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2022 (1) TMI 1030 - AT - Income TaxTP Adjustment towards brand development services - adopting Spearman s Rank Correlation method HELD THAT - An identical issue has been considered by Tribunal in assessee s own case for the assessment year 2015-16 2021 (9) TMI 1070 - ITAT CHENNAI wherein the Tribunal following the earlier decision in assessee s own case for assessment year 2013-14 2021 (9) TMI 1013 - ITAT CHENNAI held that learned TPO as well as learned DRP were erred in making transfer pricing adjustments towards brand services by adopting Spearman s Rank Correlation method and concluded that there is positive accretion between brand value and market capitalization of HMC Korea and hence, directed the AO/TPO to delete transfer pricing adjustment made towards brand development services. Therefore, consistent with the view taken by the coordinate Bench, we direct the AO to delete addition made towards brand fee adjustment. Disallowances u/s.14A r.w.r 8D - HELD THAT - An identical issue has been considered by Tribunal in assessee s own case for the assessment year 2015-16 2021 (9) TMI 1070 - ITAT CHENNAI wherein the Tribunal following the earlier decision in assessee s own case for assessment year 2013-14 2021 (9) TMI 1013 - ITAT CHENNAI directed the AO to restrict disallowances u/s.14A of the Act, to the extent of exempt income earned for the impugned assessment year. Disallowance of depreciation on capital subsidy - HELD THAT - An identical issue has been considered by Tribunal in assessee s own case for the assessment year 2015-16 2021 (9) TMI 1070 - ITAT CHENNAI wherein the Tribunal following the earlier decision in assessee s own case for assessment year 2013-14 2021 (9) TMI 1013 - ITAT CHENNAI has allowed claim of the assessee and the AO has accepted decision of the CIT(A) and deleted additions, while passing order giving effect to the order of the CIT(A). Therefore, consistent with the view taken by the coordinate Bench, we direct the AO to delete addition made towards disallowance of depreciation on capital subsidy received from SIPCOT. Disallowance u/s.43B(c) in respect of performance incentive paid to employees - HELD THAT - An identical issue has been considered by Tribunal in assessee s own case for the assessment year 2015-16 2021 (9) TMI 1070 - ITAT CHENNAI wherein the Tribunal following the earlier decision in assessee s own case for assessment year 2013-14 2021 (9) TMI 1013 - ITAT CHENNAI held that payment made to an employee which is in the nature of bonus or commission for services rendered is covered u/s. 36(1)(ii) of the Act, and thus, if such payment is not made on or before due date of filing of return of income u/s.139(1) of the Act, then same cannot be allowed as deduction, as per section 43B(c) of the Act. Deduction towards education and secondary education cess u/s.37(1) - HELD THAT - In assessee s own case for the assessment year 2015-16 2021 (9) TMI 1070 - ITAT CHENNAI wherein the Tribunal following the earlier decision in assessee s own case for assessment year 2013-14 2021 (9) TMI 1013 - ITAT CHENNAI where the issue has been remanded back to the file of AO to consider the issue denovo on merits in accordance with law, set aside issue to the file of Assessing Officer. Facts being identical for the year under consideration, by following the decision of Tribunal in assessee s own case for assessment year 2015-16, we set-aside the issue to file of the AO to re-examine the issue as per the directions given by the Tribunal. Addition towards VAT incentive received from Government of Tamil - HELD THAT - In assessee s own case for the assessment year 2015-16 2021 (9) TMI 1070 - ITAT CHENNAI issue has been remanded back to the file of AO to consider the issue denovo on merits in accordance with law, has set aside issue to the file of Assessing Officer. Facts being identical for the year under consideration, by following the decision of Tribunal in assessee s own case for assessment year 2015-16, we set aside the issue to file of the AO and direct him to reconsider the issue in accordance with law. Amount received from Focus Market Scheme to be treated as capital in nature and exclude from total - HELD THAT - In assessee s own case for the assessment year 2015-16 2021 (9) TMI 1070 - ITAT CHENNAI held that duty credit scrips received from Govt. of India under Focus Market Scheme is revenue in nature. Thus we are of the considered view that subsidy received from Govt. of India under Focus Market scheme cannot be considered as capital in nature and hence, we reject ground taken by the assessee.
