TMI Blog2018 (11) TMI 1762X X X X Extracts X X X X X X X X Extracts X X X X ..... s also apparent the expenditure was wholly and exclusively incurred for marketing assessee s own products and the payment was made to third parties in India. Therefore, it is outside the purview of international transaction as defined under section 92B of the ACT. As could be seen, the Transfer Pricing Officer ignoring the submissions made by the assessee had assumed that a benefit has accrued to the overseas A.E. on account of AMP expenditure incurred by the assessee. Following decision of the Co ordinate Bench in assessee s own case [ 2016 (5) TMI 969 - ITAT MUMBAI] we delete the addition made by the Assessing Officer towards transfer pricing adjustment on account of AMP expenditure. Ground raised is allowed. Disallowance towards royalty payable to Cadbury Adams, U.S.A. (CAUSA) - HELD THAT:- as per the original agreement executed on 1st June 2006, effective from 1st January 2006, the parties to the agreement intended to transfer and avail technical knowhow / knowledge relating to the licensed product along with trademark. Considering the submissions of the learned Sr. Counsel for the assessee that in subsequent assessment years royalty paid by the assessee @ 2.7% of sales w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Transfer Pricing Officer or the learned Commissioner (Appeals), in our view, it would be fair and reasonable to allow an opportunity to the Assessing Officer to consider the additional evidence and decide the issue. Moreover, there is also allegation and counter allegation with regard to production of evidences. When as per assessee s claim in the subsequent assessment years the Transfer Pricing Officer himself has allowed a part of the service charges paid by the assessee to CSAPL, though, the quantum is in dispute. If in the subsequent assessment years the Transfer Pricing Officer has accepted the fact that the assessee has availed services from CSAPL under the very same agreement, there is no reason to dispute assessee s claim of availing services in the impugned assessment year if the assessee can demonstrate such fact by furnishing proper documentary evidences. In that event, the Transfer Pricing Officer certainly cannot determine the arm's length price at nil by applying the benefit test. Therefore, on overall consideration of facts and circumstances of the case, we are inclined to restore the issue to the Assessing Officer for de novo adjudication after due opportuni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng to this issue are, the assessee isa subsidiary of CSOL, U.K. It is engaged in the business of manufacturing and sale of malted food and drinks as well as chocolates. For the assessment year under dispute, the assessee filed its return of income on 29th November 2006 declaring total income of ₹ 77,49,13,665. During the assessment proceedings, the Assessing Officer noticing that the assessee had entered into international transactions with the overseas Associated Enterprises (AEs) made a reference to the Transfer Pricing Officer to determine the arm's length price (ALP) of the international transactions. During the proceedings before him, the Transfer Pricing Officer noticed that the assessee has bench marked the arm's length price in respect of some of the international transactions with the A.E. by adopting Transactional Net Margin Method (TNMM). One of such international transaction related to payment of royalty to the AE for technical knowhow and trade mark. After calling for necessary information from the assessee, he found that it had entered into a technical assistance and royalty agreement with CSOL from 9th March 1993, for availing the benefit of technical k ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... license agreement was executed on 12th February 2002, between Cadbury Ltd., Trebor Bassett Ltd., CSOL and the assessee. After perusing the agreement and other material on record, the Transfer Pricing Officer on 24th January 2008, issued a show cause notice, stating that as per the earlier agreement, the assessee was required to pay royalty @ 2% of the sales towards technical knowhow. However, as per the subsequent agreement though the rate of royalty for technical knowhow was reduced to 1.25% of the sales, however, the assessee entered into another agreement for payment of royalty @ 1% on account of trademark. Thus, in effect, the assessee would pay royalty to CSOL at an enhanced rate of 2.25% of net sales. Thus, he called upon the assessee to explain why the royalty paid over and above 1.25% of net sales should not be adjusted towards the arm's length price of royalty. Though, the assessee objected to the proposed adjustment to the arm's length price, however, the Transfer Pricing Officer did not find merit in the submissions of the assessee. Referring to the clarification issued by the Government of India, Ministry of Commerce and Industries, vide Press Note no.8(2)/2001 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o CSOL at the aggregate rate of 2.25% was also approved by the Government as well as Reserve Bank of India. In this context, he drew our attention to the approval dated 14th September 2000 and 25th June 2001, approving payment of royalty for technical knowhow @ 1.25% and for trademark @ 1% respectively. He also drew our attention to the copy of relevant Circulars placed at Page 85 and 119 of the paper book. The learned Sr. Counsel submitted, Press Note no.1 (2002 series) issued by the Ministry of Commerce and