TMI Blog2023 (3) TMI 704X X X X Extracts X X X X X X X X Extracts X X X X ..... our view, sufficient opportunities were given by the lower authorities however despite grant of opportunities, the assessee had failed to file any document/claim before the lower authorities, no for the first time the assessee had filed the document and sought to claim the deduction on account of cash discount. In our view such it plea at belated stage cannot be accepted more particularly when the assessee is a company and is run by the professionals and also advised by the professionals. The assessee has given the reasons for not filing the said document before the lower authorities and had submitted that this additional document be permitted to be file on record. As noted hereinabove the assessee was negligent in not following the claim before the lower authorities by seeking deduction on account of cash discount either before the AO or before the DRP and also failed to file any documentary evidence in support thereof before lower authorities. Records shows that DRP had passed directions on 25/11/2013 and Assessing Officer passed order on 30.1.2014 for Assessment Year -2009-10, however despite that nothing was done for the current assessment year by the assessee by way of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith a direction to give depreciation on the valuation of the intangible asset on the basis of valuation of goodwill if any for A.Y. 2007-08. Admission of additional grounds before DRP - HELD THAT:- Once the additional grounds were raised by the assessee before DRP, then it is required to be adjudicated by the DRP. Accordingly, we are of the view that these grounds are required to be remanded back to the file of AO for passing an order in accordance with the law as provided under Chapter X of the I.T. Act. Needless to say that before passing an order, the AO shall pass a draft assessment order and thereafter, if the assessee is aggrieved with the draft assessment order, then assessee may prefer proceedings before DRP or in any forum as provided and thereafter, the final assessment order shall be passed by the Assessing Officer. Recover of salary expenses - benefit to the assessee with the deputation of technical expert - HELD THAT:- On perusal of the orders of lower authorities, we had considered that there is no reason to interfere with the order passed by the DRP and we considered the view of the DRP whereby the DRP has mentioned that the deputation of the technical expe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntuality the assessee will provide all the documentary evidence etc to demonstrate that the services were provided wholly and exclusively for the purpose of carrying out the international transactions. We are of the opinion that this issue is required to be remand back to the file of Assessing Officer with a direction to the assessee to provide the necessary evidence for rendering of services etc to the satisfaction of Assessing Officer. Accordingly, this issue is allowed for statistical purposes. - ITA No.616/Hyd/2016 ,, 254/Hyd/2017, 182/Hyd/2018, 182/Hyd/2018, 66/Hyd/2019 - - - Dated:- 27-6-2022 - Shri Laliet Kumar, Judicial Member AND Shri Laxmi Prasad Sahu, Accountant Member For the Appellant : Shri Deepak Chopra and Shri Nitin Narang, Advocates. For the Respondent : Shri Rajendra Kumar, CIT-DR ORDER Per Laliet Kumar, J.M. These are the set of five appeals arose against the separate assessment orders passed by Asst.Commissioner of Income Tax, Circle 1, Kadapa 1 under section 143(3) r.w.s. 144C and 92C(3) of the Income Tax Act, 1961 (hereinafter referred as the Act ) in pursuance to the directions of the Dispute Resolution Panel DRP , Ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s SA Reimbursement of expenses paid 51,31,684 Bravo Solutions SpA Reimbursement of expenses paid 4,19,968 ClimentFrancais SA Reimbursement of expenses received 8,72,891 ItlacementiFabbricheRiuniteCementoSpA Reimbursement of expenses received 1,45,77,299 CTGA SpA Reimbursement of expenses received 2,44,32,293 55,36,26,174 6. Though, the assessee had filed T.P. Study Report by benchmarking the international transactions using Transactional Net Margin Method (hereinafter referred as TNMM ) as most appropriate method and for that purpose has selected it as comparable. The assessee has worked out the PLI as 9.06% as against own margin of 11.89%. Therefore, the assessee has concluded that the international transactions of the assessee are at Arm s Length. 