TaxTMI 
TaxTMI 
2026 (8) TMI 1094
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..../AST/S/143(3)/2022-23/1050950356(1) dated 14.09.2022 & 18.03.2023 for assessment years 2017-18 & 2018-19 and the Assessment Unit's remaining twin assessments dated 26.08.2023 & 23.02.2026 having DIN Nos. ITBA/AST/S/143(3)/2024-25/1067966019(1) & ITBA/AST/S/143(3)/2025-26/1086385635(1) in assessment years 2020-21 & 2022-23; respectively, involving proceedings u/s. 143(3) r.w.s 144C(13) of the Act. Heard both the parties. Case files perused. 2. Learned senior counsel Mr. Ajay Vohra representing the assessee has filed a combined tabulation chart regarding various identical issues involved herein having varying sums; assessment year-wise, respectively. The Revenue is equally fair in not disputing the same before us. It is in this factual backdrop that we deem it more appropriate to proceed issue/ground-wise for the sake of convenience and brevity in all these assessment years. 3. Learned senior counsel first of all submits that the assessee's former identical four substantive issues herein i.e, arising against arms' length price adjustments under Chapter X of the Act involving varying sums, are under the head(s) of advertisement/marketing and sales promotion "AMP" expenses ie.....
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....nsumer durables. Further, the Applicant has entered into various international transactions with LG Electronics Inc., South Korea (hereinafter referred to as "LGEK") and other Associated Enterprises ("Other AEs"), collectively referred to as Associated Enterprises ("AEs") and has filed an application in Form 3CED under rule 10-1 of the Income-tax Rules, 1962 (hereinafter referred to as "the Rules") on 29 March 2018 proposing to enter into a Bilateral Advance Pricing Agreement with CBDT to determine the Arm's Length Price (hereinafter referred to as "ALP") of the international transactions with LGEK, and into a Unilateral Advance Pricing Agreement for transactions with Other AEs, covered by this Agreement pursuant to the provisions of clause (a) of sub-section (1) of section 92CC of the Income-tax Act, 1961, (hereinafter referred to as "the Act") read with rules 10F to 10T and rule 44GA of the Rules; AND WHEREAS the Competent Authority of India has formalized a Mutual Agreement Procedure with the Competent Authority of the Republic of Korea in accordance with rule 44GA of the Rules and the Applicant has conveyed its acceptance to such Mutual Agreement under the said rul....
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....tions are described in Appendix I(a) of the Agreement. It is clarified that the bilateral portion of the Agreement applies to the Applicant's transaction with LGEK while the unilateral portion applies to the Applicant's transactions with Other AEs listed out in serial no. 2 to 56 of Appendix I(a). 3.2 For the bilateral and unilateral portion of this Agreement, the covered transactions between the Applicant and its AEs shall be a) Royalty Payment b) Import of raw materials, spares, consumables and components c) Export of raw material, spares and service components d) Import of finished goods e) Export of finished goods f) Export of Traded Goods g) Import of capital goods h) Import of software i) Service warranty charges (payable) j) Service warranty expenses (receivable) k) Corporate guarantee paid l) Reimbursement of expenses by LGE India to AEs m) Reimbursement of expenses by AEs to LGE India n) Management fee paid o) Software services received p) Repair of machinery (payable) q) Inspection charges (payable) ....
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....ince already decided against the department in assessee's appeal ITA No. 755/Del/2015, in assessment year 2010-11 decided on 16.08.2022; as under: "102. Ground No. 11 relates to the disallowance of salary of Rs. 36,33,50,841/- paid to expatriates u/s. 37(1) of the Act holding that the expatriate employees work under direct control of LG Korea. 103. Briefly stated, that the facts of the impugned issue are that the assessee is engaged in the business of manufacturing consumers electronics and home appliances. During the year under consideration, in order to manufacture such technologically advanced goods, the assessee has employed 3,970 people including 42 expatriates, who were also on the payroll of LG Korea. 104. During the course of scrutiny assessment proceedings and on examination of the claim, the AO disallowed the salary amounting to Rs. 36,33,50,841/- 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....
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....was further contended that the expatriates come to India and work under the control of LG Korea reported to them and do not resign from their employment in Korea. 110. The Id. DR further contended that the AO/DRP has only contributed 25% cost of the salary of expats to the alleged PE of LG Korea in India. 111. We have considered the orders of the authorities below and have given thoughtful consideration to the rival submissions. We have also perused the employment agreement between the assessee and the expat employees. On perusal of the agreement it clearly shows that the expatriates were wholly and exclusively working for the business interest/benefit of the assessee and were not entitled to render service of any nature whatsoever to any other person. It is also true that the assessee follows a well-defined recruitment process which is headed by HRD of the assessee. 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. Thereafte....
