9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2021 (2) TMI 1358 - AT - Income TaxDisallowance of payment of royalty on trademarks paid to Cadbury Adams USA oversees company - HELD THAT - As decided in assessee own case 2019 (10) TMI 994 - ITAT MUMBAI assessee entered into Technical collaboration Agreement with CEPT to avail the benefits of Technical Know-how, trade secrets etc. for mixed fruit flavored and strawberry flavored sugar non-coated center filled bubble gums / chewing gums. Another agreement was entered into with the same entity for Trademarks and copyright licenses in respect of products Bubbaloo, Bubba the Cat Adams. As per agreement, the assessee paid Technical royalty @4% and Trademark Royalty @1%. Applying the same reasoning, it was held that CEPT was authorized to sub-license the rights of the Trademark only and there was no reference to presume that the same included the right to sub-license the Technology and know-how related to the products, an adjustment of Rs.142.51 Lacs was proposed by Ld. TPO. The Ld. DRP, finding the adjustment quite similar to as made for royalty payment to CAUSA, endorsed Ld. TPO's action. Since facts as well as reasoning of lower authorities are quite similar as in the case of royalty payment made by assessee to CAUSA, applying the same analogy, we delete the impugned addition. Disallowance of service fees paid to Cadbury Schweppes Asia Pacific Pvt. Ltd. - HELD THAT - We notice from the records that the identical ground has already been decided 2019 (10) TMI 994 - ITAT MUMBAI by the Coordinate Bench of ITAT in for AY 2008-09 in assessee s own case on merits in which ITAT has restored the matter back to the file of AO with direction to enable the revenue to take a consistent stand in the matter and also to follow the ITAT order for Assessment Year 2006-07. Disallowance of services fees paid to Cadbury Holdings Ltd. - HELD THAT - We notice from the records that the identical ground has already been decided by the Coordinate Bench of ITAT in 2019 (10) TMI 994 - ITAT MUMBAI for AY 2008-09 in assessee s own case on merits as held since facts as well as observations of lower authorities are parimateria the same as made by services fees paid by the assessee to CSAPL, taking similar view, we restore the matter back to the file of Ld. TPO / Ld. AO for re-adjudication on similar lines. Adjustment on account of advertising, marketing and promotion (AMP) expenses - HELD THAT - The identical ground has already been decided by the Coordinate Bench of ITAT in 2018 (11) TMI 1762 - ITAT MUMBAI for AY 2006-07 in assessee s own case on merits as delete the addition made by the Assessing Officer towards transfer pricing adjustment on account of AMP expenditure. Disallowance of depreciation on marketing know how - HELD THAT - We notice from the records that the identical ground has already been decided by the Coordinate Bench of ITAT 2019 (10) TMI 994 - ITAT MUMBAI in assessee s own case allowed depreciation claim applying the ratio of decision of Hon‟ble Supreme Court rendered in M/s Smifs Securities Ltd 2012 (8) TMI 713 - SUPREME COURT Similar view has been taken in subsequent years. Therefore, respectfully following the consistent view of the Tribunal on this issue in assessee's own case, we allow assessee's claim of depreciation. Disallowance u/s 14A of the Act r.w.r. 8D. - HELD THAT - As in 2019 (10) TMI 994 - ITAT MUMBAI for in assessee s own case we deem it fit to restore the matter of direct / indirect expense disallowance to the file of Ld. AO for re-adjudication in the light of suo-moto disallowance offered by the assessee. As held earlier, no interest disallowance would be justified, keeping in view the assessee‟s financial parameters. Disallowance of foreign exchange loss - HELD THAT - We notice from the records that the identical ground has already been decided in the case of London Star Diamond Co. (I) Pvt. Ltd. 2013 (11) TMI 424 - ITAT MUMBAI as held these are not premature cancellations by the assessee and therefore, in our considered view, the said loss being related to the FCs which are integral or incidental to the exports of the diamonds, should be allowed as business loss in view of the binding High Court or Tribunal decisions/judgments in the case of D Kishore kumar and Co 2005 (3) TMI 699 - ITAT MUMBAI Badridas Gauridu Pvt Ltd 2003 (1) TMI 61 - BOMBAY HIGH COURT Sooraj Muill Magarmull 1980 (9) TMI 69 - CALCUTTA HIGH COURT etc. Thus, loss arising from cancellation of the matured contracts is allowed in favour of the assessee. Disallowance on allocation of expenditure at Baddi Unit - HELD THAT - We notice from the records that the identical ground has already been decided by the Coordinate Bench of ITAT in 2020 (2) TMI 1704 - ITAT MUMBAI for AY 2007-08 in assessee s own case settled in favour of the assessee. We notice that the Coordinate Bench has accepted the method of allocation with regard to interest, VRS decrease in stock, direct expenses, direct marketing cost and selling distribution expenses, royalty and technical fees. The bench has remitted back to AO only the other overhead. Accordingly, we deem it fit to remit only the verification of allocation of other overhead to the file of AO. Therefore, we are inclined to accept the submission of Ld. AR. Accordingly, this ground raised by the assessee is partly allowed. Characterizing buyback of shares as distribution of dividend and levying dividend distribution tax on such buy back - HELD THAT - We notice from the records that the identical ground has already been decided by the Coordinate Bench of ITAT in the case of Golden Sachs (India) Securities Pvt. Ltd. 2016 (3) TMI 118 - ITAT MUMBAI hold that transaction in question would not fall under the category of colourable device.If an assessee enters into a deal which does not violate any provision of the Act of applicable to a particular AY - the deal cannot be termed a colourable device,if it result in non-payment or lesser payment of taxes in that year.The whole exercise should not lead to tax evasion.Non-payment of taxes by an assessee in given circumstances could be a moral or ethical issue.But,for that the assessee cannot be penalised.In light of the above discussion,we are reversing the decision of the FAA and deciding the effective ground of appeal in favour of the assessee. Disallowance on account of Annual Information Repot - HELD THAT - As decided in the case of Basant Kumar 2015 (11) TMI 1127 - ITAT DELHI settled in favour of the assessee and as submitted by Ld. AR, the assessee has declared the same in the subsequent assessment year, there is no loss as such to the revenue. Therefore, we are inclined to accept the submission of Ld. AR. Accordingly, this ground raised by the assessee is allowed. Short grant of TDS credit - HELD THAT - We notice from the records that the Ld. AO has granted credit for TDS only to the extent of Rs. 1,69,04,517/- as Rs. 2,99,18,916/- against claimed in the return of income file. Therefore, we are directing AO to verify the claim of the assessee and accordingly allow the TDS credit based on the record submitted before him. Accordingly, this ground raised by the assessee is allowed.
