2019 (3) TMI 2006 - AT - Income Tax

TP Adjustment - upward adjustment made on international transactions - threshold limit of Rs 15 crores - HELD THAT - No document was cited before us showing a threshold limit of Rs 15 crores being in force at the relevant point of time. As far the Calance Software case 2018 (3) TMI 1310 - ITAT DELHI that was a case in which the value of transactions was less than Rs 5 crores and the CBDT circular holding the threshold limit, for reference to the TPO, was placed on record. There is nothing before us to suggest the threshold limit of Rs 15 crore in such cases being in force at the relevant point of time. In any case, the plea of the assessee is not disposed of by way of a speaking order. In this view of the matter, as also bearing in mind entirety of the case, we deem it fit and proper to remit the matter to the file of the CIT(A) for adjudication on this short point by way of a speaking order, in accordance with the law and by way of a speaking order. As the matter is being remitted to the file of the CIT(A) on this technical plea, it will be premature to deal with grievances raised by the AO. Disallowance on account of interest expenses u/s 36(1)(iii) - once the funds are put into business they lose their identity - CIT-A deleted the addition - HELD THAT - We see no reasons to interfere in the matter as learned CIT(A) s order for the assessment year 2009-10, based on which impugned relief was given, has since been confirmed by a coordinate bench vide order 2016 (9) TMI 1500 - ITAT AHMEDABAD and the learned Departmental Representative has not been able to point out any material difference in the facts of the case of the said assessment year vis- -vis the facts of the case of this year. As a matter of fact, there is no dispute that material facts of the case are same. In view of these discussions, as also bearing in mind entirety of the case, we approve the conclusions arrived at by the CIT(A) and decline to interfere in the matter. Addition on account of royalty payment - payment was made for the use of landmark - Capital expenditure - CIT-A deleted the addition - HELD THAT - We see no reasons to interfere in the matter as learned CIT(A) s order for the assessment year 2009-10, based on which impugned relief was given, has since been confirmed by a coordinate bench 2016 (9) TMI 1500 - ITAT AHMEDABAD and the learned Departmental Representative has not been able to point out any material difference in the facts of the case of the said assessment year vis- -vis the facts of the case of this year. As a matter of fact, there is no dispute that material facts of the case are same. In view of these discussions, as also bearing in mind entirety of the case, we approve the conclusions arrived at by the CIT(A) and decline to interfere in the matter.

Summary

Issues Involved:
1. Dispute over upward adjustment of Rs 1,83,53,946 on international transactions.
2. Disallowance of Rs 1,90,05,000 on account of interest expenses under section 36(1)(iii) of the Act.
3. Addition of Rs 56,35,500 on account of royalty payment for the use of landmark.
4. Non-adjudication on ground no. 2(d) before the CIT(A).

Issue 1 - Upward Adjustment on International Transactions:
The Assessing Officer disputed the deletion of an upward adjustment of Rs 1,83,53,946 on international transactions. The assessee argued that the reference to the Transfer Pricing Officer was not required as the value of transactions did not exceed Rs 15 crores. The Tribunal noted the absence of a document indicating the threshold limit of Rs 15 crores at the relevant time. Citing a relevant case law, the Tribunal remitted the matter to the CIT(A) for adjudication on this point, emphasizing the need for a speaking order.

Issue 2 - Disallowance of Interest Expenses:
The Assessing Officer disallowed Rs 1,90,05,000 as interest expenses under section 36(1)(iii) of the Act, relating to investments in subsidiaries. The CIT(A) had deleted this disallowance, which was upheld by a coordinate bench for the assessment year 2009-10. As no material differences were found in the facts, the Tribunal approved the CIT(A)'s decision and declined to interfere in the matter.

Issue 3 - Addition on Account of Royalty Payment:
Regarding the addition of Rs 56,35,500 on account of royalty payment for the use of a landmark, the Assessing Officer treated the expenditure as capital expenditure but allowed depreciation at 25%. The Tribunal found no reason to interfere as the facts were similar to a previous assessment year where the relief was confirmed by a coordinate bench. Consequently, the Tribunal approved the CIT(A)'s decision and dismissed the appeal.

Issue 4 - Non-Adjudication on Ground No. 2(d):
The Tribunal observed a factual lapse in the non-adjudication of ground no. 2(d) before the CIT(A). This issue was remitted to the CIT(A) for adjudication on merits in accordance with the law. Ground nos. 3, 4, 5, and 6 were deemed premature for consideration pending the adjudication on the reference to the TPO. Ground no. 7 was dismissed as it was not pressed. The assessee's appeal was partly allowed for statistical purposes based on the above considerations.