7. The learned TPO was not impressed with the T.P.Study carried out by the assessee on the basis of the TNMM as most app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rived at (operating cost / operating revenues) at 27.12%, whereas (operating profits / operating cost) was arrived at 33.37%. Assessee in its 3CEB report claimed Transaction Net Margin Method [TNMM] as the most appropriate method, analysed its transactions and compared two sets of comparable companies. Under the first set of comparables as noted down by TPO in Page 4 of the order, it compared 11 companies which are in cement business whose average operating profit/operating cost was at 18.59% as against assessee's operating margin 29.36%. It also had another set of comparables wherein the Iaverage net margin on sale was at 21.67% as against assessee's margin of 29.36%. Assessee's TP study was rejected by TPO stating that just because the operating margin of the taxpayer is comparable with the operating margin of certain comparables, it cannot be said that all the transactions were transacted at Arm's Length. Relying on the principle of 'substance over form' as held by Hon'ble Supreme Court in the case of Union of India Vs. Gosalia Shipping P. Ltd., [113 ITR 307 (SC)], AO rejected the method of TNMM, consequently, the TP study conducted by the taxpay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8. Next item analysed by TPO was with reference to payment of Rs.6,26,62,000/- to Ciments Francais S.A., towards sub-license agreement. Ciments Francais S.A., an affiliated company of Italcementi Group is having sub-license agreement to use the trade mark. As per the agreement, royalty at 1% of net sales of licensed products has to be paid to Ciments Francais S.A., on quarterly basis. AO analysed the same under the CUP method and noticed that there is no need for paying any amount to Italcementi Group for use of trade mark as assessee's own trade mark of ZCL was well established. He analysed the evolution of ZCL brand equity and noticed that assessee itself had entered into an agreement with M/s. Jindal Vijayanagar Ltd., for a fixed license of Rs.1,00/- per metric tonne for using the trade mark and accordingly, assessee has received amounts. Therefore, commercial exploitation of the trade mark aided by the marketing and advertising efforts of ZCL, resulted in creation of valuable intangible assets in India. Thereafter, analyzing the benefit test, the TPO came to the that new trade mark licensed to the tax payer does not have any value and therefore no license fee should ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts of the case will not give reliable results. Assessee relied on the orders of the ITAT in Air Liqauide Engineering India Pvt. Ltd., in ITA No.1040/H/2011 and Lumax Industries in ITA No.7408 and 7641/Mum/2010. With reference to the T.P. adjustment of Rs.1,65,64,219/- relating to fee paid for technical services, it was contended that SVCL i.e., Sri Vishnu Cements Ltd., was a subsidiary of assessee, as a part of BIFR package from FY.2002-03. Before that, it was independent sick company and having acquired by the company, being sick, no royalty was charged to SVCL during the period 2002-03 to 2006-07 w.e.f. January 2007. The said SVCL was merged with assesseecompany under the order of Hon'ble High Court of AP. Therefore, comparing with costs occurred about three years prior to the impugned period, was also not correct. Further, it was contended that TPO has taken a wrong information and ignored certain data in between which comparing annual earnings as can be seen from the table itself extracted in the order. Since TPO has not based his ultimate decision of SVCL, Ld.Counsel also referred to the three companies taken as external comparables, in arriving at 0.91% of royalty rate. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... will not happen year after year and TPO/ DRP has made a similar approach in AY.2008-09 and made the adjustment of Rs.31.74 Crores and in AY.2009-10, the adjustment was Rs.41.60 Crores. Therefore, the action of the TPO/DRP is irrational on the reason that proposing the transfer pricing adjustment for transfer of Zuari trade mark year after has no basis, without appreciating the fact that the transfer can take place only once. With reference to the consultancy fees for manufacturing a new plant, first objection was that the amount was not claimed as expenditure in the P L A/c and was capitalized. While supporting the payment by way of services being provided by the AE in procuring the equipment for the new plant and also the necessity for taking various procurement services for a fee, it was the submission that TPO erred in ignoring the evidences and determining the ALP at NIL. Likewise, payment of consultancy fee to Bravo Consultancy SPA for use of 