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TMI Blog2018 (12) TMI 1515X X X X Extracts X X X X X X X X Extracts X X X X ..... with the principal. " 2. "On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the adjustment made on account of service tax paid by the assessee on brand usage royalty without appreciating the fact that approval taken from RBI cannot be taken to be augmenting the terms of agreement with the principal. " 3. "On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the adjustment made on account of service tax paid by the assessee on know-how royalty without appreciating the fact that approval taken from RBI cannot be taken to be augmenting the terms of agreement the principal. " 4. "On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the adjustment made on account of payment of royalty on traded finished goods made by the assessee to J & J, US." 5. "On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in allowing the technical know-how royalty payment @ 2% / 4% instead of 1 % as done by the TPO." 6. "On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the adjustment made on account of tax, R & D cess on know- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the Hon'ble CIT(A) order without appreciating the fact that the Hon'ble CIT(A) has followed the order of Hon'ble Jurisdictional Tribunal in Assessee's own case, wherein transfer pricing adjustment on withholding- tax on brand usage royalty was deleted; Service tax on brand usage royalty of Rs. 0.50 crore 3. erred in objecting Hon'ble CIT(A) order without appreciating the fact that the Hon'ble CIT(A) has followed the order of Hon'ble Jurisdictional Tribunal in Assessee's own case, wherein transfer pricing adjustment on tax paid on brand usage royalty was deleted; Payments of royalty on sale of traded finished goods of Rs. 8.28 crore 4. erred in objecting Hon'ble CIT(A) order without appreciating the fact that the Hon'ble CIT(A) has followed the order of Hon'ble Jurisdictional Tribunal in Assessee's own case wherein the transfer pricing adjustment on account of payment of royalty on traded goods for receipt of technical know-how was deleted; Disallowance of Rs. 18.33 crore on account of Restriction of technical/ marketing royalty rate at 1 % 5. erred in objecting to the Hon'ble CIT(A) order without appreciating the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g adjustment should also be made in the opening stock; Disallowance of depreciation on testing equipments of Rs. 53,48,110/- 11. erred in objecting to the Hon'ble CIT(A)'s order which is based on rulings of the Hon'ble Jurisdictional High Court and Hon'ble jurisdictional Tribunal both in Assessee's own case that depreciation claimed on testing equipment installed at various pathologies and hospitals under section 32 of the Act amounting to Rs. 53,48,110/- is to be allowed; Payments made to person specified under section 40A(2)(b) of Rs. 2,79,646 12. erred in objecting to the Hon'ble CIT(A)'s order which is based on rulings of the Hon'ble jurisdictional High Court and Hon'ble jurisdictional Tribunal both in Assessee's own holding payments made to MIs Crawford Bailey & Co of Rs. 2,79,646 is not excessive or unreasonable and hence, no disallowance is required under section 40A(2)(b); On the facts and in the circumstances of the case as well as in law, the Hon'ble CIT(A): Adjustment in accordance with section 145A in toto 13. erred in confirming the action of the learned AO of adding proportional MODVAT credit attributable to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relied upon the order of Assessing Officer/TPO. In the rejoinder submission, the ld. AR of the assessee submits that the grounds of appeal in cross objection filed by assessee are in support of the order of the ld. CIT(A). 6. We have considered the rival submission of the parties and have gone through the orders of authorities below. 7. Ground No. 1 relates to disallowance of Tax on brand usage royalty amounting to Rs. 1.16 Crores. The ld. AR of the assessee submits that this ground of appeal is covered in favour of assessee's own case for AY 2002- 03 in ITA No. 4092/Mum/2007 dated 28th August 2013 and again in assessee's own case for A.Y. 2006-07, A.Y. 2008-09, A.Y. 2009-10 wherein the Tribunal deleted the adjustment based on the principle laid down by Tribunal in its order for A.Y. 2002-03. The ld. AR further submits that the facts in the year under consideration are same as of previous year and the appeal of the revenue is dismissed. The ld. DR relied on the order of Assessing Officer. 8. We have considered the submission of the parties and have gone through the order of authorities below. We have noted that similar ground of appeal was raised before Tribunal in assessee's o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... missed. The ld. DR relied on the order of Assessing Officer. 