2023 (3) TMI 655 - AT - Income Tax

TP Adjustment - Advertising, Marking and Promotion(AMP) - assessee pointed that the distribution agreement in the impugned assessment year is the same and is renewed automatically on year to year basis - HELD THAT:- There is no change/modification in the terms and conditions of the distribution agreement. Tribunal has been consistently relying on same distribution agreement while passing the order in the preceding assessment years. A copy of the distribution agreement has been placed before us - Revenue has not been able to controvert the submissions of assessee nor any decision contrary to the decision of Tribunal in assessee’s own case has been furnished by the Revenue. Thus, we find no reason to take a contrary view, hence, ground of the appeal are allowed in similar terms.

TP Adjustment on account of Convention Expenses incurred in normal course of business - HELD THAT:- Admittedly, the TPO/DRP had made a similar alternative adjustment in respect of the convention expenses in the case of the assessee for the aforementioned preceding years viz. A.Y. 2011-12, A.Y. 2012-13 and A.Y. 2013-14. We have perused the orders of the Tribunal for the said respective years and find that the said alternative adjustment on appeal was vacated by the Tribunal. Accordingly, finding ourselves to be in agreement with the view taken by the Tribunal in respect of the issue under consideration in the aforementioned preceding years, we vacate the said alternative adjustment made by the TPO/DRP.

TP Adjustment on account of reimbursement of expenses - primary contention for the assessee is that the TPO had made adjustment - TPO had made adjustment of Rs.1,22,62,124/-, however, the DRP enhanced the adjustment to Rs.4,04,53,708/-. It is contended that before enhancement no show cause notice was issued to the assessee - HELD THAT:- Taking into consideration entirety of facts we deem it appropriate to restore this issue back to the file of AO for denovo consideration after affording reasonable opportunity of hearing to the assessee, in accordance with law. Consequently, ground of the appeal are allowed for statistical purpose.

Working capital adjustment while computing operating margin of comparable companies - HELD THAT:- After allowing working capital adjustment the operating margin of the assessee company was within permissible 3% range of tolerance limit of revised arm’s length mean of comparable companies. Consequently, the adjustment in assessment year 2014-15 was deleted. In the impugned assessment year the ground are restored back to the file of AO with similar directions.

Disallowance of expenditure on account of payments to Doctors/Convention expenses, printing and equipment, hiring charges, grants to medical association, accommodation expenses of the medical practitioners, conducting of medical education meetings, expenditure on food, travel facilities, registration charges, car hiring charges, etc. - HELD THAT:- Expenditure on medical practitioners be restored to Assessing Officer for reconsideration in the light of decision rendered by Hon'ble Supreme Court of India in the case of Apex Laboratories Pvt. Ltd.[2022 (2) TMI 1114 - SUPREME COURT] Without commenting on merits of the issue raised they are restored to the file of Assessing Officer for adjudication in accordance with the decision rendered in the case of Apex Laboratories Pvt. Ltd. vs. DCIT(supra).

Disallowance of depreciation on buildings - HELD THAT:- The stand of the assessee is that building in question forms part of the block of assets and continue to exist even after manufacturing was discontinued. We find that for similar reasons in assessment year 2008-09 assessee’s claim on depreciation on plant, machinery and building was disallowed by the Assessing Officer.

Non-granting of credit of TDS - HELD THAT:- The issue is restored back to the file of AO for the limited purpose of ascertaining the correct amount of TDS credit to be allowed to the assessee. AO is directed to re-examine the issue and grant TDS credit accordingly.