'easy supply' portal and the evidences furnished in this regard were totally ignored and wrongly determined the ALP at NIL. Likewise, the Ld.Counsel made detailed submissions on reimbursement of expenses and other various disallow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trade mark is also faulty. Under the guise of TPO provisions, the TPO cannot determine the ALP at NIL as held by the Hon'ble Delhi High Court in the case of CIT Vs. EKL Applicances Ltd., (supra). Therefore, rejecting the entire payment without there being any analysis on the CUP method cannot be accepted. In the guise of analyzing the transactions in the CUP method, the TPO has not brought any evidence on record to reject the 1% payment made to Italcementi Group. Moreover, while determining the price at NIL on the issue, the TPO surprisingly holds that assessee has transferred its 'Zuari Brand' to 'Italcementi Group'. We are unable to understand this logic. Italcementi Group never obtained, acquired or used Zuari Brand anywhere in the world, so that this cannot be considered for Transfer Pricing analysis. It is the Italcementi Group brand which is used by assessee-company. The TPO's analysis of AMP expenses are also not correct. Even though Italcementi Group was being used from earlier years, AMP expenses of current year also included in this, which is not correct. Moreover, Italcementi Group itself is a 50% shareholder in the assessee-company from the begin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as TNMM method and leave it open for the TPO to finalize the consequential computation as per law. We further make it clear that it shall be very much open for the assessee to file on record all the necessary details pertaining to the comparable(s) list submitted in TNMM in the consequential computation. Ordered accordingly. 11. It was further submitted by the ld.AR for the assessee that pursuant to the decision of the Tribunal in the second round of appeal (supra), the AO has given effect to the order passed by the Tribunal and granted relief to the assessee and for that purpose, the ld.AR has drawn our attention to the order of the AO for A.Y. 2009-10 to the following effect. 13. We have considered the issue and pursued the evidences on record, including the documents placed on the Paper Books. We are of the opinion that the approach of the TPO is not correct. Even though the payments made by assessee to the AEs are just a fraction of the total turnover of assessee, these transactions are invariably inter-linked to the manufacturing and trading of cement by the assessee-company. Therefore, the approach of the TPO in considering the CUP method for analyzing independen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this cannot be considered for Transfer Pricing analysis. It is the Italcementi Group brand which is used by assessee-company. The TPO's analysis of AMP expenses are also not correct. Even though Italcementi Group was being used from earlier years, AMP expenses of current year also included in this, which is not correct. Moreover, Italcementi Group itself is a 50% shareholder in the assessee- company from the beginning. Therefore, it cannot be stated that 'Zuari Cements' is exclusive brand owner of the Birla Group in exclusion of Italcementi Group. The entire approach by the TPO is biased and cannot be justified on the facts of the case. Therefore, we are not in a position to uphold any of the contentions raised by TPO in his order. Likewise, the disallowance of various service fees including reimbursements made by assessee to AE. Since we do not find any valid reason for TPO to disallow these expenditures, we have no other go than to set aside the entire order of the TPO which is based on wrong presumptions and propositions. DRP unfortunately, even though consisted of three senior officers, did not apply its mind to the valid objections raised by assessee. In view of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to the TPO / AO to adopt TNMM as the most appropriate method for determination of transfer pricing adjustments. 13. Per contra, the ld.DR had submitted that it is correct that the Tribunal in the second round of litigation had reiterated the finding recorded wherein it was held that the transactions are required to be determined / benchmarked on the basis of TNMM. However, it was submitted that he has to verify whether the appeal was preferred by the Department. It was further submitted that the correctness of TNMM was not examined by the TPO. 14. In rebuttal, the ld.AR for the assessee has submitted that the assessee has checked from the website of the hon ble High Court and there is no such appeal was preferred by the Department against the order passed by the Tribunal for A.Y. 2009-10. Further, it was submitted that even assuming that there was some appeal filed by the Department against the order of the Tribunal but the situation is no stay was granted by the hon ble High Court against the decision of the Tribunal. 