Industry, Government of India, does not restrict payment of royalty on trademark to the payment of royalty for technical knowhow. He submitted that the Transfer Pricing Officer has not disputed the TNMM as the most appropriate method adopted by the assessee. Therefore, he submitted, determination of arm's length price of royalty payment at nil is not in accordance with TNMM. The learned Sr. Counsel submitted, while deciding identical issue in assessee s own case for assessment year 2002 03 to 2005 06, the Tribunal has allowed royalty payment on technical knowhow and trademark @ 2.25%. In this context, he drew our attention to the relevant orders of the Tribunal placed in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the order passed by him in assessee s own case for assessment year 2005 06. As could be seen from the material available on record, the assessee has entered into agreement with its current company in the year 1993, for availing technical knowhow for which it was required to pay royalty @ 2%. Subsequently, the assessee has entered into fresh agreements with the parent company for transfer of technical knowhow as well as use of trade mark for which assessee is required to pay royalty @ 1.25% and 1% of the net sales respectively. As could be seen from the materials placed on record, the payment of royalty for technical knowhow @ 1.25% has been approved by the Ministry of Commerce and Industry, Government of India, vide letter dated 14th September 2000 (copy is placed at Page 85 of the paper book). Similarly, payment of royalty for trademark @ 1% has been approved by the Reserve Bank of India, vide letter dated 25th June 2001, copy at Page 119 of the paper book. Thus, as could be seen, payment of royalty for trademark at 1% over and above the royalty paid at 1.25% for technical knowhow has been approved by the Reserve Bank of India. Though, the Transfer Pricing Officer has relied upon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... authorities, we find that in so far as the payment of royalty on technical knowhow concerned, the assessee has been paying to its parent AE right from 1993, as, other group companies are paying across the globe. It has been accepted by the TPO that the payment does not effect the profitability of the assessee, if we are to examine the issue from that angle as well. In any case the payment of royalty on technical knowhow is at par with the similar payments from the group companies in other countries region. Besides this, the payment is made as per the approval given by the RBI and SIA, Government of India. Hence there cannot be any scope of doubt that the royalty payment on technical knowhow is not at arm‟s length. 40.Coming to the issue of royalty payment on trademark usage, we find that the assessee, in fact is paying a lesser amount, if the payments are compared with the payments towards trademark usage, by the other group companies using the Brand Cadbury in other parts of the world. On the other hand, if we examine the argument taken by the TPO with regard to OECD guidelines. On this point the assessee‟s payment is coming to a lesser figure, as discussed in d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce should not be made on account of AMP expenditure incurred by the assessee since, according to the Transfer Pricing Officer a benefit has accrued to the A.E. on account of such expenditure. Though, through elaborate written submissions the assessee objected to the proposed adjustment, however, the Transfer Pricing Officer rejecting the submissions of the assessee ultimately concluded that benefit has accrued to the A.E. on account of AMP expenditure incurred by the assessee. Accordingly, he quantified such benefit accruing to the A.E. on account of AMP expenditure at 1.77% of the net sales which worked out to ₹ 1.70 crore. However, observing that he has already made disallowance of the royalty payment on trademark he restricted the adjustment to be made on account of AMP expenditure at₹ 80 lakh. In terms of the orders passed by the Transfer Pricing Officer, the Assessing Officer made addition of ₹ 80 lakh to the income of the assessee. Being aggrieved of such addition, the assessee preferred appeal before the first appellate authority. 11. However, the learned Commissioner (Appeals) upheld the addition / adjustment made by the Assessing Officer / Transfer P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for assessment year 2005 06. Notably, while deciding assessee s appeal for assessment year 2005 06 the Tribunal vide order passed in ITA no. 5470/Mum./2012, dated 18th May 2016, has decided the issue in favour of the assessee holding as under: 3.4.We have heard the rival submissions and perused the material before us. Before proceeding further it would be useful to understand the philosophy and to consider the historical background of the TP provisions. It is said that the purpose and object of introduction of the provisions contained in Chapter X is to prevent an assessee from avoiding payment of tax by transferring income yielding assets to non-residents even while retaining the power to enjoy the fruits of such transactions i.e. the income so generated. As a concept it is not totally a new idea. A reference to the provisions of section 42(2)to the Indian Income Tax Act,1922,could be made in this regard-as it was a somewhat similar section and dealt with the trans-border transactions. The provisions of the said section broadly provided that where a nonresident carried out business with the person resident in the taxable