2021 (6) TMI 1066 - AT - Income Tax

Rectification of mistake - assessee challenged segregation and separate benchmarking the intragroup services from the manufacturing and trading segment - HELD THAT - We have perused the submissions advanced by both sides in light of records placed before us. We note that the said Ground No.1.3 is raised by assessee challenging the segregation of service by Ld.AO/TPO. Therefore observation of this Tribunal deserves to be deleted. Accordingly we delete the observation in para 14 of the impugned order at page 6. Henceforth para 14 shall be read as under 14. The Ld.AR submitted that Ld.TPO has not analysed the services rendered by AE to assessee in the light of evidences filed by assessee. He also submitted that even Ld.CIT(A) summarily rejected submissions of assessee without verifying various evidences filed. Disallowance of management fee under section 40(a) of the Act by Ld.AO on protective basis - HELD THAT - From the records we note that in the impugned order, this Tribunal remanded the issue of computation of arms length price of intragroup services back the Ld.AO, and accordingly this issue becomes academic. We refer to the specific observation of this Tribunal which consider this aspect in para 8 and para 25.Accordingly we reject this plea of assessee. We thus direct registry to fix the appeal only to adjudicate the additional ground raised by assessee wide application dated 21/09/2020 that reads as under Ground no. 2.5 Deduction in respect of 'education cess on income-tax' and 'secondary and higher education cess on income-tax' for the year under consideration, while assessing the total income of the Appellant The Learned Assessing Officer ( Learned AD ) and Hon'ble Commissioner of Income Tax ( Hon'ble CIT(A) ), while assessing the total income of the Appellant for the year under consideration, have erred in not allowing a deduction for education cess and secondary higher education cess (collectively known as education cess ) for the year under consideration On the facts and circumstances of the case and in law, the Learned AD and Hon'ble CIT(A) ought to have allowed deduction of education cess for the year under consideration, though not claimed as a deduction by the Appellant while filing its return of income.

Summary

Issues involved:
1. Rectification of mistakes apparent on record in the order dated 25/11/2020.
2. Adjudication of additional ground challenging disallowance of education.
3. Segregation and separate benchmarking of intragroup services.
4. Adjudication of the ground regarding disallowance of management fee under section 40(a) of the Act.
5. Remand of the issue of computation of arms length price of intragroup services.
6. Adjudication of the additional ground raised by the assessee regarding deduction for education cess on income-tax.

Issue 1: Rectification of mistakes apparent on record
The present miscellaneous petition sought rectification of alleged mistakes apparent on record in the order dated 25/11/2020 passed by the Tribunal. The Ld.AR highlighted that an additional ground challenging the disallowance of education had not been adjudicated. Upon perusal, it was noted that this issue had inadvertently not been addressed in the impugned order. The Tribunal acknowledged the oversight and proceeded to rectify the same by deleting an observation in the order and directing the registry to fix the appeal for adjudicating the missed ground raised by the assessee.

Issue 2: Adjudication of additional ground challenging disallowance of education
The Ld.AR submitted that the assessee had filed an additional ground challenging the disallowance of education, which had not been adjudicated. The Tribunal, after reviewing the submissions and records, observed that the said ground had not been addressed in the impugned order. Consequently, the Tribunal acknowledged the oversight and directed the registry to fix the appeal for hearing on this specific issue, thereby partially allowing the miscellaneous petition filed by the assessee.

Issue 3: Segregation and separate benchmarking of intragroup services
The Ld.AR raised a contention regarding the segregation and separate benchmarking of intragroup services from the manufacturing and trading segment. The Tribunal examined the submissions made by both sides and noted that a specific ground challenging the segregation of services had been raised by the assessee. Upon review, the Tribunal found merit in the contention and decided to delete an observation in the impugned order related to this issue, thereby addressing the concerns raised by the assessee.

Issue 4: Adjudication of the ground regarding disallowance of management fee under section 40(a)
The Ld.AR pointed out another ground that had not been adjudicated, concerning the disallowance of management fee under section 40(a) of the Act by the Ld.AO on a protective basis. Upon examining the records, the Tribunal noted that the issue of computation of arms length price of intragroup services had been remanded back to the Ld.AO in the impugned order, rendering the specific ground raised by the assessee on this matter academic. Consequently, the Tribunal rejected this plea of the assessee.

Issue 5: Remand of the issue of computation of arms length price of intragroup services
The Tribunal, in the impugned order, had remanded the issue of the computation of arms length price of intragroup services back to the Ld.AO. This remand rendered the specific ground raised by the assessee regarding the disallowance of management fee under section 40(a) academic. The Tribunal referred to specific observations in the order that addressed this aspect and rejected the plea of the assessee concerning this issue.

Issue 6: Adjudication of the additional ground raised by the assessee regarding deduction for education cess on income-tax
The Tribunal directed the registry to fix the appeal for hearing on the additional ground raised by the assessee regarding the deduction for education cess on income-tax. The specific ground challenged the failure to allow a deduction for education cess and secondary & higher education cess for the year under consideration. The Tribunal acknowledged the need to address this ground and directed the registry to fix the appeal for hearing on this issue in the regular course, thereby partially allowing the miscellaneous petition filed by the assessee.

In conclusion, the Tribunal addressed various issues raised by the assessee, rectifying oversights, deleting observations, and directing the registry to fix the appeal for hearing on specific grounds, thereby partially allowing the miscellaneous petition filed by the assessee.