TMI Blog2019 (5) TMI 1796X X X X Extracts X X X X X X X X Extracts X X X X ..... eby upheld. Therefore, respectfully following the decision of Co-ordinate Bench we allow ground raised by the assessee. Adjustments made by the TPO on a without prejudice basis in respect of the other segments namely consumer Lifestyle Distribution, Healthcare distribution and Healthcare contract Manufacturing division - HELD THAT:- As decided in own case [2018 (3) TMI 211 - ITAT KOLKATA] issue is squarely covered in favour of the assessee. Nature of expenses - lease rent paid in respect of motor cars - revenue or capital expenditure - HELD THAT:- As the issue is squarely covered in favour of the assessee by the decision of Co-ordinate Bench in assessee s own case [2018 (4) TMI 503 - ITAT KOLKATA] and there is no change in facts and law and the revenue is unable to produce any material to controvert the above said findings of the Co-ordinate Bench. We find no reason to interfere in the said order of the Co-ordinate Bench and the same is hereby upheld. Excess depreciation to the tune of 15% claimed by the company on moulds - HELD THAT:- As the issue is squarely covered in favour of the assessee by the decision of Co-ordinate Bench in assessee s own case ( 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been discussed and adjudicated in favour of the assessee. The ld. Counsel for the assessee submitted that the present issue is squarely covered by the above said order of the Tribunal, a copy of which is also placed before the Bench. 6. The ld. DR relied upon the orders of the authorities below. 7. We see no reason to take any other view of the matter then the view so taken by the division bench of this Tribunal in assessee s own case vide order dated 04.04.2018. In this order, the Tribunal has inter alia observed as under: 6. We have heard the rival submissions and perused the materials available on record including the paper book of the assessee. We find that similar issue had cropped up before this tribunal in assessee s own case for the Asst Years 2009-10 , 2010-11 , 2011-12 and 2012-13 and similar arguments were advanced by both the sides. We find that in the order passed for the Asst Year 2011-12, this tribunal had held as under:- 10. We have heard the rival contentions perused the materials available on record. In the instant case the TPO has treated the MSSA received by the assessee as stewardship services and for the benefit of AE. Accordingly the TPO valued ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iii. capital structure, loans, exchange risks, financial research, warranties and guarantees, credit management, the establishment and management of finance and lease companies and all further banking activities, including long-term finance plans; iv. development of data processing d. fiscal and legal matters , including patents, trademarks and customs duties, particularly in international transactions ; e. personal matters particularly with respect to : i. the selection and training of personnel ; ii. an adequate personnel policy; f. insurances; g. admittance at the Company s specific request and at mutually agreed terms of a reasonable number of employees of the Company to its premise to the extent to which Philips has the free right to do so, so that they can acquaint themselves with commercial and other knowledge as specified above, familiarize themselves with the organization of the Philips Concern and with working methods used by it or receive advice on specific matters in the fields described above; h. sending at the Company s specific request such experts from Philips to the Company s offices as may be agreed between the parties for such period o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd the same has been accepted by the department. He also referred to the summary of emails from Pages 333 to 378 and further emails which are enclosed in Exhibit II from pages 800 to 854 of Paper Book. He also referred to the exclusion of 12000000 Euros towards the Shareholder function costs in the overall cost allocation to the assessee company which is enclosed in page 795 of the Paper Book. We find that the assessee had also furnished before the lower authorities , the details of specific benefits derived by it on each of the emails corresponded between the assessee and KPENV comprising of various services rendered by KPENV pursuant to the MSSA. In fact the benefits derived from each of the services is furnished in the separate column in the said reply dated 11.1.2013 before the ld TPO which is also enclosed as Exhibit II in the Paper Book filed by us. The ld TPO simply replied in his remand report filed before the ld DRP to these emails and the reply of the assessee by stating that the services rendered are only in the nature of control, supervisory and monitoring functions. The assessee in turn filed rejoinder to this remand report by specifically pointing out the benefits der ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would be chargeable to tax in India under the DTAA as well as the I.T. Act. 4.2.1. Hence based on the aforesaid order of ld DRP in the hands of KPENV for the Asst Year 2009-10, we find that the ld DRP had treated the receipts of Management Support Services Charges from assessee herein (i.e. Philips India Ltd) in the hands of KPENV as FTS or Royalty and made it taxable in India. So once the same is accepted as FTS or Royalty in the hands of KPENV, the nature of payment cannot be different in the hands of the assessee herein by simply placing reliance on the benefit test, even though the benefits derived by the assessee pursuant to MSSA has been elaborated in detail by the assessee by way of substantial cost reduction. We also find that the assessee had paid service tax of ₹ 14,87,24,134/- on payment of Management Support Service Charges of ₹ 125,27,30,863/-. 