territory and it appeared to the AO that on account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... % that the AMP expenditure incurred by the assessee during the same period was 10.45% that the assessee had contended that its profitability(PBT to sales ratio) @10.85%was much higher compared to the average profitability of the comparables at the rate of 3.57% that the FAA had held that higher rate profitability could not be a justification of this proportionate expenditure, that in the appellate proceedings the FAA had proposed further addition that finally he upheld the order of the TPO and confirmed the addition of ₹ 71 lakhs that there was no contractual obligation to recover money from the AE that it was separately paying royalty for use of brand and trademark. There is no reason for not holding that the increased AMP expenditure led to enhanced sales and profitability that for the purpose of analysing the AMP expenditure incurred by and the comparables it is necessary to consider various factors. If factors like growth rate, nature of business number of products launched territories serviced and turnover/profits achieved have necessarily to be considered for determining the AMP expenses. The entire expenditure was focused on the Indian consumer and it is evident from t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... maintaining its position in the market. The TPO/FAA had not controverted the fact that the AE was the owner of intellectual property of the Cadbury brand and that it was responsible for promoting the brand all over the globe and that the brand related exercise at the cost of the AE for the overall brand positioning and management benefited the assessee also in an indirect manner. Nothing has been brought on record to prove that the assessee was directly or indirectly promoting the global brand rather than promoting its own products. In our opinion, there exists a fine but very important distinction between products promoted and nurtured by an assessee and the brand owned and supported by its AE. In the modern world both exist and play different and specified roles. Therefore until and unless some -thing positive is brought on record about sharing/incurring AMP expenditure under the head by an assessee on behalf of its AE,it cannot be held that it should have recovered some amount from the AE as the expenditure by it indirectly helped in augmenting the brand value owned by its overseas AE. In the case under consideration the assessee was incurring expenditure for its products wher ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Meaning of international transaction. 928.(1) For the purposes of this section and sections 92,92C,92D and 92E , international transaction means a transaction between two or more associated enterprises, either or both of whom are nonresidents; in the nature of purchase, sale or lease of tangible or intangible property, or provision of services, or lending or borrowing money, or any other transaction having a bearing on the profits, income, losses or assets of such enterprises, and shall include a mutual agreement or arrangement between two or more associated enterprises for the allocation or apportionment of, or any contribution to, any cost. or expense incurred or to be incurred in connection with a benefit, service or facility provided or to be provided to anyone or more of such enterprises. (2) A transaction entered into by an enterprise with a person other than an associated enterprise shall, for the purposes 'of sub-section (1), be deemed to be a transaction entered into between two associated enterprises, if there exists a prior agreement in relation to' the relevant transaction between such other person and the associated enterprise, or the terms of the relevant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Revenue, and even if resort is had to Section 92F (v), which defines 'transaction' to include 'arrangement', 'understanding' or 'action in concert', 'whether formal or in writing', it is still incumbent on the Revenue to show the existence of an 'understanding' or an 'arrangement' or 'action in concert' between MSIL and SMC as regards AMP spend for brand promotion. In other words, for both the 'means', part and the 'includes' part of Section 928 (1) what has to be definitely shown is the existence of transaction whereby MSIL has been obliged to incur AMP of a certain level for SMC for the purposes of promoting the brand of SMC. 59. In Whirlpool of India Ltd. (supra), the Court interpreted the expression acted in concert and in that context referred to the decision of the Supreme Court in Daiichi Sankyo Company Ltd. v.. Jayaram Chigurupati 2010(6)MANU/SC/0454/2010, which arose in the context of acquisition of shares of Zenotech Laboratory Ltd. by the Ranbaxy Group. The question that was examined was whether at the relevant time the Appellant, i.e., 'Daiichi Sankyo Company and Ranbaxy wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a 'transaction' and that every expenditure forming part of the function, cannot be construed as a 'transaction'. Further, the- Revenue's attempt at re-characterising the AMP expenditure incurred as a transaction by itself when it has neither been identified as such by the Assessee or legislatively recognised in the Explanation to Section 92 B runs counter to legal position explained in CIT vs. EKL Appliances Ltd. (supra) which required a TPO to examine the 'international transaction' as he actually finds the same. 62. In the present case, the mere fact that B L, USA