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2020 (3) TMI 212 - AT - Income TaxTransfer pricing adjustment made on payment of management fee to the Associated Enterprise (AE) - HELD THAT:- Not only the AE has rendered services to the assessee under GSA, but the assessee is also in receipt of such services and has also benefited by such services. In fact, it has been submitted by the learned Authorised Representative that while making payment towards intra group services, the assessee has also deducted tax at source under section 195 . Thus, all these facts clearly go to prove that the assessee, indeed, has received certain specified services from the AE and payments have been made in consideration of such services. Therefore, the services rendered by the AE to the assessee certainly have some value attached to it which requires benchmarking under any of the methods prescribed under the statute. Transfer Pricing Officer accepts that some services have been rendered, however, he has made a general observation that such services do not have any value and has proceeded to determine the arm's length price on a purely on ad–hoc basis. Whereas, the reading of the AAR ruling, referred to above, clearly demonstrate that highly specialized services, in fact, were rendered by the AE to its Indian subsidiary. Thus, on the basis of facts available on record, we have no hesitation in holding that the determination of arm's length price at nil is without any legal sanctity, hence, cannot be sustained. Accordingly, following the judicial precedents cited before us, we delete the addition made in this regard. TDS u/s 194H - Disallowance u/s 40(a)(ia) - HELD THAT:- Identical view was expressed by the Tribunal while deciding the issue in assessment years 2008–09 and 2009–10. Pertinently, while implementing the direction of the Tribunal in assessment year 2007–08, the Assessing Officer vide order dated 30th December 2016, has allowed assessee’s claim of discount given to the distributors which is evident from the copy of the order placed in the paper book. It is also the submissions of the learned Authorised Representative that though similar disallowance was made by the Assessing Officer in the assessment years 2013–14 and 2014–15, however, the DRP has allowed assessee’s claim by deleting the disallowance. Considering the fact that while deciding identical issue in assessee’s own case for the assessment year 2007–08, 2008–09 and 2009–10, the Tribunal has restored the issue to the Assessing Officer for fresh adjudication with specific direction, we are inclined to follow the same and restore the issue to the Assessing Officer for fresh adjudication with similar direction. Suffice to say, if similar claim made by the assessee was allowed by the Assessing Officer in assessment year 2007–08 and by the DRP in assessment years 2013–14 and 2014–15, then there should not be any difficulty in allowing assessee’s claim. Disallowance of commission paid - HELD THAT:- We are of the view that assessee’s claim that the accruals of ₹ 2,30,66,201, was subjected to deduction of tax at source on receipt of invoice in subsequent years requires factual verification at the end of the Assessing Officer. Accordingly, we restore the issue to the Assessing Officer for fresh adjudication after verifying the material available on record or to be filed by the assessee and decide the issue in accordance with law after due opportunity of being heard to the assessee. Ground is allowed for statistical purposes. Short grant of TDS credited - HELD THAT:- We direct the Assessing Officer to verify the TDS as per Form no.26AS, and grant credit to the assessee in accordance with law. This ground is allowed for statistical purposes. Disallowance of tax deducted on interest expenditure incurred in foreign currency - HELD THAT:- As could be seen, the assessee had entered into a borrowing arrangement with Standard Chartered Bank on a net of tax basis. As per the terms of the agreement, the assessee has computed TDS on a net of tax basis and no tax has been separately debited to the Profit & Loss Account. It is also a fact on record that as per the borrowing arrangement, the tax liability, if any, on payment of interest has to be borne by the assessee. Therefore, the tax withheld has to be allowed as expenditure to the assessee. We do not find any infirmity in the directions of the DRP. Ground is dismissed.
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