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2024 (1) TMI 697 - ITAT AHMEDABADRefund of excess Dividend Distribution Tax - whether as per Double Avoidance Taxation Agreement ("DTAA") between India and Germany, the liability of tax on dividend received by the German resident does not exceeds 10% of the dividends? - HELD THAT:- As decided in Total Oil India Pvt. Ltd. [2023 (4) TMI 988 - ITAT MUMBAI (SB)] where dividend is declared, distributed or paid by a domestic company to a non-resident shareholder(s), which attracts Additional Income-tax (Tax on Distributed Profits) referred to in sec.115-O of the Act, such additional income tax payable by the domestic company shall be at the rate mentioned in section 115-O of the Act and not at the rate of tax applicable to the non-resident shareholder(s) as specified in the relevant DTAA with reference to such dividend income. Nevertheless, we are conscious of the sovereign's prerogative to extend the treaty protection to domestic companies paying dividend distribution tax through the mechanism of DTAAs. Thus, wherever the Contracting States to a tax treaty intend to extend the treaty protection to the domestic company paying dividend distribution tax, only then, the domestic company can claim benefit of the DTAA, if any. we hereby dismiss Ground Nos. 6 to 9 of the assessee’s appeal. Disallowance of reimbursement of expenses u/s 37 - assessee had reimbursed a sum to Schaeffler Technology GMBH and CO KG, Germany on account of professional services rendered by E.Y. Germany in lieu of Agreement entered with Schaeffler Germany - HELD THAT:- We are of the considered view that in the interests of justice the matter may be restored to the file of the Ld. A.O. so as to allow the assessee to produce relevant documents / evidences in support of claim of deduction of the aforesaid expenses under Section 37 of the Act. TP Adjustment - MAM selection - benchmarking of Royalty using CUP Method instead of TNMM Method - HELD THAT:- We observe that ITAT Ahmedabad in assessee’s own case for A.Y. 2002-03 [2014 (11) TMI 552 - ITAT AHMEDABAD] has held that TNMM may be used for determination or Arm’s Length Price for Royalty payments. Further, we observe that even the AO / TPO in the remand proceedings have given a specific findings that if TNMM is taken to be the most appropriate method, the transactions is at Arm’s Length Price. Accordingly, in view of the decision of ITAT Ahmedabad in assessee’s own case on this issue, we are of the considered view that Ld. CIT(A) has not erred in facts and in law in deciding this issue in favour of the assessee. TP Adjustment – Management Fees - TPO held that assessee has not produced any details in respect of determination of payment made by the assessee to it’s AEs at the time of entering into the Agreement alongwith the basis thereof, cost benefit analysis carried out by the assessee, the comparability analysis in respect of the payment etc., at the time of making the aforesaid payments, thus concluded that the Arm’s Length Price of the services provided to the assessee by both the Associated Enterprises towards management fee, is to be taken at “NIL” and accordingly, recommended adjustment of the entire amount - HELD THAT:- We are of the considered view that Ld. CIT(A) has not erred in facts and in law in holding the determination of Management Fees to be at Arm’s Length Price. In our considered view, Ld. CIT(A) has correctly observed that the aforesaid activities / services do not qualify as stewardship / shareholder activity. Notably, in assessee’s own case for A.Ys. 2013-14 and 2014-15, the TPO has not made any TPA in respect of aforesaid services and accepted the payment of Management Fees to be at Arm’s Length Price. We also observe that Ld. CIT(A) has made a detailed comparison between the decision rendered by ITAT, Pune Bench in the case of a group company (INA Bearings) in respect of management services and after a detailed comparison and looking into the facts of the assessee’s case, has held that the assessee has correctly determined the Arm’s Length Price in respect of the aforesaid Management Fees by using TNMM method. Accordingly, looking into the instant facts, we are of the considered view that Ld. CIT(A) has not erred in facts and in law in deciding this issue in favour of the assessee.
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