through B L, South Asia, Inc holds 99.9% of the share of the Assessee will not ipso facto lead to the conclusion that the mere increasing of AMP expenditure by the Assessee involves an international transaction in that regard with B L, USA. A similar contention by the Revenue, namely the fact that even if there is no explicit arrangement, the fact that the benefit of such AMP expenses would also encure to the AE is itself self sufficient to infer the existence of an international transaction has been negatived by the Court in Maruti Suzuki India Ltd. (supra) as under: 68. The a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t determining whether the AMP spend of the Assessee on application of the BLT is excessive there by evidencing the existence of an international transaction involving the AE. The quantitative determination forms the very basis for the entire TP exercise in the present case. 74.The problem with the Revenue's approach is that it wants every instance of an AMP spend by an Indian entity which happens to use the brand of a foreign AE to be presumed to involve an international transaction. And this, notwithstanding that this is not one of the deemed international transactions listed under the Explanation to Section 928 of the Act. The problem does not stop here. Even if a transaction involving an AMP spend for a foreign AE is able to be located in some agreement, written (for e.g., the sample agreements produced before the Court by the Revenue) or otherwise, how should a TPO proceed to benchmark the portion of such AMP spend that the Indian entity should be compensated for? 63. Further, in Maruti Suzuki India Ltd. '(supra) the Court further explained the absence of a 'machinery provision qua AMP expenses by the following analogy: 75. As an analogy; and for-no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for promoting the brand of the foreign AE. As mentioned-in- Sassoon -J David-(supra)- the--fact that- somebody other than the Assessee is also benefitted by the expenditure should not come in the way of an expenditure being 'allowed by way of a deduction under Section 10 (2) (xv) of the Act (Indian Income Tax Act, 1922) if it satisfies otherwise the tests laid down by the law . Considering the facts-like absence of an agreement between the assessee and the AE.s. for sharing AMP expenses payment made by the assessee under the head AMP to the domestic parties failure of the TPO prove that expenses were not for the business carried out by the assessee in India-and following the judgments of the Hon ble Delhi High Court delivered in the case of Bausch and Lomb(India) Pvt. Ltd (supra),we are of the opinion that the transaction-in - question was not an international transaction and that the TPO had wrongly invoked the provisions of Chapter X of the Act for the said transaction. 3.4.4. With regard to the submissions of the AR that the issue of AMP should be restored back to the file of the AO we want to mention that law as a concept is supposed to evolve with passage of ti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve the benefit accruing such rights directly or indirectly through its A.Es. The assessee entered into an agreement with CAUSA on 1st June 2006 for trademark license agreement relating to Halls, Maxair, Vita C. As per the said agreement the assessee agreed to pay royalty to CAUSA @ 2.70% of the sales. In the return of income filed for the impugned assessment year, the assessee claimed deduction on account of payment of royalty to CAUSA for an amount of ₹ 32,41,691. In course of proceedings before the Transfer Pricing Officer, he called upon the assessee to produce the relevant documents relating to payment of royalty and also justify the arm's length price of the royalty paid. In response to the query raised by the Transfer Pricing Officer, the assessee furnished the required document and also submitted that the royalty payment to CAUSA is covered under the automatic route, hence, no approval either from RBI or any other authority is required. On a query raised by the Transfer Pricing Officer that royalty payment for brand name cannot exceed 1% of the sale under automatic route in the absence of approval by the relevant authority, it was submitted by the assessee that no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trademark royalty at ₹ 12,00,626. As a result, the differential amount of ₹ 20,41,065, was considered as transfer pricing adjustment. However, considering the fact that the assessee has added back the entire royalty payment in the computation of income, the Transfer Pricing Officer left it to the discretion of the Assessing Officer to take appropriate view with regard to the addition of the amount. However, the Assessing Officer while completing the assessment made addition of the entire transfer pricing adjustment recommended by the Transfer Pricing Officer including the adjustment on account of royalty payment to CAUSA amounting to ₹ 20,41,065. Being aggrieved of such addition, the assessee preferred appeal before the first appellate authority. 