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2021 (6) TMI 1120 - AT - Income TaxTP adjustment made in respect of sourcing commission - assessee claimed that the payment of commission is at arm’s length - TPO determined the ALP of commission payment as Nil and accordingly made transfer adjustment of entire claim - HELD THAT:- We notice that an identical issue has been examined in the assessee’s own case by the coordinate bench in A.Y. 2014-15 [2020 (10) TMI 1049 - ITAT BANGALORE] and the matter has been restored to the file of the AO/TPO for examining it afresh. TP adjustment made in respect of payment of interest on debentures - HELD THAT:- As decided in own case for assessment year 2012-13 & 2014-15 [2020 (10) TMI 1049 - ITAT BANGALORE] TPO has been taking different stand in different years. While he accepted the CCD as debentures in AY 2012-13 and reduced the rate of interest only, the TPO treated CCD as equity in AY 2014-15. However, in AY 2015-16, the TPO has accepted the rate of interest of 12% to be at arms length. We notice that the TPO has made certain enquiries in AY 2015-16 and accordingly came to the conclusion that the interest payment is at arms length. The benefit of those enquiries was not available with the TPO in the two years under consideration. Since the issue is the same in all the years and further, in view of the conflicting stands taken by TPO, we are of the view that this issue requires fresh examination at the end of TPO. Accordingly, we restore this issue in both the years under consideration to the file of AO/TPO for examining it afresh TP adjustment in respect of reimbursement of expenses - HELD THAT:- Identical issue in assessment year 2005-06 and 2006-07 and has held that the nature of these expenses is such that they cannot be attributed solely and exclusively incurred by parent company for distribution business of the assessee. Accordingly, the TPO, following the decision of ITAT, determined the ALP of reimbursement of expenses at NIL. Tribunal following the decision rendered by the coordinate bench in A.Y. 2005-06 & 2006-07 [2013 (11) TMI 355 - ITAT BANGALORE] has decided this issue against the assessee. TP adjustment in respect of royalty payment - HELD THAT:- We notice that an identical issue has been examined by the coordinate bench in A.Y. 2014-15 [2020 (10) TMI 1049 - ITAT BANGALORE] as held that onus to prove that the expenses incurred by the AE was towards sale of products and not for purpose of creating brand awareness lies upon the assessee. We notice that this onus has not been discharged by the assessee. The basic details like the agreement if any for reimbursing this expenses, RBI approval, business necessity/expediency in making the payment, the basis of calculation etc., have not been furnished. Hence, the TPO has taken the view that this expenditure is not related to the business of the assessee and accordingly he has determined the ALP at NIL. Before us also, no further details were furnished. In view of the above, we are of the view that there is no infirmity in the order so passed by the TPO/AO - Decided against assessee. TP adjustment made in respect of Advertisement, Marketing and Promotion expenses (AMP expenses) - HELD THAT:- We notice that the AMP expenses incurred by the assessee in the years, other than the year in which there was partial reimbursement of expenses by A.E. of the assessee, has been held to be fully allowable by the coordinate bench. Since the facts available in the present year is akin to A.Y. 2009-10 and since it is stated that there is no agreement between the assessee and its A.E. for reimbursement of expenses, we are of the view that the decision rendered by Hon’ble Delhi High Court in the case of Maruti Suzuki Ltd. [2015 (12) TMI 634 - DELHI HIGH COURT] is applicable to the facts of the present case. Accordingly, following the decision rendered by the coordinate bench in other years, we hold that the TP adjustment made in respect of AMP expenses is not justified. Accordingly, we direct the A.O. to delete the same. Disallowance of claim of purchase of samples - allowable business expenses or not? - HELD THAT:- When the transaction is between related parties, the Act places more burden on the shoulders of the assessee to prove that the expenditure is related to the business of the assessee. Further, in trade circles also, it is known fact that the expenditure on samples are borne by the manufacturers only. Hence this claim of expenditure is against the trade practice and the assessee appears to have borne the expenses only on the reasoning that the same was charged upon it by its parent company. Hence, we are of the view that the AO was justified in holding that the burden to incur this expenditure is that of parent company and is not related to the business activities of the assessee - As relying on previous years we decide this issue against the assessee and accordingly, confirm the disallowance made by the A.O. on this issue. Disallowance u/s 40(a)(i/ia) of the Act for non-deduction of tax at source - A.R. submitted that the assessee could not fully furnish the relevant details before the AO/DRP in respect of expenses which were disallowed in earlier years in respect of which TDS was remitted during the year - HELD THAT:- Having regard to the submissions made by the Ld. A.R., we are of the view that, in the interest of natural justice, the assessee may be provided with an opportunity in this regard. Accordingly, we restore this issue to the file of AO for examining the same afresh in accordance with law.
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