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TMI Blog2016 (11) TMI 326X X X X Extracts X X X X X X X X Extracts X X X X ..... Pricing-Management Consultancy and Business Auxiliary Services 1.1 On the facts and in law, the Addl. Commissioner of Income Tax, Ld. Transfer Pricing Officer-1(2), New Delhi and Deputy Commissioner of Income Tax, The Ld. Assessing Officer erred in determining and the Hon'ble Dispute Resolution Panel erred in confirming the arm's length price of the international transaction pertaining to payment of management consultancy and business auxiliary services by the assessee to its Associated Enterprises for AY 2009-10 as Nil against INR 210,653,579 as determined by the assessee. 1.2 On the facts and in law, the Ld.TPO, the Ld. AO and the Hon'ble DRP erred in disregarding the correct interpretation and adaptation of Global Service Agreement, Cost Allocation Audit Certificate, various documentary evidences, factual details and submissions filed by the assessee from time to time to substantiate the receipt of services, benefits derived there from and cost incurred by AE for rendering the management consultancy and business auxiliary services. On the facts and in law, the Ld. TPO, the Ld. AO and the Hon'ble DRP erred in disregarding the benchmarking analysis conducted by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e facts and in law, the Ld. AO and the Hon'ble DRP erred in disregarding the order of the Hon'ble High Court in the assessee's own case for AY 2004-05 wherein this ground has been decided in favour of the assessee. 4. Corporate Tax Disallowance u/s 14A of the Act 4.1 On the facts and in law, the Ld. AO erred in proposing and the Hon'ble DRP erred in confirming disallowance relating to expenditure incurred for earning tax exempt income from investments by invoking the provisions of Section 14A of the Act read with Rule 8D of the Income Tax Rules, 1962 without appreciating that no such income has been earned by the assessee company during the year under consideration. 5. On the facts and in the circumstances of the case, the Ld. AO erred in initiating penalty proceedings u/s 271(1)(c ) of the Act. 6. That on the facts and in the circumstances of the case and in law, the ld. AO has erred in levying interest u/s 234B of the Act. 7. That on the facts and in the circumstances of the case and in law, the Ld. AO has grossly erred holding that interest u/s 234C be charged on the assessed income of the appellant. 8. That on the facts and in the circumstances of the case and in law, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion of the ITAT till assessment year 2004- 05 in favour of the assessee, vide ITAT's order dated 08/05/2009 and thereafter, the dismissal of the Department's appeal by the Hon'ble Delhi High Court on 31/05/2010. 3.2 On the issue of 14A disallowance, the Ld. AR submitted that the disallowance had been incorrectly calculated at Rs. 1,444,726/-. As per the AR, the correct amount of disallowance was Rs. 2,677/- and a chart was submitted in support of the assessee's claim. The chart is being reproduced as under: The Ld. AR submitted that in view of the incorrect calculation of disallowance, the matter needs to be restored to the file of the AO for re-computing the disallowance after taking the correct figures into account. 4. The Ld. CIT DR vehemently supported the directions of the Hon'ble DRP as well as the orders of the TPO/AO. 5. Having heard the rival submissions and perused the material on record, it is seen that ground no. 3.1 of the assessee's appeal is covered in favour of the assessee in assessee's own case for A.Y. 2008-09 in ITA No. 5923/Del/2012, wherein the issue has been discussed at length in Para 17 to 22 of the said order and wherein an addition on identical groun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or application thereof nor to do any act which might assist or give rise to an application to remove any of the registered Trademarks from the Register or which might prejudice the right or title of the Licensor to any of the Trade Marks. 7.3 The Licensee will on request give to the Licensor or its authorized representatives any information as to its use of the Trade Marks which the Licensor may require and will (subject to the provisions of clause 8) render any assistance reasonably required by the Licensor in maintaining the Registrations and/or prosecuting any application there for. 7.4 The Licensee will not make any representation or do any act which may be taken to indicate that it has any right, title or interest in or to the ownership or use of any of the Trade Marks except under the terms of this Agreement and acknowledge that nothing contained in this agreement shall give the Licensee any right, title, or interest in or to the Trade Marks save as granted by this Agreement." 19. This Clause makes it palpable that the Licensor is the proprietor of the trademarks and the Licensee undertakes not to do anything which might jeopardize the trade mark in any manner. Claus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enditure and cannot be treated as a capital expenditure. Ex consequenti, the disallowance made by the AO for a sum of Rs. 4.79 crore (after allowing depreciation @ 25%) is hereby deleted." 5.1 In view of the detailed findings by the ITAT in assessee's own case in AY 2008-09 on identical issue and which could not be negated by the Department in this year, we hold that the total payment 16,931,247/- made by the assessee for the use of technical know-how and trademarks is a Revenue expenditure and cannot be treated as a capital expenditure. Therefore, the disallowance of Rs. 12,698,435/- (after allowing depreciation @ 25%) made by the AO is hereby deleted. In the result, this ground of the assessee is allowed. 5.2 As far as the issue of disallowance of logo fee is concerned, the Ld. AR has submitted that out of the logo fees of Rs. 62,094,207/-, Rs. 4,13,96,138/- was disallowed by the TPO. In MAP proceedings, the ALP was determined at Rs. 52,318,386/- and the disallowance was reduced to Rs. 9,775,821/- only and in view of the MAP proceedings, this disallowance was not being contested. Hence assessee's ground on this issue is dismissed as not pressed. 5.3 As far as the issue of dis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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