18. The learned Commissioner (Appeals) after considering the submissions of the assessee and examining the material on record noted that the trademark license agreement between the assessee and CAUSA was with effect from 1st January 2006, and was due to expire on 31st December 2007. He observed, as per the Government guideline / regulation under the automatic rout, brand / trademark royalty is payable to the extent o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ensing technology / technical knowhow. The learned Sr. Counsel submitted, only for removing any ambiguity and further clarification, the assessee entered into another agreement with CAUSA on 24th December 2007, amending certain clauses of the original agreement. He submitted, as per the amended agreement which is effective from 1st January 2006, i.e., the effective date of the original agreement, a specific clause was incorporated for sub licensing technology / technical knowhow. In this context, he drew our attention to the relevant clauses of amended agreement a copy of which is at Page 132A of the paper book. He submitted, the amended agreement makes it implicit that the assessee has to use the technology for manufacturing the licensed product. He submitted, the scope and ambit of Transfer Pricing Officer s power is only to determine the arm's length price of the international transaction. He cannot look into the issue whether the company is authorised to transfer technology or not. For this proposition, he relied upon the decision of the Hon'ble Calcutta High Court in CIT v/s Arun Dua, [1990] 186 ITR 494 (Cal.). He submitted, in any case of the matter, the assessee itse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er is empowered to examine whether such transaction is at arm's length irrespective of the fact whether the assessee has disallowed the expenditure in the computation of income. The learned Departmental Representative drawing our attention to the agreement dated 1st June 2006, with CAUSA submitted that the agreement clearly says that it is for licensing of trademark. Therefore, the rate of royalty fixed under the said agreement is for trademark alone. He submitted, though as per the terms of the said agreement, there is no transfer of technology / knowhow. Even assuming that there is such a transfer no price is fixed for such transfer. He submitted, the assessee has not furnished any documentary evidence either before the Assessing Officer or before the learned Commissioner (Appeals) to demonstrate transfer of technology / knowhow to the assessee. He submitted, even as per the sub license agreement between Cadbury Ireland and CAUSA, CAUSA is authorized to sub license only trademark of products. He submitted, in these circumstances, the contention of the assessee that the original agreement between the assessee and CAUSA provides for transfer of technology / knowhow is contrary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year would not be applicable for a transaction undertaken in the relevant financial year. The learned Commissioner (Appeals) has also endorsed the aforesaid view of the Transfer Pricing Officer. No doubt, on a perusal of the agreement dated 1st June 2006 between the assessee and CAUSA it appears that the said agreement has been termed as trademark license agreement. However, reading the agreement as a whole and more particularly, Clause 7(b) of the said agreement, it becomes clear the licensee (the assessee) shall manufacture licensed product using any technology of the licensor provided to the licensee in accordance with all specifications and instructions provided by the licensor from time to time. It is not the case of the Revenue that in the relevant previous year assessee has neither manufactured nor sold Halls brand products in India. Thus, it is necessary to ponder whether in absence of necessary technical knowhow/knowledge it would have been possible for the assessee to manufacture the aforesaid products? In our view, the answer would be No. Further, the assessee and CAUSA have entered into one more agreement on 24th December 2007, amending the terms of the original agre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before him, the Transfer Pricing Officer having noticed that the assessee has paid royalty of ₹ 13.02 crore to M/s. Cadbury Schwepps Asia Specific TTE (CSAPL) called upon the assessee to furnish necessary details. From the details furnished by the assessee, he found that the assessee has entered into a service agreement with CSAPL on 21st October 2005, effective from 1st April 2005, for provision of certain services to the assessee. As per the terms of the said agreement, the fees payable by the assessee for services rendered works out to ₹ 13.02 crore per annum. After examining the nature of services provided under the agreement, the Transfer Pricing Officer noticed that in Form no.3CEB report, the assessee has stated that the fees paid of ₹ 13.02 crore for services availed is at arm's length under TNMM. Noticing the above, the Transfer Pricing Officer called for further information / document from the assessee. As observed by the Transfer Pricing Officer, the assessee did not furnish transfer pricing study report. However, a note on the transfer pricing study was submitted. The Transfer Pricing Officer also alleged that, though, in the said note the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 1st April 2005, for availing services relating to business strategy, value based management, financial planning and accounting, supply chain co ordination and planning, human resources, legal, marketing, etc. He submitted, for availing such services, the assessee has paid the amount of ₹ 13.02 crore and has benchmarked such transaction by applying TNMM as most appropriate method. He submitted, the assessee has considered itself as tested party since it does not own an intangible asset and its profitability can be ascertained most reliably. He submitted, since the margin earned by the assessee is higher than the margin earned by