15. We have heard the rival contentions of the parties and perused the material available on record. The DRP for the A.Y. 2009-10 vide his direction dt.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of expenses paid 86,61,340 Bravo Solutions SpA Reimbursement of expenses paid 8,06,176 Italacementi Fabbriche Riunite Cemento SpA Reimbursement of expenses paid 18,61,405 Climent Francais SA Reimbursement of expenses received 23,41,868 Italacementi Fabbriche Riunite Cemento SpA Reimbursement of expenses received 62,26,926 CTG SpA Reimbursement of expenses received 58,17,683 Ciment Francais SA Payables 5,42,53,321 Bravo Solutions SpA Payables 56,06,477 CTG SpA Payables 2,40,43,258 Italacementi Fabbriche Riunite Cemento SpA Receivables 1,64,97,030 Similarly for A.Y. 2013-14 which are forming part of Para 4 of the TPO order to the following effect : International Transactions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2013-14 are similar with AYs. 2011-12. Therefore, respectfully following our decision for A.Y. 2011-12, we also allow the T.P grounds raised by the assessee in these set of appeals, namely, ITA 254/Hyd/2017, ITA 182/Hyd/2018 and ITA 66/Hyd/2019. Accordingly, the TPO / AO is directed to apply TNMM as most appropriate method in respect of the international transactions mentioned by the assessee in Form 3CEB and determine the ALP. 20 . NON-TRANSFER PRICING ISSUES. Firstly, we will deal with ground Nos. 5(a) and 5(b): With respect to grounds 5(a) and 5(b) for A.Y. 2011-12, the ld. AR had drawn our attention to the draft assessment order dt.31.03.2015 wherein at Page 3, the Assessing Officer has mentioned as under : The assessee debited to Profit and Loss Account an amount of Rs.9,56,82,000/- towards cash discounts. The assessee has not filed any proof in respect of discounts given and in view of the same, the assessee s claim is disallowed. Feeling aggrieved by the draft assessment order dt.31.03.2015, assessee had filed objections before the DRP and the DRP dealt with the issue at Pages 32, 33 and 34 to the following effect. 3. Other than TP adjustments. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r as per the business policy of the Company, Apart from all these discounts, Company also offers cash discount for early realization of its debt. Providing all these kinds of discount is essential for the smooth operations of the business. Further, it is normal industry practice followed by various companies to provide cash discounts to customer. Therefore, it cannot be said that just because company is offering various other types of discount, cash discount is not warranted. Offering cash discount is the management decision to carry out business activity of the company effectively. Having considered the submissions, it is noticed from the assessment order that the assessee failed to furnish any evidence to support such cash discounts, in such circumstances, we are of the view that the A.O. was justified in disallowing such claim as the assessce lies to submit the evidences that such expenses have been incurred wholly and exclusively for the purpose of the business carried on during the year, for allowing deduction u/s 37(1) of the Act. The objection is accordingly rejected. 21. As there was no evidence filed by the assessee to show that the expenses were incurred wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... discount, Page Nos.5-6 of Additional Evidence Paper Book Sample workings of cash discount given by the Company, Page No.7-20 of Additional Evidence Paper Book. 21. On the other hand, the ld.DR had submitted that no evidence was filed before the AO during the assessment proceedings or during the first appellate proceeding before the DRP and therefore, the same is now entitled to any relief. It was further submitted that even the application filed by the assessee under Rule 29 dt.09.05.2018 is required to be rejected. 