Issues Involved:
1. Transfer Pricing Adjustments. 2. Disallowance of payment of royalty on trademarks and technology. 3. Disallowance of service fees paid to associated enterprises. 4. Adjustment on account of advertising, marketing, and promotion (AMP) expenses. 5. Disallowance of depreciation on marketing know-how. 6. Disallowance under section 14A of the Act r.w.r. 8D. 7. Disallowance of foreign exchange loss. 8. Disallowance on allocation of expenditure at Baddi Unit. 9. Characterizing buyback of shares as distribution of dividend and levying dividend distribution tax on such buyback. 10. Disallowance on account of Annual Information Report. 11. Short grant of TDS credit. Issue-wise Detailed Analysis: 1. Transfer Pricing Adjustments: - This ground was considered general in nature and required no specific adjudication. 2. Disallowance of Payment of Royalty on Trademarks and Technology: - The Tribunal noted that similar issues had been decided in favor of the assessee in previous years (AY 2008-09). Specifically, the royalty payment on trademarks to Cadbury Schweppes Overseas Ltd. and on technology to Cadbury Adams USA LLC and Cadbury Enterprises Pvt. Ltd. were found to be at arm's length and allowable. The Tribunal followed these precedents and allowed the grounds. 3. Disallowance of Service Fees Paid to Associated Enterprises: - The Tribunal observed that similar issues had been remitted back to the AO in previous years (AY 2008-09). The Tribunal directed the AO to verify the documents and follow the consistent stand taken in earlier years, allowing the grounds for the assessee. 4. Adjustment on Account of Advertising, Marketing, and Promotion (AMP) Expenses: - The Tribunal referred to its own decision in AY 2006-07, where it was held that AMP expenses incurred by the assessee for its own products did not constitute an international transaction. The Tribunal followed this precedent and deleted the AMP adjustment, allowing the grounds for the assessee. 5. Disallowance of Depreciation on Marketing Know-How: - The Tribunal noted that similar issues had been decided in favor of the assessee in previous years (AY 2008-09). The depreciation claim on marketing know-how was allowed based on the consistent view of the Tribunal in earlier years. 6. Disallowance under Section 14A of the Act r.w.r. 8D: - The Tribunal observed that the AO had not established a nexus between borrowed funds and investments. It held that no interest disallowance was justified and remitted the matter of direct/indirect expense disallowance back to the AO for re-adjudication, allowing the grounds partly. 7. Disallowance of Foreign Exchange Loss: - The Tribunal followed the decision in the case of London Star Diamond Co. (I) Pvt. Ltd., allowing the loss on cancellation of matured forward contracts as business loss. The grounds were allowed in favor of the assessee. 8. Disallowance on Allocation of Expenditure at Baddi Unit: - The Tribunal followed its own decision in AY 2007-08, accepting the method of allocation for various expenses except for other overheads, which were remitted back to the AO for verification. The grounds were partly allowed. 9. Characterizing Buyback of Shares as Distribution of Dividend and Levying Dividend Distribution Tax: - The Tribunal followed the decision in the case of Golden Sachs (India) Securities Pvt. Ltd. and Capgemini India Pvt. Ltd., holding that the buyback of shares was not a colorable device to evade tax. The grounds were allowed in favor of the assessee. 10. Disallowance on Account of Annual Information Report: - The Tribunal followed the decision in the case of Basant Kumar, noting that the amount in question was declared in the subsequent assessment year. The grounds were allowed in favor of the assessee. 11. Short Grant of TDS Credit: - The Tribunal directed the AO to verify the claim of the assessee and allow the TDS credit based on the records submitted. The grounds were allowed. Conclusion: The appeal filed by the assessee was partly allowed, with the Tribunal providing detailed analysis and directions for each issue based on precedents and consistent views from earlier years.
|