the comparable companies under TNMM, the transaction should be considered to be at arm s length. Refuting the allegation of the Departmental Authorities that the assessee has not furnished supporting evidences, the learned Sr. Counsel submitted, all necessary and relevant evidences were produced before the Departmental Authorities. In this context, he drew our attention to the documents submitted in the paper book. He submitted, the assessee has availed services from CSAPL on cost plus 5% mark up basis. In this context, the learned Sr. Counsel sought ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t year since as per the facts involved in the present year, the assessee has failed to furnish the necessary details. Refuting the contention of the learned Sr. Counsel that various evidences were produced before the Departmental Authorities the learned Departmental Representative drawing our attention to certain specific documents furnished in the paper book submitted that these documents pertained to subsequent financial years, hence, have no relevance for the impugned assessment year. He submitted, if the Tribunal admits the additional evidence, the Assessing Officer must be given an opportunity to examine such evidence and decide the issue afresh. 27. We have considered rival submissions and perused materials on record. The dispute is with regard to payment of ₹ 13.02 crore to one of the A.Es towards availing of various services under an agreement executed with the A.E. On a perusal of the order passed by the Transfer Pricing Officer and the learned Commissioner (Appeals) it is evident, assessee s claim that aforesaid payment was made to the A.E. for services availed was disbelieved and the arm's length price was determined at nil basically on the allegation that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce charges paid by the assessee to CSAPL, though, the quantum is in dispute. If in the subsequent assessment years the Transfer Pricing Officer has accepted the fact that the assessee has availed services from CSAPL under the very same agreement, there is no reason to dispute assessee s claim of availing services in the impugned assessment year if the assessee can demonstrate such fact by furnishing proper documentary evidences. In that event, the Transfer Pricing Officer certainly cannot determine the arm's length price at nil by applying the benefit test. Therefore, on overall consideration of facts and circumstances of the case, we are inclined to restore the issue to the Assessing Officer for de novo adjudication after due opportunity of being heard to the Assessing Officer. The Assessing Officer / Transfer Pricing Officer must pass a speaking and well reasoned order dealing with all the submissions of the assessee. Accordingly, this ground is allowed for statistical purposes. 28. In view of our decision in grounds no.1, 2, 3 and 4, there is no need for adjudication of ground no.5, independently. 29. In ground no.6, the assessee has challenged disallowance of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore, respectfully following the consistent view of the Tribunal on this issue in assessee s own case in the preceding assessment years, we allow assessee s claim of depreciation. 34. In ground no.7, the assessee has challenged disallowance of expenditure under section 14A of the Act amounting to ₹ 1,77,87,904. 35. Brief facts are, during the assessment proceedings, the Assessing Officer noticing that in the relevant previous year, the assessee has earned exempt income by way of dividend and interest on tax free bond amounting to ₹ 8,02,14,485, called upon the assessee to explain why expenditure attributable to such income should not be disallowed under section 14A of the Act. In response, the assessee furnished a detailed explanation stating that investments in exempt income yielding fund were made out of surplus fund available with the assessee, hence, no interest expenditure was incurred. Further, furnishing the details of expenses incurred under various heads, it was submitted that only the salary relating to treasury manager and his assistant who look after the entire treasury and banking related functions and take decisions for putting the moneys from time ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Tribunal while deciding identical issue in assessee s appeal for assessment year 2005 06, in ITA no.5470/Mum./2012, dated 18th May 2016. Respectfully following the consistent view of the Tribunal in assessee s own case as referred to above, we direct the Assessing Officer to restrict the disallowance under section 14A of the Act to 2% of the exempt income earned by the assessee during the year. This ground is partly allowed. 40. In the result, assessee s appeal is partly allowed. ITA no.1578/Mum./20131 Revenue s Appeal 41. In this appeal, the main ground raised by the Revenue is with regard to deletion of part disallowance made under section 14A of the Act. 42. In view of our decision in ground no.7, of assessee s appeal herein before, this ground has become redundant, hence, no separate adjudication is required. Accordingly, this ground is dismissed. 43. Beside the aforesaid main ground, the Revenue has raised additional grounds concerning the AMP expenditure. 44. In view of our decision in ground no.2, of assessee s appeal herein before, these grounds have become redundant, hence, are dismissed. 45. In the result, Revenue s appeal is dismisse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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