22. We have heard the rival contentions of both the parties and perused the material available on record. The draft assessment order was passed in this case by Assessing Officer on 31.03.2015 and thereafter, the DRP has issued directions on 29.12.2015 and the final assessment order was passed on 25.02.2016 and thereafter, the assessee has filed the present appeal before us dt.23.05.2016. After filing of the appeal before this tribunal, the assessee filed the application for admission of the additional documents only in the year 2018. In our view, sufficient opportunities were given by the lower authorities however despite grant of opportunities, the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l to permit additional evidence to be adduced to enable it to pass orders or, in its opinion, if there is any substantial cause for receiving additional evidence. The expression or for any other substantial cause occurs in rule 27(1)(b) of Order 41, Civil Procedure Code, and this expression has been the subject-matter of decisions by the Privy Council, Supreme Court and High Courts. In Parsotim Thakur v. Lal Mohar Thakur AIR 1931 PC 143it was held that the words for any other substantial cause must be read with the word requires in the beginning of the sentence and it is only where the appellate court requires any document to be produced or any witness to be examined that this rule will apply. The discretion to receive additional evidence is to be exercised only when any point is required to be cleared up in the interests of justice. This power given to the Tribunal has to be exercised cautiously and sparingly in order to advance the interests of justice. Rule 29 is not intended to allow an assessee who has been unsuccessful throughout to patch up the weak parts of his case or to fill up omissions. It is well settled that a party guilty of remissness and gross negli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re DRP for A.Y. 2009-10. Thereafter, the AO in final assessment order dated 30.1.2014 for Assessment Year 2009-10 had allowed the deduction on account of cash discount . Assessing Officer at Page 5 of the final assessment order which is to the following effect. 23. Admittedly, the DRP has given the opportunity to the assessee for A.Y. 2009 2010 for producing the evidence / documents to prove the disallowance on account of cash discount given to the consumers. Before us, the assessee had filed the application for admitting the additional document to show that the actual discounts are offered and given to the various consumers / concerns and the same was required to be treated as business expenditure while computing the income of the assessee. The Ld.AR has submitted that a separate application dated 9.5.2018 was filed for the purposes of admitting the additional evidence filed by the assessee. The assessee has given the reasons for not filing the said document before the lower authorities and had submitted that this additional document be permitted to be file on record. As noted hereinabove the assessee was negligent in not following the claim before the lower authorities ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee in this regard. (iii) The learned AO ought to have granted depreciation on goodwill based on the directions given by the DRP members for the AY 2010-11. It is submitted that in the Assessee's own case for AY 2010-11, the Honorable DRP has directed the leaned AO to allow the clam for depreciation on Goodwill, Based on the same, depreciation on goodwill should be allowed to the Assessee for the AY 2011-12 also. Having considered the submission , we direct the A010 allow the depreciation issued by the DRP in AY. 2010-11, in accordance with the provisions of the Act. 32. The AO while passing the final assessment order has dealt with the issue at Pages 4 and 5 of the order to the following effect : B(iii) Depreciation on Goodwill: The assessee has claimed depreciation on goodwill of Rs.16,60,91,410/- by filing a letter dt.05.02.2015 before the Assessing Officer request for allowance of depreciation on goodwill. Before the Hon ble Dispute Resolution Panel it was submitted that in assessee s own case for Asst. Year 2010-11 the Hon'ble Dispute Resolution Panel has directed the Assessing Officer to allow the claim for depreciation on goodwill and as such d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s submitted by the ld.AR that the similar issue was arose in A.Y. 2010-11 and the Tribunal order dt.05.08.2016 has allowed the claim of the assessee. 