised by the assessee for AY 2011-12 is allowed for statistical purposes. 16. Ground No. 14 raised by the assessee for AY 2014-15 is with regard to excess dividend distribution tax paid by the assessee to non resident share holders as against the rate prescribed in the India-Korea DTAA and accordingly whether the assessee would be entitled for refund of the same. 16.1 We have heard the rival submissions and perused the material available on record. This issue is squarely covered against the assessee by the Special Bench decision of Mumbai Tribunal in the case of DCIT Vs. Total Oil I....
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....ng or leasing goods carriages and such contractors furnishes PAN to the assessee. In view of this amendment w.e.f. 01.10.2009, the assessee stopped deducting tax at source from the payments made to transport contractors who provided their PAN to the assessee. The Assessing Officer without appreciating the submissions made by the assessee, passed the order dated 27.02.2015 under section 201(1)/201(1A) of the Act, holding that the petitioner was required to deduct tax at source under section 194C of the Act from payments to the transport contractors and treated the assessee as an 'assessee in default' for not deducting tax at source under that section. The ld AO, on the basis of the order passed under section 201(1) of the Act treating the assessee as 'assessee in default' for the alleged non deduction of tax at source from the payment made to Transporters, made disallowance of Rs. 2,11,88,76,084/- under section 40(a)(ia) of the Act. 18.3 It was contended that the amendment brought in Section 194C(6) of the Act by the Finance Act, 2015 need to be construed as prospective in nature. The purpose of bringing the amendment in Section 194C(6) of the Act as proposed by the Finance Act, ....
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....f labour, calibration charges, moulding charges etc to maintain already existing asset and not to bring any new asset into existence. The ld AO without assigning any specific reason proceeded to disallow a sum of Rs. 187,14,217/- on account of repairs and maintenance expenses incurred by the assessee for its business purposes, which stood rightly deleted by the ld DRP, on which we do not find any infirmity. Accordingly, ground No. 4 raised by the revenue for AY 2011-12 is dismissed. 20. Ground Nos. 5 and 6 raised by the revenue for AY 2011-12 are general in nature and does not require any specific adjudication. Hence, they are dismissed. Similarly, Ground Nos. 1 to 3.1 for AY 2011-12 raised by the assessee, Ground Nos. 1 to 1.2 for AY 2006-07, Ground Nos. 1 to 4.1 for AY 2014-15 raised by the assessee, Ground Nos. 1 to 1.2 for AY 2005-06, Ground Nos. 1 to 3.1 for AY 2012- 13 raised by the assessee, Ground Nos. 1 to 4.1 for AY 2013-14 are general in nature and does not require any specific adjudication. 21. With regard to chargeability of interest u/s 234B of the Act, the same is consequential in nature. With regard to chargeability of interest u/s 234C of the Act, the law is ....
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....llowed vide AO order dated 31.10.2011 Relief by ITAT vide order dated 08.12.2014 Disallowance sustained by ITAT Transfer Pricing: 1 Advertising, Marketing and Promotion expenses 1,827,111,346 Refer Back to TPO 2 Royalty 327,895,200 120,228,240 207,666,960 Corporate Tax: 3 U.P Sales Tax Subsidy 610,079,579 610,079,579 4 Royalty 819,802,800 819,802,800 - 5 Export Commission 111,167,130 - 111,167,130 6 Provision of Service Warranty 77,904,573 77,904,573 7 Deduction u/s 80JJAA 12,562,113 12,562,113 Total 3,786,522,741 1,017,935,61 941,475,782 25.2. The ld CIT(A) categorically noted from the aforesaid table that the additions that were ultimately sustained by the ITAT are only disallowance of claim of expenditure made by the assessee except addition made on account of UP Sales Tax subsidy. It was categorically held that all these expenses were duly disclosed by the assessee in its books of account and there is absolutely no question of furni....