2020 (9) TMI 22 - AT - Income Tax

Determination of Arms Length Price for Intra Group Services (IGS) - HELD THAT - We agree with the submissions of ld. Counsel for the assessee. Year after year, the Tribunal has been adjudicating this issue against the Revenue. Despite such findings, the Assessing Officer, the DRP chose to stick to their stand, on the ground that the issue is before the Hon'ble High Court. Under these circumstances, we reject this request of the ld. DR. Consistent with the view taken therein we uphold the contention of the assessee and allow this ground no. 2 of the assessee. Determination of ALP of Advertisement, Marketing and Promotion expenses - HELD THAT - Issue adjudicated in favour of the assessee by the ITAT in the earlier assessment years. Disallowance of payments made for IT services - HELD THAT - No hesitation in upholding these contentions of the assessee that rule of consistency has to be followed in income tax proceedings as held by the Hon'ble Supreme Court in the case of Radhasoami Satsang vs. CIT 1991 (11) TMI 2 - SUPREME COURT - In the result, this ground is allowed. Disallowance of lease rent paid in respect of motor cars - HELD THAT - This issue is also covered in favour of the assessee by the decision of the Tribunal for all the assessment years running from 2009-10 to 2014-15 . Depreciation on moulds - HELD THAT - We set aside this ground of the assessee to the file of the AO for fresh adjudication. The assessee is at liberty to file fresh evidence in support of its claim. Thus, this ground is allowed for statistical purposes. Short grant of credit - HELD THAT - Both parties agreed that the issue may be restored to the file of the Assessing Officer for fresh verification and disposal. Additional tax on interest on distributable profits - HELD THAT - As agreed to by both parties issue is also set aside to the file of the Assessing Officer for fresh adjudication in accordance with law. Education cess and higher education cess is allowable as a deduction. In the result, this ground of the assessee is allowed.

Issues:
1. Determination of Arms Length Price for Intra Group Services (IGS)
2. Determination of ALP of Advertisement, Marketing and Promotion expenses
3. Rule of consistency in transfer pricing adjustments
4. Disallowance of lease rent paid in respect of motor cars
5. Depreciation on moulds
6. Non-grant of deduction u/s 80G
7. Short deduction of TDS/tax collected at source
8. Levy of interest u/s 234A and 234B
9. Levy of additional tax on interest on distributable profits
10. Deduction of 'education cess on income tax' and 'secondary and higher education cess on income-tax'

Analysis:

1. Determination of Arms Length Price for Intra Group Services (IGS): The Tribunal upheld the assessee's contention, emphasizing the rule of consistency and rejecting the request to remand the issue back to the Assessing Officer for fresh determination of ALP. The Tribunal noted the past decisions in favor of the assessee and disallowed the appeal by the Revenue.

2. Determination of ALP of Advertisement, Marketing and Promotion expenses: The Tribunal reiterated its stance from previous years, holding in favor of the assessee based on past decisions by the Co-ordinate Bench. The Tribunal rejected the repetition of the stand by the TPO and DRP, emphasizing the rule of consistency in transfer pricing adjustments.

3. Rule of consistency in transfer pricing adjustments: The Tribunal upheld the rule of consistency in income tax proceedings, citing the decision of the Hon'ble Supreme Court. The Tribunal emphasized that the same treatment should be applied to similar issues across assessment years, thus allowing the appeal on this ground.

4. Disallowance of lease rent paid in respect of motor cars: The Tribunal ruled in favor of the assessee, citing past decisions by the Co-ordinate Bench. The Tribunal emphasized the lack of material from the Revenue to counter the findings in favor of the assessee, leading to the allowance of the appeal on this ground.

5. Depreciation on moulds: The Tribunal set aside this ground to the file of the Assessing Officer for fresh adjudication, allowing the assessee to provide additional evidence in support of its claim. The Tribunal emphasized the need for a fresh review of the issue.

6. Non-grant of deduction u/s 80G: The Tribunal allowed the issue to be set aside for fresh adjudication by the Assessing Officer, emphasizing the need for verification of the claim of the assessee in accordance with the law.

7. Short deduction of TDS/tax collected at source: Both parties agreed to restore this issue to the file of the Assessing Officer for fresh verification and disposal, leading to the allowance of the appeal on this ground for statistical purposes.

8. Levy of interest u/s 234A and 234B: The Tribunal set aside these issues to the file of the Assessing Officer for fresh calculation, as they were deemed consequential in nature.

9. Levy of additional tax on interest on distributable profits: The issue was set aside for fresh adjudication by the Assessing Officer in accordance with the law, as agreed by both parties.

10. Deduction of 'education cess on income tax' and 'secondary and higher education cess on income-tax: The Tribunal allowed the deduction of education cess and higher education cess as claimed by the assessee, citing relevant judgments and legislative considerations, leading to the allowance of the appeal on this ground.

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