34. Per contra, the ld.DR for the Revenue has submitted that against the first order on 17.04.2015 in ITA 471/Hyd/2014, the issue of the depreciation was dealt by the Tribunal in Para 15.2 and 15.3 which read as under : 15.2 We have to accept that judicial principles relied on by assessee are very clear that assessee can raise any additional ground on legal matters, however, rider is that the facts should be available on record. Assessee submitted that the merger took place w.e.f. 01-01-2007 i.e., in A.Y.2007-08. We are considering appeal in AY.2009-10. How, the goodwill arose what is the amount and why assessee has not claimed depreciation and other issues require examination in AY.2007-08. In AY.2009-10, if a depreciation was allowed on an asset which is in the block of assets in earlier year, only consequential depreciation can be allowed. Since assessee is claiming fresh depreciation on the goodwill, which arose in AY.2007-08, we cannot allow the ground in this assessment year. As rightly held by the Hon'ble Supreme Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... : During the course of hearing conducted on 21.04.2022, relating to grounds relating to disallowance of depreciation on goodwill, in each of the subject assessment years it was for the Appellant before this Hon'ble Bench that the Assessing submitted by the Officer ( AO ) has erred in not allowing the claim of depreciation on goodwill in terms of the judgment of the Hon'ble Supreme Court in the case of Smifs Securities Limited vs. Commissioner of Income-tax, Kolkata (2012) (348 ITR 302). In view thereof, a query was raised by the Hon'ble Bench as to whether the allowability of the said claim was affected by the amendments brought about in section 2(11) (definition of block of assets) and Section 32(1)(ii) of the Income Tax Act, 1961 ( the Act ) vide Finance Act, 2021. In connection with the above, itis most respectfully submitted that the said amendments made by the Finance Act, 2021 are applicable only from 01.04.2021 and have no retrospective application. Hence, the amendments do not in any way restrict or effect the allowability of the claim of depreciation on goodwill in the subject assessment years (i.e, AY 2011-12 to AY 2014-15). 37. We have he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or thereafter when the goodwill was acquired by the assessee on amalgamation would be the commencing point for determining the depreciation on the Goodwill. Accordingly, grounds 7(a) and 7(b) are allowed for statistical purposes. GROUND NOS. 8(A), 8(B), 9 AND 10 40. At the outset, ld.AR for the assessee submitted that, the assessee is not pressing ground Nos. 8(a), 8(b), 9 and 10 and hence, requested that the same may kindly be dismissed as not pressed. 41. In view of the submission of ld.AR, we are hereby dismissing ground Nos.8(a), 8(b), 9 and 10 as not pressed. The grounds are dismissed accordingly. GROUND NOS.11 TO 15 42. Next, we will deal with ground No.11 to 15. The assessee had filed a letter before the DRP on 20.07.2015 whereby the assessee sought to raise the additional grounds of objections. The contents of said letter are reproduced below : We refer to the captioned objection for the AY 2011-12 which was filed on May 5, 2015. The Assessee would like to file additional ground of objection with respect to the following: a) Objection No 1.29: Claim of balance 50% of the additional depreciation under section 32(1) (iia) of the Inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee namely, ground nos.11 to 15 before the DRP afresh and pass an appropriate order in accordance with the law. In our view, whether the DRP was under an obligation to consider and decide the grounds afresh before it by the assessee is not come under res integra and the same has been accepted by the Tribunal in many matters, referred hereinabove by the assessee in the written submissions. 46.1 the Ld. DR for the revenue relied upon the order passed by the lower authorities 47. We have heard the rival contention the parties and perused the material of liberal on record .In the Case of Electrosteel Castings Ltd Vs. DCIT , the Calcutta tribunal in paragraphs 54 and 55, after reference to the decision of the Hon ble Supreme Court in the matter of Goetze (India) Limited had held as under : 54. As far as ground No. 3 raised by the Revenue is concerned, the issue that arise for consideration is as to whether the Dispute Resolution Panel could have directed the Assessing Officer to entertain the claim of the assessee that sales Tax remission received by it is capital receipt not chargeable to Tax when the said claim was not made by filing a revised return of income befo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section (8) that the DRP has been empowered to confirm, reduce or enhance the variations proposed in draft order. There is specific prohibition contained in the provision to the effect that the DRP cannot set-aside any proposed variation or issue any direction for further enquiry and passing of the assessment order. 