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2019 (1) TMI 879 - AT - Income TaxTPA - MAM selection - Held that - Tribunal in assessee s own case vide its orders dated 17.01.2017 for AY 2008-09 and 2009-10 respectively to re-compute ALP of international transaction of import of finished goods entered into by assessee with its AE i.e. Alfa Group of entities by following resale price method(RPM). While arriving at aforesaid decision, we are guided by the decision of Radhasoami Satsang v. CIT 1991 (11) TMI 2 - SUPREME COURT that rule of consistency need to be followed. Thus, ground of appeal No. 1 is allowed for statistical purposes. We order accordingly. TDS U/S 194H - addition u/s 40(a)(ia) on account of non- deduction of Income-tax at source(TDS) - Held that - We set aside the issue to the file of the AO for fresh consideration of the issue in accordance with law , with similar directions as were given by the tribunal for AY 2009-10 in assessee s own case as detailed above . While arriving at aforesaid decision, we are guided by the decision of Hon ble Supreme Court in the case of Radhasoami Satsang v. CIT 1991 (11) TMI 2 - SUPREME COURT that rule of consistency need to be followed.
Issues Involved:
1. Adjustment towards the international transaction of import of finished goods for resale. 2. Disallowance under Section 40(a)(ia) for non-deduction of tax at source on credit card processing charges. 3. Disallowance under Section 40(a)(ia) for non-deduction of tax at source on charges paid for foreign exchange collection and deposit. 4. Initiation of penalty proceedings under Section 274 read with Section 271(1)(c). Issue 1: Adjustment towards the international transaction of import of finished goods for resale The assessee, engaged in retail trade and operation of duty-free shops, reported international transactions with its Associated Enterprises (AE) using the Resale Price Method (RPM) to compute the Arm's Length Price (ALP). The Transfer Pricing Officer (TPO) rejected RPM and adopted the Transactional Net Margin Method (TNMM), resulting in an adjustment of ?5,87,35,794/- to the assessee's income. The CIT(A) upheld the TPO's decision, guided by previous decisions for AY 2008-09 and 2009-10. The Tribunal, however, noted that the assessee's functional profile as a reseller without value addition supports the use of RPM. It cited multiple judicial precedents, including the Tribunal's own decisions in the assessee's case for earlier years, which favored RPM over TNMM for such transactions. The Tribunal directed the Assessing Officer (AO)/TPO to re-compute the ALP using RPM, emphasizing consistency as per the Supreme Court's ruling in Radhasoami Satsang v. CIT. Issue 2: Disallowance under Section 40(a)(ia) for non-deduction of tax at source on credit card processing charges The AO disallowed ?1,05,53,740/- under Section 40(a)(ia) for non-deduction of tax at source under Section 194H on credit card processing charges. The CIT(A) upheld this disallowance, following the DRP's order for AY 2009-10. The Tribunal referred to its decision for AY 2009-10, where it held that payments to banks for credit card processing do not constitute commission liable for TDS under Section 194H. Consequently, no disallowance under Section 40(a)(ia) is warranted. The Tribunal allowed the assessee's claim, ordering the deletion of the disallowance. Issue 3: Disallowance under Section 40(a)(ia) for non-deduction of tax at source on charges paid for foreign exchange collection and deposit The AO disallowed ?95,75,838/- under Section 40(a)(ia) for non-deduction of tax at source under Section 194H on charges paid to Thomas Cook India Ltd. for foreign exchange services. The CIT(A) upheld this disallowance, following the DRP's order for AY 2009-10. The Tribunal, referring to its decision for AY 2009-10, noted that the relationship between the assessee and Thomas Cook must be examined to determine if it constitutes a principal-agent relationship. The Tribunal remitted the matter to the AO for fresh consideration, directing the AO to examine the nature of the relationship and decide accordingly. Issue 4: Initiation of penalty proceedings under Section 274 read with Section 271(1)(c) The Tribunal's order did not specifically address the initiation of penalty proceedings under Section 274 read with Section 271(1)(c). However, given the decisions on the substantive issues, the initiation of penalty proceedings would likely be impacted by the final determination of the adjustments and disallowances. Conclusion: The Tribunal partly allowed the assessee's appeal, directing the AO/TPO to re-compute the ALP using RPM, delete the disallowance for credit card processing charges, and re-examine the disallowance for foreign exchange charges. The principle of consistency, as established by the Supreme Court, was emphasized throughout the judgment.
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