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2021 (2) TMI 1358 - AT - Income TaxDisallowance of payment of royalty on trademarks paid to Cadbury Adams USA oversees company - HELD THAT:- As decided in assessee own case [2019 (10) TMI 994 - ITAT MUMBAI] assessee entered into Technical collaboration Agreement with CEPT to avail the benefits of Technical Know-how, trade secrets etc. for mixed fruit flavored and strawberry flavored sugar non-coated center filled bubble gums / chewing gums. Another agreement was entered into with the same entity for Trademarks and copyright licenses in respect of products Bubbaloo, Bubba the Cat & Adams. As per agreement, the assessee paid Technical royalty @4% and Trademark Royalty @1%. Applying the same reasoning, it was held that CEPT was authorized to sub-license the rights of the Trademark only and there was no reference to presume that the same included the right to sub-license the Technology and know-how related to the products, an adjustment of Rs.142.51 Lacs was proposed by Ld. TPO. The Ld. DRP, finding the adjustment quite similar to as made for royalty payment to CAUSA, endorsed Ld. TPO's action. Since facts as well as reasoning of lower authorities are quite similar as in the case of royalty payment made by assessee to CAUSA, applying the same analogy, we delete the impugned addition. Disallowance of service fees paid to Cadbury Schweppes Asia Pacific Pvt. Ltd. - HELD THAT:- We notice from the records that the identical ground has already been decided [2019 (10) TMI 994 - ITAT MUMBAI] by the Coordinate Bench of ITAT in for AY 2008-09 in assessee’s own case on merits in which ITAT has restored the matter back to the file of AO with direction to enable the revenue to take a consistent stand in the matter and also to follow the ITAT order for Assessment Year 2006-07. Disallowance of services fees paid to Cadbury Holdings Ltd. - HELD THAT:- We notice from the records that the identical ground has already been decided by the Coordinate Bench of ITAT in [2019 (10) TMI 994 - ITAT MUMBAI] for AY 2008-09 in assessee’s own case on merits as held since facts as well as observations of lower authorities are parimateria the same as made by services fees paid by the assessee to CSAPL, taking similar view, we restore the matter back to the file of Ld. TPO / Ld. AO for re-adjudication on similar lines. Adjustment on account of advertising, marketing and promotion (AMP) expenses - HELD THAT:- The identical ground has already been decided by the Coordinate Bench of ITAT in [2018 (11) TMI 1762 - ITAT MUMBAI] for AY 2006-07 in assessee’s own case on merits as delete the addition made by the Assessing Officer towards transfer pricing adjustment on account of AMP expenditure. Disallowance of depreciation on marketing know how - HELD THAT:- We notice from the records that the identical ground has already been decided by the Coordinate Bench of ITAT [2019 (10) TMI 994 - ITAT MUMBAI] in assessee’s own case allowed depreciation claim applying the ratio of decision of Hon‟ble Supreme Court rendered in M/s Smifs Securities Ltd [2012 (8) TMI 713 - SUPREME COURT] Similar view has been taken in subsequent years. Therefore, respectfully following the consistent view of the Tribunal on this issue in assessee's own case, we allow assessee's claim of depreciation. Disallowance u/s 14A of the Act r.w.r. 8D. - HELD THAT:- As in [2019 (10) TMI 994 - ITAT MUMBAI] for in assessee’s own case we deem it fit to restore the matter of direct / indirect expense disallowance to the file of Ld. AO for re-adjudication in the light of suo-moto disallowance offered by the assessee. As held earlier, no interest disallowance would be justified, keeping in view the assessee‟s financial parameters. Disallowance of foreign exchange loss - HELD THAT:- We notice from the records that the identical ground has already been decided in the case of London Star Diamond Co. (I) Pvt. Ltd. [2013 (11) TMI 424 - ITAT MUMBAI] as held these are not premature cancellations by the assessee and therefore, in our considered view, the said loss being related to the FCs which are integral or incidental to the exports of the diamonds, should be allowed as business loss in view of the binding High Court or Tribunal decisions/judgments in the case of D Kishore kumar and Co [2005 (3) TMI 699 - ITAT MUMBAI] Badridas Gauridu Pvt Ltd [2003 (1) TMI 61 - BOMBAY HIGH COURT] Sooraj Muill Magarmull [1980 (9) TMI 69 - CALCUTTA HIGH COURT] etc. Thus, loss arising from cancellation of the matured contracts is allowed in favour of the assessee. Disallowance on allocation of expenditure at Baddi Unit - HELD THAT:- We notice from the records that the identical ground has already been decided by the Coordinate Bench of ITAT in [2020 (2) TMI 1704 - ITAT MUMBAI] for AY 2007-08 in assessee’s own case settled in favour of the assessee. We notice that the Coordinate Bench has accepted the method of allocation with regard to interest, VRS decrease in stock, direct expenses, direct marketing cost and selling & distribution expenses, royalty and technical fees. The bench has remitted back to AO only the other overhead. Accordingly, we deem it fit to remit only the verification of allocation of other overhead to the file of AO. Therefore, we are inclined to accept the submission of Ld. AR. Accordingly, this ground raised by the assessee is partly allowed. Characterizing buyback of shares as distribution of dividend and levying dividend distribution tax on such buy back - HELD THAT:- We notice from the records that the identical ground has already been decided by the Coordinate Bench of ITAT in the case of Golden Sachs (India) Securities Pvt. Ltd. [2016 (3) TMI 118 - ITAT MUMBAI] hold that transaction in question would not fall under the category of colourable device.If an assessee enters into a deal which does not violate any provision of the Act of applicable to a particular AY - the deal cannot be termed a colourable device,if it result in non-payment or lesser payment of taxes in that year.The whole exercise should not lead to tax evasion.Non-payment of taxes by an assessee in given circumstances could be a moral or ethical issue.But,for that the assessee cannot be penalised.In light of the above discussion,we are reversing the decision of the FAA and deciding the effective ground of appeal in favour of the assessee. Disallowance on account of Annual Information Repot - HELD THAT:- As decided in the case of Basant Kumar [2015 (11) TMI 1127 - ITAT DELHI] settled in favour of the assessee and as submitted by Ld. AR, the assessee has declared the same in the subsequent assessment year, there is no loss as such to the revenue. Therefore, we are inclined to accept the submission of Ld. AR. Accordingly, this ground raised by the assessee is allowed. Short grant of TDS credit - HELD THAT:- We notice from the records that the Ld. AO has granted credit for TDS only to the extent of Rs. 1,69,04,517/- as Rs. 2,99,18,916/- against claimed in the return of income file. Therefore, we are directing AO to verify the claim of the assessee and accordingly allow the TDS credit based on the record submitted before him. Accordingly, this ground raised by the assessee is allowed.
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