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TMI Blog2019 (1) TMI 1870X X X X Extracts X X X X X X X X Extracts X X X X ..... it was held as under:- "8. We have considered the submission of the parties and have gone through the order of authorities below. We have noted that similar ground of appeal was raised before Tribunal in assessee's own case for A.Y. 2002-03 in ITA No. 4092/Mum/2007 and the co-ordinate bench of Tribunal passed the following order: 34. We have heard the rival submissions, perused the orders of the lower authorities and also the copy of agreement submitted alongwith application to RBI as exhibited at pages 1143 to 1145 of the Paper book. We find that the application made by the assessee to RBI for brand usage agreement specifically mentions that the royalty to be remitted is net of taxes. Further, the approval was received from the RBI to remit the royalty on brand usage by the assessee @ 1 % net of taxes. Considering the brand usage agreement vis-à-vis the approval granted by RBI, it can be safely inferred that taxes were liability of J&J India under the terms of agreement. The assessee has entered into a commercial arrangement with J&J US and it has been so arranged that the payment of taxes have to be borne by the assessee being a commercial arrangement, the same sho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 4070/Mum/2007, which was followed in A.Y. 2006-07 in ITA No.83/Mum/201 1 and in A.Y. 200809 and A. Y. 2009-10 in ITA No. 829/Mum/2014, on identical ground, we confirmed the order of Id. CIT(A). In the result, ground no.4 of the appeal is dismissed." 3.1. Respectfully following the said decision, ground No.2 raised by the Revenue is dismissed. 4. Ground No.3 raised by the Revenue is with regard to the action of the ld.CIT(A) in allowing the technical know-how royalty payment at 2% / 4% instead of 1% as done by the ld.TPO. We find that this issue is also covered by the order of the Tribunal in assessee's own case (supra) for assessment year 2005-2006, wherein it was held as under:- "17.We have considered the submission of the parties and find that in assessee's own case for A.Y. 2002-03 in ITA No. 4092/Mum/2007 and ITA No. 4070/Mum/2007, the Tribunal passed the following order: "55. We have considered the submissions and perused the orders. As we have already held hereinabove that the payment of royalty has to be considered in the light of the agreement between the assessee and J & J USA, for the same reasons, we do not find any reason to interfere with the findings of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee company to bear service tax. Hence we hold that TPO was not justified to state that liability of bearing service tax was of assessee-company. In view of above, we hold that disallowances made by TPO on account of taxes, services tax is not justified and we direct to delete the same. Hence, Ground Nos.12, 13 and 17 of the appeal taken by assessee are allowed. 12.Considering the decision of Tribunal in assessee's own case for A.Y. 2006- 07 in ITA No. 83/Mum/201 1, which was followed in A.Y. 2008-09 in ITA No.133/Mum/2012 and in A.Y. 2009-10 in ITA No. 829/Mum/2014, on identical ground, we confirmed the order of Id. CIT(A). In the result, ground no.2 & 3 of the appeal are dismissed." 5.1. Respectfully following the said decision, ground No.4 raised by the Revenue is dismissed. 6. Ground No.5 raised by the Revenue is with regard to the action of the ld.CIT(A) in deleting the adjustment made on account of tax, R&D cess on know-how royalty and traded finished goods and manufactured products. We find that this issue is covered by the decision of by this Tribunal in assessee's own case for assessment year 2005-2006 (supra), wherein it was held as under:- "21.We have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see and therefore the parent company of the assesseecompany should share some of the expenses. It is a fact that TPO while suggesting any disallowance/adjustment has to state that the transactions between the assessee -company and its AE is not at Arms Length. The TPO is to determine the Arms length by following one of the method and /or most appropriate method as prescribed in section 92C(l) of the Act. The TPO cannot suggest adjustment/disallowance on the basis of his assumptions that the payment is excessive though it is at arm's length. Similar issue was also considered by ITAT Murnbai Bench in the case of Kodak India Pvt. Ltd.