49. In view of the above, it is crystal clear that once the additional grounds were raised by the assessee before DRP, then it is required to be adjudicated by the DRP. Accordingly, we are of the view that these grounds are required to be remanded back to the file of Assessing Officer for passing an order in accordance with the law as provided under Chapter X of the I.T. Act. Needless to say that before passing an order, the AO shall pass a draft assessment order and thereafter, if the assessee is aggrieved with the draft assessment order, then assessee may prefer proceedings before DRP or in any forum as provided and thereafter, the final assessment order shall be passed by the Assessing Officer. Thus, the ground Nos. 11 to 15 are partly allowed. GROUND NOS.16 AND 17 50. At the outset, ld.AR for the assessee submitted that the assessee is not pressing gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sai, and Sri Gopinath have been deputed to France on behalf of CF for assistance. As per the agreement, it is agreed that no mark up shall be added to the actual costs incurred on salary, allowances, bonus, leave, provisions, social security / welfare contributions, insurance premiums, out of pocket expenses, etc. The services provided by the employee of the taxpayer are of high-end as the concerned employee was a highly trained expert, who can handle technical requirements related to project implementation. Therefore, the said service cannot be reimbursed at cost. At arm's length, the services rendered by the taxpayer by way of employees secondment to overseas locations has to be marked up at cost plus 33.37%, which taxpayer earns in India. Out of the total expenditure of Rs. 1,43,86,477/- cost and reimbursed the balance by is the towards AEs a sum of Rs.23,41,868/- is towards salary third party payment. The arm's length compensation for the services rendered i.e. salary cost of Rs.23,41,868/- to CF by deputing the personnel of the taxpayer to overseas location is computed as under : Arm s length compensation of services rendered by emp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore, we are not in a position to uphold any of the contentions raised by TPO in his order. Likewise, the disallowance of various service fees including reimbursements made by assessee to AE. Since we do not find any valid reason for TPO to disallow these expenditures, we have no other go than to set aside the entire order of the TPO which is based on wrong presumptions and propositions. The assessee also relied on the directions of the Hon'ble DRP in assessee's own case for AY 2011-12 wherein the Hon'ble Panel vide Para 2.9 of its Direction held that the TPO has not given any rationale for computing a mark-up of 33.37% and accordingly, directed the AO to delete the proposed adjustment. During the year, the assessee deputed its employees to CF where the employees had remained under the supervision and control of CF. The salary cost of these employees incurred by the assessee during the period has been charged back by the assessee to CF. Hence, CF has reimbursed salary expenses at cost to the assessee. Further, the assessee has also recovered stay and travel expenses incurred on behalf of CF at 'actuals'. The details of expenses recovered by the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly be for a definite purpose to benefit the AE and benefit from the expertise and productivity of these experts while depriving the assessee of their services. Therefore, we conclude that there should be some benefit to the assessee with the deputation of technical expert and therefore, we do not find any reason to interfere with the decision of learned lower authorities. Accordingly, this ground is dismissed. 62. NON-TRANSFER PRICING ISSUES. GROUND NO.12. Firstly, ground No.12 Disallowance of depreciation on goodwill. This issue was already decided by us while deciding lead appeal ITA 616/Hyd/22016 at Para 38(supra) wherein we held that the matter may be remanded to the file of jurisdicitonal Assessing Officer with a direction to the Assessing Officer to consider the evidences filed on record for A.Y. 2007-08 for arriving at the valuation of the goodwill after amalgamation of the companies. The value attached to the goodwill in the said assessment year shall be considered for the purpose of allowing the depreciation on the basis of the rate as provided by the Act / Rules. Following the same reasoning, this issue is remanded back to the file of jurisdictional Asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Wipro Vs. CIT 137 Taxmann.com 230 had held as under : 11. Learned ASG had placed reliance on the decision of this Court in Goetze (India) Ltd. vs. Commissioner of Income Tax10 in support of the objection pressed before us that it is not open to entertain fresh claim before the ITAT. According to him, the decision in National Thermal Power Co. Ltd.11 merely permits raising of a new ground concerning the claim already mentioned in the returns and not an inconsistent or contrary plea or a new claim. We are not impressed by this argument. For, the observations in the decision in Goetze (India) Ltd.12 itself make it amply clear that such limitation would apply to the assessing authority , but not impinge upon the plenary powers of the ITAT bestowed under Section 254 of the Act. In other words, this decision is of no avail to the department. 