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2022 (7) TMI 1508 - AT - Income TaxTP adjustments - non-recovery of charges for providing letter of support/comfort - HELD THAT:- Since the issue is exactly similar and grounds as well as the facts are also identical, respectfully following the above decision in assessee’s own case for the A.Y. 2010-11 [2022 (2) TMI 1428 - ITAT MUMBAI] and also following the principle of “Rule of consistency”, we allow the ground raised by the assessee. Addition u/s 14A r.w.r 8D - HELD THAT:- Since the issue is exactly similar and grounds as well as the facts are also identical, respectfully following the above decision in assessee’s own case for the A.Y. 2010-11 and also following the principle of “Rule of consistency” as held as no proper satisfaction has been recorded by the learned assessing officer in terms of the provisions of Section 14 A (2) having regard to the accounts of the assessee about the correctness of the claim of the assessee in respect of expenditure in relation to income which does not form part of the total income Under the act. In view of this ground of the appeal of the learned assessing officer is dismissed. Excess DDT paid by the assessee u/s 115O - beneficial rate as per the applicable Double Taxation Avoidance Agreement (DTAA) for dividends paid to non-resident shareholders - HELD THAT:- We observe that similar issue was considered and adjudicated by the Coordinate Bench in assessee’s own case for the A.Y.2010-11 [2022 (2) TMI 1428 - ITAT MUMBAI] wherein held there is no information about the country of residence of those shareholders, whether those shareholders have Tax Residency certificate of that country, there is no submission whether the dividend income is income of shareholders and about how the assessee will claim refund of the taxes , if same is income of the shareholders. Further the host of issues with respect to applicable of DTAA as stated in grounds of appeal by assessee are required o be addressed. Therefore, in case of assessee itself for assessment year 2009 – 10 we also set-aside this issue back to the file of the learned assessing officer with direction to the assessee to submit its claim with all necessary supporting evidences and certificates and then ld.AO to decide in accordance with the law. Reduction in claim made u/s. 35(2AB) for certain R&D expenditure - HELD THAT:- Respectfully following the above said decision of the Tribunal in assessee’s own case for A.Y. 2010-11, we are inclined to set-aside the issue to the file of the Assessing Officer for verification as per the directions of the earlier Tribunal orders verifying whether the expenditure in question has been incurred by the assessee on research and development which is eligible for deduction u/s 35(2AB). The appeal of the assessee is accordingly treated as allowed for statistical purpose. Non-Inclusion of Damaged Stock in valuation of closing stock - HELD THAT:- We observe that assessee is valuing closing stock for damaged stock taking the value at NIL and however, Assessing Officer makes disallowance to the extent of 0.5% of the value of closing stock and the same was confirmed by the Coordinate Bench in the earlier years from A.Y. 2003-04 to 2006-07 and A.Y. 2008-09. We further observed that following the decision of the ITAT, CIT(A) in A.Y: 2009-10 and A.Y. 2010-11 had followed the same. Respectfully following the earlier decision of the ITAT, CIT(A) in the present appeal also allowed the same. Considering the fact on record and also this method is consistently followed by the assessee over the years there is no loss to the revenue. Accordingly, we do not find any reason to interfere with the findings of the CIT(A). Balance 10% additional depreciation on addition made in earlier year - assessee has put to use it for less than 180 days - HELD THAT:- Similar issue was considered and adjudicated by the Coordinate Bench in assessee’s own case for the A.Y. 2010-11 [2022 (2) TMI 1428 - ITAT MUMBAI] and decided the issue in favour of the assessee. Waiver of royalty income received from Bangladesh and Srilanka - royalty is computed @3% of the of the net sales by majority of Associated Enterprise - HELD THAT:- We observe from the record that the assessee has granted waiver of royalty to its two subsidiaries i.e. Bangladesh and Srilanka on account of commercial and business considerations. We observe that assessee has granted similar waiver in the past to the above said subsidiaries from A.Y.2008-09 to A.Y. 2010-11 and the assessee has disclosed the above said information in its T.P. Study Report. When the matter was referred to TPO, TPO has considered this information and do not propose any addition relating to these additions. It is fact on record that assessee has waived Royalty income to Bangladesh and Srilanka Subsidiaries for business consideration. It is also fact on record that the TPO has not proposed any addition u/s. 92CA of the Act and further, we observe that as per the provision of DTAA, the Royalty income cannot be recognized as revenue until such royalty are paid. In the given case the assessee has never received any Royalty from these Associated Enterprises. In the similar situation the Coordinate Bench in the case of Diageo India Pvt Ltd [2019 (12) TMI 1615 - ITAT MUMBAI] held as upon hearing both the Counsel and perusing the records, we find that it is the claim of the assessee that payment of royalty is an international transaction and assessee has submitted the benchmarking report and the Transfer Pricing Officer has not made any adjustment. In this view of the matter, the Transfer Pricing officer has not made any adjustment. Hence, it was not open to the AO to apply the benefit test and make the disallowance u/s.37(1) of the Act, without proper examination of all aspects of the claim. Decided against revenue.
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