Issues Involved:
1. Transfer Pricing Adjustment 2. Disallowance under Section 14A 3. Disallowance of Depreciation on Capital Subsidy 4. Disallowance under Section 43B(c) for Performance Incentive 5. Deduction for Education Cess and Secondary Education Cess 6. Addition towards VAT Incentive 7. Treatment of Export Incentives under Focus Market Scheme 8. Non-grant of Deduction under Section 80G 9. Lower TDS Credit 10. Interest Charged under Section 234B Detailed Analysis: 1. Transfer Pricing Adjustment: The appellant challenged the transfer pricing adjustment made towards brand development services, arguing that the adjustment was erroneous. The Tribunal noted that the TPO had used the Spearman’s Rank Correlation method to conclude a positive correlation between the brand value of Hyundai Motor India Limited and the market capitalization of Hyundai Motor Corporation, South Korea. The Tribunal found that this issue was previously decided in favor of the appellant for the assessment years 2013-14 and 2015-16, where the adjustments were deleted. Consequently, the Tribunal directed the AO to delete the addition made towards brand fee adjustment. 2. Disallowance under Section 14A: The appellant contested the disallowance under Section 14A read with Rule 8D, amounting to ?70,07,153/-. The Tribunal referred to its earlier decisions for the assessment years 2013-14 and 2015-16, where it was held that disallowance under Section 14A should be restricted to the extent of exempt income earned. The Tribunal directed the AO to restrict the disallowance to the extent of exempt income earned for the impugned assessment year. 3. Disallowance of Depreciation on Capital Subsidy: The appellant argued that the subsidy received from SIPCOT was a capital receipt and should not be adjusted against the cost of assets. The Tribunal noted that this issue was previously decided in favor of the appellant for the assessment years 2006-07, 2013-14, and 2015-16. The Tribunal directed the AO to delete the addition made towards the disallowance of depreciation on capital subsidy received from SIPCOT. 4. Disallowance under Section 43B(c) for Performance Incentive: The appellant contended that the performance incentive paid to employees should not be disallowed under Section 43B(c). The Tribunal referred to its earlier decisions for the assessment years 2013-14 and 2015-16, where it was held that performance incentives paid to employees are covered under Section 36(1)(ii) and thus, if not paid on or before the due date of filing the return, cannot be allowed as a deduction under Section 43B(c). The Tribunal upheld the disallowance. 5. Deduction for Education Cess and Secondary Education Cess: The appellant claimed that education cess and secondary education cess should be allowable as revenue expenditure under Section 37(1). The Tribunal noted that this issue was previously remanded to the AO for reconsideration for the assessment years 2013-14 and 2015-16. The Tribunal set aside the issue to the AO for re-examination in accordance with the law. 6. Addition towards VAT Incentive: The appellant argued that the VAT incentive received from the Government of Tamil Nadu should be treated as a capital receipt not chargeable to tax. The Tribunal referred to its earlier decisions for the assessment years 2011-12, 2013-14, and 2015-16, where the issue was remanded to the AO for reconsideration. The Tribunal set aside the issue to the AO for verification. 7. Treatment of Export Incentives under Focus Market Scheme: The appellant contended that the export incentives under the Focus Market Scheme should be treated as capital receipts not chargeable to tax. The Tribunal referred to its earlier decisions for the assessment years 2007-08, 2013-14, and 2015-16, where it was held that the duty credit scrips received under the scheme are revenue in nature. The Tribunal upheld the treatment of the incentives as revenue receipts. 8. Non-grant of Deduction under Section 80G: The appellant did not press this ground during the hearing. Consequently, the Tribunal dismissed the ground as 'not pressed'. 9. Lower TDS Credit: The appellant argued that the AO had granted lower TDS credit than claimed. The Tribunal set aside this issue to the AO for verification and directed the AO to grant TDS credit in accordance with the law. 10. Interest Charged under Section 234B: The interest charged under Section 234B is consequential. The Tribunal directed the AO to recompute the interest in accordance with the law. Conclusion: The appeal was partly allowed for statistical purposes, with directions to the AO to re-examine certain issues and delete or adjust additions as per the Tribunal's findings.
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