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2021 (1) TMI 741 - AT - Income TaxDisallowance u/s 40(a)(i) - AO noticed that assessee had paid to a foreign entity and no TDS was deducted - HELD THAT:- Since the assessee bonafidely believed that such certification fee was not liable to tax in India, as the same was not covered within the meaning of “ Fee for Technical Services” as provided u/s 9(1) (vii) of the Act and/or the overriding provisions of the Double Taxation Avoidance Agreements. The aforesaid issue stands covered in favour of the assessee by the order of the Tribunal passed in the assessee’s own case [2020 (11) TMI 478 - ITAT DELHI] Disallowance in respect of provision made for sales incentive under “Shahenshah Scheme” - “Shahenshah Scheme” towards sales incentive payable to dealers and distributors - AO had disallowed the provision by holding that the provision made by the assessee was not based on any scientific method and there is an element of contingent liability and therefore the sum is not allowable - HELD THAT:- In earlier years has decided the issue in favour of the assessee by holding that the provision made by the assessee in respect to “Shahenshah Scheme” to be on scientific basis. Before us, no material has been placed by the Revenue to point out any distinguishing feature in the facts of the case in the year under consideration and that of earlier years. Further Revenue has also not placed any material to demonstrate that the decision of the Tribunal in assessee’s own case in A.Y. 2006-07, 2007-08, 2008-09 has been set aside/ stayed or over ruled by the higher judicial forum. Considering the totality of the aforesaid facts and following the order of the Co-ordinate bench in the assessee’s own case and for similar reasons, we hold that the Revenue was not justified in making the addition. Denial of claim of deduction u/s 80IC on interest income - interest income in the accounts of Baddi Unit and Haridwar Unit - HELD THAT:- We find that the Hon’ble Delhi High Court in the case of PCIT vs. Bharat Sanchar Nigam Ltd. [2016 (8) TMI 270 - DELHI HIGH COURT] and the Co-ordinate Bench of Tribunal in the case of M/s. NHPC Ltd [2019 (5) TMI 1664 - ITAT DELHI] has held that the Revenue was not justified in denying the claim of deduction on such income. Before us, Revenue has not pointed any contrary binding decision in its support. We therefore, hold that AO not justified in denying the claim of deduction u/s 80IC of the Act and thus direct the AO to grant deduction u/s 80IC on the interest income earned by the assessee. Thus the ground of the assessee is allowed. Deduction of education cess and secondary and higher education cess - HELD THAT:- As in the assessee’s own case for AY 2008-09 [2020 (11) TMI 478 - ITAT DELHI] and for similar reasons we hold that the Revenue was not justified in denying the claim of deduction. Denial of claim of deduction of interest expenses - HELD THAT:- CIT(A) while deciding the issue and after examining the excise returns of various manufacturing units of Assessee has given a finding that the products manufactured at Greater Noida are capacitors and reactors and the products manufactured at Neemrana are electric motors, CFL bulbs etc. The products manufactured at Greater Noida and Neemrana Unit are completely different and the technology, plant & machinery, skill required for its production cannot be same for the manufacturing of existing products and therefore assessee had entered into extension of business and it is not a case of expansion of business. In such a situation he held that proviso to Section 36(1)(iii) are applicable and therefore assessee is not eligible for deduction of interest. Before us, no fallacy has been pointed in the finding of CIT(A) therefore we find no reason to interfere with the order of CIT(A). Thus the ground of Assessee is dismissed. Transfer Pricing Adjustments - Comparable selection - HELD THAT:- Piramal Healthcare Ltd. - extract of services income extracted the TPO in the order does not match with the figures reported in the Annual Report which are available in the public domain - Annual Report placed in the paper book has also pointed out that 98.79% of its revenue are earned from sale of manufactured and traded pharmaceutical products revenue earned by the assessee are for various business services. In such a situation, we find force in the argument of Learned AR that it cannot be considered to be a comparable to assessee company. WAPCOS Ltd. - Considering the functions undertaken by it, we are of the view that the functions performed by it are not comparable to the assessee company which is engaged in providing basic business support services and therefore we are of the view that it cannot be considered to be a comparable company - in the case of Worley Parsons India Pvt. Ltd [2017 (2) TMI 117 - ITAT HYDERABAD] has noted that public sector undertakings are not driven by profit motive alone but other considerations such as discharge of social obligations etc also weigh and hence they cannot be considered as comparable to the private companies - we hold that WAPCOS Ltd. cannot be considered to be a comparable company and we therefore direct its exclusion.
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