67. In view of the categorical decision of the Hon ble Supreme Court, we have no doubt that the lower authorities are duty bound to decide the issue even if the claim has not been filed in the return of income or in the revised return of income. 68. In light of the above, we deem it appropriate to remand the matter back to the file of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... GROUND NO.1 74. Coming to non-transfer pricing issues, ground no.1 is with respect to disallowance of depreciation on goodwill. This ground has already been decided in ITA 616/Hyd/2016 for A.Y. 2011-12, therefore, respectfully, following the same, we remand this ground to the file of Assessing Officer. GROUND NOS. 2 AND 3 75. Ground nos. 2 and 3 are related to ECB. The DRP in Para 2.14 had held that ECB loan was taken for purchase of fixed assets and any loss caused to the assessee on account of foreign exchange fluctuation would come within the purview of the section 43A of the Act. However, the ld.AR had disputed the applicability of 43A of the Act on the transactions and had submitted that the matter may be remanded back for fresh examination in the light of the decisions of hon ble Supreme Court in the cases of Woodward Governor and Wipro (supra). We have heard the rival contentions of both the parties on identical facts, we have remanded the matter to the file of Assessing Officer, therefore, we issue similar direction as done in lead appeal in ITA 616/Hyd/2016 and remand back the matter to the file of Assessing Officer for fresh examination. Accordingly, gro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tute does not stipulate creation of provision in the accounts. The statutory requirement is to restore, reclaim and rehabilitate the land affected by the mining operations before the conclusion of the operation. This statutory requirement was not met, no information or evidence was filed as to the expenditure incurred in reclaiming and rehabilitating the affected land. The assessee appears to be merely creating provision year after year without actually fulfilling the statutory mandate. Without fulfilling the public interest mandate contained in the legislative provision, the assessee cannot be allowed to claim tax benefit by merely creating provision. The AO is justified in disallowing the claim. The proposed addition is upheld. 80. It was submitted by the ld.AR that this ground of the assessee is required to be allowed as the assessee has provided scientific basis for the purpose of claiming the charges for site restoration. Per contra, the ld.DR has relied on the order of lower authorities. 81. We have heard the rival submissions and perused the material on record. As the assessee willing to provide the necessary scientific information to show that the expenditure was in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ne the issue under section 37 of the Act and in that eventuality the assessee will provide all the documentary evidence etc to demonstrate that the services were provided wholly and exclusively for the purpose of carrying out the international transactions. 77. In the light of the above, we are of the opinion that this issue is required to be remand back to the file of Assessing Officer with a direction to the assessee to provide the necessary evidence for rendering of services etc to the satisfaction of Assessing Officer. Accordingly, this issue is allowed for statistical purposes. Needless to say while giving effect to the direction of the tribunal order, the assessing officer/ TPO, shall follow the principle of natural justice by affording opportunity of hearing to the assessee in accordance with. 78. IN THE RESULT, the appeal of the assessee in ITA No.66/Hyd/2019 for A.Y. 2014-15 is partly allowed for statistical purposes. 79. To sum up, the appeal of assessee in ITA No.2169/Hyd/2018 is dismissed and the remaining i.e., ITA No.616/Hyd/2016, 254/Hyd/2017, 182/Hyd/2018 and 66/Hyd/2019 are partly allowed for statistical purposes. Order pronounced in the Open Court on 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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