(supra). Further, Rule 10B specifically provides the procedure to be followed fordetermining Arm's Length Price. We observe that the TPO while suggesting the disallowance of 200.82 Lakhs out of the expenses incurred by assessee on publicity and sales promotion has not followed any of the method and therefore the said adjustment/disallowance suggested by TPO is outside its jurisdiction. During the course of hearing, id. DR submitted that the matter could be restored to TPO to decide afresh after considering the guidelines laid down by Special Bench ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IT(A). In the result, ground no.8 of the appeal is dismissed. 29.Ground No.9 relates to MODVAT credit relating to opening stock. The id. AR of the assessee submits that it is settled legal position that to give impact to the provision of section 145A, in case tax, duty, cess or fees areadded to the value of closing stock than opening stock also would have to be grossed up with excise duty. Otherwise, it would result into following a hybrid system of accounting i.e. neither the exclusive method nor inclusive method. The Id. AR submits that in assessee's own case for A.Y. 1999-2000 in ITA No. 2680/Mum/2003, the similar issue was restored back to the file of Assessing Officer vide order dated 18.01.2013. Against the order of Tribunal, the revenue filed appeal before the jurisdictional High Court and the same has been rejected vide order dated 28.03.2016 in ITA No. 2197 of 2013 by following the ratio laid down by High Court in Mahalaxmi Glass Works Pvt. Ltd. [318 ITR 116]. The Id. AR further submits that by following the decision of Tribunal and High Court in assessee's own case, similar relief was granted to the assessee for A.Y. 2000-01, A.Y. 2001-02 in ITA No. 3289/Mum/200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ought to have established excessiveness of the payment. This has not been done. Considering the decision of the Tribunal in assessee's own case, in the light of the observations made by the Ld. CIT(A), we do not find any reason to interfere with the findings of the Ld. CIT(A). Ground No. 7 is accordingly dismissed. 37.Considering the decision of Tribunal in assessee's own case for A.Y. 2002- 03 in ITA No.4092/Mum/2007, which was followed in A.Y. 2006-07, A.Y. 2003-04 & A.Y. 2004-05, we confirm the order of Id. CIT(A). In the result, ground no. 11 of the appeal is dismissed." 10.1. Respectfully following the said decision, ground No.9 raised by the Revenue is dismissed. 11. Ground No.10 raised by the Revenue is with regard to the action of the ld.CIT(A) in allowing depreciation on testing equipment provided to laboratories and hospitals free of charge. We find that this issue is also covered by the decision of by this Tribunal in assessee's own case for assessment year 2005-2006 (supra), wherein it was held as under:- "33.We have considered the submission of parties and find that in A.Y. 2000-01 in ITA No. 3287/Mum/2004, the co-ordinate bench of Tribunal passed the fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee had received the information of such transaction in the month of April 2007 only. Further, in respect of remaining alleged receipts of Rs. 1,23,400, the assessee submitted that it does not have any information about any such payment made by MCGM and accordingly the same were not accounted by the assessee. In other words, the assessee categorically denied any transaction with MCGM to the tune of Rs. 1,23,400 before the ld.AO. However, the ld.AO proceeded to dismiss the same and proceeded to make addition of entire difference between the accounted data and the AIR information to the tune of Rs. 5,10,050 in the assessment. It was pleaded before the ld.CIT(A) that no addition could be made merely on the basis of AIR information alone. Reliance was also placed on the decision of the Hon'ble jurisdictional High Court in the case of CIT v. Shri S.Ganesh ITA No.1930 of 2011 dated 18th March, 2014. The ld.CIT(A) placing reliance on the said judgment, deleted the addition. Aggrieved, the Revenue is in appeal before us. 12.1. We have heard the rival submissions. We find that the issue in dispute is squarely covered in favour of the assessee by the decision of the Hon'ble jurisdictional ..... X X X X Extracts X X X X X X X X Extracts X X X X
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