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....d herein is that the learned lower authorities have erred in law and on facts in disallowing its provisions if service warranty made on scientific and rational basis in assessment year 2015-16. It invites our attention to the tribunal's order right from assessment years 2002-03 to 2008-09 as well as in assessment years 2013-14 to 2014-15(supra) that the department's very stand stands already rejected which has gone unrebutted from the Revenue side. We thus adopt judicial consistency herein as well to delete the impugned provision for service warranty disallowance in assessment year 2015-16 therefore. 10. The assessee's eighth substantive issue raised herein as per its thirteenth ground in assessment year 2017-18 is that the Assessing Officer has erred in law and on facts in restricting the TDS credits claim made in the revised return. The same is found to be more involving a factual reconciliation and verification than any substantive adjudication on our part as duly agreed by both the parties. We thus direct the learned Assessing Officer to decide the same afresh as per law therefore. This assessee's ground succeeds for statistical purposes. 11. Next comes the assessee's nin....
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....rred to a larger bench of the High Court. The said paragraph is reproduced herein under: 40. In our respectful opinion, in these circumstances, the following questions of law are required to be answered by the Larger Bench: (1) Whether the decision of the Division Bench in M/s. Colorcon Asia Pvt. Ltd. v. The Joint Commissioner of Income Tax, Panji Goa and Ors. (Tax Appeal No.5/2004 decided on 28 November, 2025) lays down the correct position in law when it holds that, Dividend Distribution Tax (DDT) is a tax paid by the Company, on dividend income of the shareholder, entitling the shareholder of the benefit of the provisions of Double Taxation Avoidance Agreement (DTAA) between India and UK? (ii) Considering the decision of the Supreme Court in Godrej and Boyce Pvt. Ltd. (supra), whether the decision of the Division Bench in M/s Colorcon Asia Pvt. Ltd. (supra) is per incuriam? 3. Having regard to the ramifications of the aforesaid questions being answered either way, several intervention applications (IA No. 143674/2026, IA No. 147312/2026, IA NO.146726/2026 and IA No. 151478/2026) have been filed. To enable the parties to make their sub....
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....s 234B, 234C & 234D interest and section 271(1)(c) penalty(ies) which are treated as consequential in nature and rejected in very terms. 19. The assessee's sixteenth substantive ground/issue in fourteenth and fifteenth grounds in A.Ys. 2015-16 & 2017-18 seeking tax credit of advance tax stands restored back to Assessing Officer for his afresh appropriate reconciliation and factual verification as per law. 20. The assessee's seventeenth and eighteenth substantive issue/grounds raised herein seek to claim correct tax rate application and against double addition of transfer pricing adjustment which are treated as consequential in nature. Learned Assessing Officer is directed to ensure the correct tax rate is applied and there is no double addition in its hands. Necessary computation shall follow as per law in all these cases. No other ground or arguments has been pressed before us. 20. These assessee's five appeals ITA Nos. 490/Del/2021, 2493/Del/2022, 1036/Del/2023, 4397/Del/2024, 187/Del/2026 are partly allowed in above terms. A copy of this common order be placed in the respective case files. Order Pronounced in the Open Court on 21.07.2026. ============= Documen....
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.... 17-18 52,42,46,804 31,21.23.402 1,41,83,52.210 70,91,76,105 (22,95,91,401) FY 18 FY 18-19 83,63,60,549 31,81.80,275 31,81,80,275 FY 19 FY 19-20 68,85,13,925 34,42,56.963 4.24,48.899 2.12,24 449 32.80,44,349 FY 20 FY 20-21 50,72,50,007 25.38,29.504 25,36,29,504 FY 21 FY 21-22 69,72,30,809 34.86,15,405 1,59.11,52.810 79.55.76.405 (25.60.07.564) FY 22 FY 22-23 Total 3,15,36,11,095 1,57,58,05,548 4,12,84,92,742 2,05,42,46,371 0 (Unit : KRV) Korea's Financial Voar India's Financial Year Adjustments made by Korea [A] Adjustments to be retained as per APA negotiation [6]-50'SA Adjustments made by India [C] Adjustments to be retained as per APA negotiation [D]= 50%C Adjustments to be mace to the rotunad Income of LGEK FY 14 FY 14-15 15,428.043,288 7,714,021.653 (5.757,953,458) FY 15 FY 15-16 2.877,356.348 1,438.678.165 (1,073.568,118) FY 16 FY 16-17 419,517,320 209.758.669 (156.569.518) FY 17 FY 17-18 10,841,244.965 5,420.622.483 24,438,208,578 12,219,104,289 (3,700.045,953) FY 18 FY 18-19 10,251,984,809 5,125.992,405 5.125.992,405 FY 19 FY 19-20 11,395.319.572 5,697.659.786 708,472.124 354,236.054 5.433,248.458 FY 20 FY 20-21 8,079,967,587 4....