4.3. We find that the ld DR argued that assessee had not proved that services were received by the assessee and had derived commercial and economic benefits out of the MSSA. He argued that only general reply was given by the assessee with regard to the benefits derived. He argued that these services were rende ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... carpet. We find that no adjustments to ALP was made in the Asst Years 2005-06 to 2008-09 in respect of the very same MSSA by the ld TPO for the assessee. We find that the principles of consistency need to be followed and cannot be given a go by when there is no change in the facts and circumstances of the case from the earlier years. Reliance in this regard is placed on the decision of the Hon ble Supreme Court in the case of Radhasaomi Satsang vs CIT reported in (1992) 193 ITR 321 (SC) . 4.6. We find that the decision relied upon by the ld AR on the Hon ble Delhi High Court in the case of CIT vs Cushman and Wakefield (India) (P) Ltd reported in (2014) 367 ITR 730 (Del) is well founded wherein it was held that :- 35. The Transfer Pricing Officer's report is, subsequent to the Finance Act, 2007, binding on the Assessing Officer. Thus, it becomes all the more important to clarify the extent of the Transfer Pricing Officer's authority in this case, which is to determining the arm's length price for international transactions referred to him or her by the Assessing Officer, rather than determining whether [such services exist or benefits have accrued. That exercise - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s well as CIT v. Cushman Wakefield (India) (P.) Ltd.[2014] 367 ITR 730/46 taxmann.com 317 (Delhi), rendered similar ruling as was rendered in the case of Dresser-Rand India (P.) Ltd. (supra). In the case of Cushman Wakefield India (P.) Ltd. (supra), the Hon'ble Delhi High Court observed that whether a third party - in an uncontrolled transaction with the Taxpayer would have charged amounts lower, equal to or greater than the amounts claimed by the AEs, has to perforce be tested under the various methods prescribed under the Indian TP provisions. In the context of cost sharing arrangement, the Hon'ble High Court opined that concept of base erosion is not a logical inference from the fact that the AEs have only asked for reimbursement of cost. This being a transaction between related parties, whether that cost itself is inflated or not only is a matter to be tested under a comprehensive transfer pricing analysis. The basis for the costs incurred, the activities for which they were incurred, and the benefit accruing to the Taxpayer from those activities must all be proved to determine first, whether, and how much, of such expenditure was for the purpose of benefit of the T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n arm's length price and even if profit is established, it does not necessarily follow that transaction was at an arm's length price - Held, yes [Para 21] We find that this judgement had approved the earlier decision of Hon ble Delhi High Court in the case of Cushman and Wakefield (India) (P) Ltd supra and also the decision of EKL Appliances supra. 4.9. In view of the aforesaid findings and respectfully following the judicial precedent relied upon hereinabove, we hold that the determination of ALP for Management Support Services at Rs NIL is unwarranted and accordingly the upward adjustment made by the ld TPO in the sum of ₹ 125,27,30,863/- is deleted. Accordingly, the Ground Nos 2 3 raised by the assessee are allowed. We find that there is no change in the facts and circumstances during the year under appeal with regard to MSSA when compared to that in the earlier years and hence respectfully following the judicial precedents relied upon hereinabove, we hold that the determination of ALP for Management Support Services at Rs NIL is unwarranted and accordingly the upward adjustment made by the ld TPO in the sum of ₹ 300,40,09,360/- is deleted. Accordi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Asst Year 2011-12 supra wherein it was held :- 43. We have heard the rival submissions and perused the materials available on record. The preliminary issue here arises whether the AMP expenses constitute the international transactions so as to attract the provisions of transfer pricing of the Income Tax Act, 1961. The claim of the Ld. AR is that the AMP transaction does not represent the international transaction between the AE s therefore no question of determining the ALP of AMP transactions. We find force in the argument of the ld. AR in the given facts and circumstances. Therefore, in our considered view the AMP cannot be regarded as international transaction. In holding so we find the support guidance from the judgment of Hon ble Delhi High Court in the case of Maruti Suzuki India Limited vs. CIT reported in 381 ITR 117 wherein it was held as under: 51. The result of the above discussion is that in the considered view of the court the Revenue has failed to demonstrate the existence of an international transaction only on account of the quantum of AMP expenditure by MSIL. Secondly, the Court is of the view that the decision in Sony Ericsson Mobile Communications I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said order of the Tribunal, a copy of which is also placed before the Bench. 17. The ld. DR relied upon the orders of the authorities below. 18. We see no reason to take any other view of the matter then the view so taken by the division bench of this Tribunal in assessee s own case vide order dated 15.12.2017. In this order, the Tribunal has inter alia observed as under: 15. We have heard the rival contentions perused the materials available on record. In this regard we find that the ld. DRP has deleted the addition made by the TPO in own cases of the assessee pertaining to other assessment years as discussed above. Thus, the assessee has been claiming the IT expenses for the last several years and the same was not denied and therefore in our view principle of consistency should be applied in the instant case. In this connection we are relying on the decision of Hon ble Supreme Court in the case of Radhasoami Satsang vs. Commissioner of Income Tax (1992) 193 ITR 0321 (SC) We are aware of the fact that, strictly speaking, res judicata does not apply to IT proceedings. Again, each assessment year being a unit, what is decided in one year may not apply in the following ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the assessee. 20. Ground No. 6 raised by the assessee relates to variation of 3% from the arithmetic mean. 21. The ld. Counsel for the assessee informs the Bench that the assessee does not wish to press this ground therefore we dismiss the ground No. 6 raised by the assessee, as not pressed. 22. Ground No. 7 raised by the assessee relates to objectionspertaining to adjustments made by the TPO on a without prejudice basis in respect of the other segments namely consumer Lifestyle Distribution, Healthcare distribution and Healthcare contract Manufacturing division. 23. When this this was called out for hearing the ld. Counsel for the assessee invited our attention to the order dated 07.02.2018, passed by the Tribunal in assessee s own case in I.T.A. No. 612/Kol/2017 for assessment year 2012-13, whereby the issue of objection pertaining to adjustments made by the TPO on a without prejudice basis in respect of the other segments namely consumer Lifestyle Distribution, Healthcare distribution, Healthcare contract Manufacturing division etc, have been discussed and adjudicated in favour of the assessee. The ld. Counsel for the assessee submitted that the present issue is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct for the assessee pursuant to the aforesaid passive observations of the ld TPO. The various contentions raised by the assessee are left open in view of giving effect order to DRP passed by the ld TPO and final assessment order passed by the ld AO. Hence we are of considered opinion that adjudication of Ground No. 6 raised by the assessee would be superfluous. 26. The said issue is also covered by the assessee s own case in I.T.A. No. 2489/Kol/2017, for assessment year 2013-14, order dated 04.04.2018, wherein the Tribunal has inter alia observed as under: 14. The Ground no. 7 raised by the assessee does not require any specific adjudication in view of our decisions rendered for the other grounds on the issue of transfer pricing. 27. As the issue is squarely covered in favour of the assessee by the decision of Co-ordinate Bench in assessee s own case (supra) in I.T.A. No. 612/Kol/2017 for ay 2012-13, and there is no change in facts and law and the revenue is unable to produce any material to controvert the above said findings of the Co-ordinate Bench. We find no reason to interfere in the said order of the Co-ordinate Bench and the same is hereby upheld. 28. Ground N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7; 8,38,64,111 being the lease rent paid in respect of cars treating the same as capital expenditure. 8.2. The Learned AO and DRP erred in law and on facts in disallowing the lease rent paid without taking cognizance of the decision of the Supreme Court in the case of ICDS Ltd. vs. CIT (2013) 350 ITR 527 (SC). 8.3. Strictly without prejudice to the above, the Learned AO and DRP erred in law and on facts in not allowing depreciation on total payment towards lease transactions including interest. 15.1. The ld AR argued that this issue is covered by the decision of the Hon ble Supreme Court in the case of ICDS Ltd vs CIT reported in (2013) 350 ITR 527 (SC) wherein it was held that :- the lessor i.e the assessee is the owner of the vehicles. As the owner, it used the assets in the course of its business, satisfying both requirements of section 32 of the Act and hence, is entitled to claim depreciation in respect of additions made to the trucks, which were leased out. The ld AR stated that the assessee herein is a lessee and is entitled for deduction towards lease rentals paid towards cars taken on finance lease. He also stated that the lessor had confirmed that it had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted that the present issue is squarely covered by the above said order of the Tribunal, a copy of which is also placed before the Bench. 36. The ld. DR relied upon the orders of the authorities below. 37. We see no reason to take any other view of the matter then the view so taken by the division bench of this Tribunal in assessee s own case vide order dated 04.04.2018. In this order, the Tribunal has inter alia observed as under: 16.2. We have heard the rival submissions. The ld AR stated that the moulds were owned by the assessee and used for the purpose of its business. Further, the moulds were exclusively used in the plastic factory by the job workers / co-makers to whom moulds were given by the assessee to be used in the plastic factory, under its control and supervision and prayed that depreciation @ 30% would be eligible on the said moulds. We find that this issue has been considered by this tribunal in assessee s own case for the Asst Year 2011-12 in ITA Nos. 863 539/Kol/2016, dated 15.12.2017 wherein it was held as under:- 27. We have heard the rival contentions and perused the material available on record. In the instant case, issue relates to depre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ld AO in support of its contentions ) and there is no change in facts and law and the revenue is unable to produce any material to controvert the above said findings of the Co-ordinate Bench. We find no reason to interfere in the said order of the Coordinate Bench and the same is hereby upheld. Therefore, respectfully following the decision of Co-ordinate Bench we allow ground No. 9 raised by the assessee for statistical purposes. 39. Ground No. 11 raised by the assessee relates to short grant of tax deducted at source / tax collected at source. We direct the Assessing Officer to verify the TDS certificate and grant credit to the assessee in accordance with law. 40. Ground Nos. 12 and 13 raised by the assessee relate to interest u/s 234A and B. We note that these grounds are consequential in nature and do not require any adjudication. 41. Ground No. 14 raised by the assessee relates to levy of additional tax and interest on distributable profits. We direct the ld. Assessing Officer to compute correctly DDT and grant credit for the amount of DDT paid by the assessee after appropriate verification and examination of the facts. 42. In the result, the appeal of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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