11. We have considered the submission of the parties and have gone through the order of authorities below. We have noted that similar ground of appeal was raised before Tribunal in assessee's own case for A.Y. 2006-07 in ITA No. 83/Mum/2011 dated 05.02.2014 and the co-ordinate bench passed the following order: 34. In respect of Ground taken by assessee for making disallowance on account of tax, service tax paid by assessee on the payment of royalty, we observe that the said issue has already been considered by Tribunal in assessee's own case for the assessment year 2002-03 (supra) and the Tribunal has held after considering the agreements entered into between the assessee and J&J US and also the decision in the case of Dresser Rand India P. Ltd. (supra) that the taxes were liability of the assessee- company under the terms of agreements and accordingly disallowance made by AO were deleted. Further, we also observe that liability of payment of service tax is of recipient of services and since assessee is the receiver of services, it is the liability of the assessee company to bear service tax. Hence we hold that TPO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o.5 relates to restricting technical no how and market services royalty @ 1% for manufactured goods. The ld. AR of the assessee submits that similar ground of appeal was adjudicated by Tribunal in assessee's own case for A.Y. 2006-07 in ITA No. 83/Mum/2011 and in A.Y. 2002-03 in ITA No. 4092/Mum/2007 and ITA No. 4070/Mum/2007. The ld. DR relied on the order of Assessing Officer. 17. We have considered the submission of the parties and find that in assessee's own case for A.Y. 2002-03 in ITA No. 4092/Mum/2007 and ITA No. 4070/Mum/2007, the Tribunal passed the following order: "55. We have considered the submissions and perused the orders. As we have already held hereinabove that the payment of royalty has to be considered in the light of the agreement between the assessee and J & J USA, for the same reasons, we do not find any reason to interfere with the findings of the ld. CIT(A)." 18. Further, on similar issue for A.Y. 2006-07 in ITA No. 83/Mum/2011 dated 05.02.2014 the tribunal passed the following order: 55. We have considered the submissions and perused the orders. As we have already held hereinabove that the payment of royalty has to be considered in the light of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 07. The ld. DR relied on the order of Assessing Officer. 24. We have considered the submission of the parties and find that in assessee's own case for A.Y. 2006-07 on similar ground in ITA No. 83/Mum/2011, the Tribunal passed the following order: 40. We have considered the order of the TPO/AO and the submissions of ld. Representatives of the parties. We observe that the TPO has suggested disallowance on the ground that the AE of the assessee viz J&J US is reaping the benefit of higher royalty amount as a result of higher sales realized by assessee by incurring higher expenses by way of publicity and sales promotion undertaken by assessee and therefore the parent company of the assesseecompany should share some of the expenses. It is a fact that TPO while suggesting any disallowance/adjustment has to state that the transactions between the assessee-company and its AE is not at Arm's Length. The TPO is to determine the Arm's length by following one of the method and /or most appropriate method as prescribed in section 92C(1) of the Act. The TPO cannot suggest adjustment/disallowance on the basis of his assumptions that the payment is excessive though it is at arm's len ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Report, no addition was made in A.Y. 1993-94. Copy of Assessment Order and Audit Report is placed on record. Further, based on the said Audit Report, no addition was made in A.Y. 1993-94. The ld. AR further submits that similar addition was made for A.Y. 2002-03 and the Tribunal on the basis of decision of A.Y. 1991-92 deleted the addition. By following the order of Tribunal, similar issue was decided in favour of assessee by Tribunal in A.Y. 2003-04 & A.Y. 2004-05. Copy of which placed on record. The ld. DR for the Revenue after going through the various as referred by ld. AR not disputed the factual position canvassed by ld. AR of the assessee. 27. We have considered the submission of the parties and find that in assessee's own case for A.Y. 2002-03 in ITA No. 4092/Mum/2007, the Tribunal passed the following order: 62. We have considered the rival submissions and perused the orders of the lower authorities. We have also perused the order of the Tribunal in assessee's own case for A.Y. 1991-92 in ITA No. 1146/M/97 wherein the Tribunal has held that the production loss depends on number of factors and in absence of any comparable to show that the loss shown by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... justification to interfere in his order. 32. Ground No. 10 relates to disallowance of depreciation on testing equipment. The ld. AR submits that this ground of appeal is also covered by the decision of Tribunal in assessee's own case for A.Y. 2001-02 in ITA No. 9437/Mum/2004 vide order dated 05.02.2013. The revenue filed appeal before Hon'ble Bombay High Court and the same was dismissed vide order dated 04.07.2016 in ITA No. 2441 of 2013. By following the decision of Tribunal and Hon'ble High Court, the assessee was allowed similar relief in A.Y.2002-03, A.Y.2006-07, A.Y. 2008-09 & A.Y.2009-10. The ld. DR relied on the order of Assessing Officer. 33. We have considered the submission of parties and find that in A.Y. 2000- 01 in ITA No. 3287/Mum/2004, the co-ordinate bench of Tribunal passed the following order: "21. The learned Counsel for the assessee contended that similar issue was raised in the case of assessee's sister concern, namely, NR Jet Enterprises Limited and the Tribunal vide its order dated 28th May, 2008 in ITA No. 4474/Mum/2004 has held that depreciation should be allowed on the testing equipment provided to laboratories and hospitals free of charge as the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A) has deleted the addition holding that for the payments for legal counseling, it is futile to think of comparables because counsels may not charge standard fee but may charge according to the issue involved. The Ld. CIT(A) further observed that if the AO wanted to disallow on the ground of excessive payment, he ought to have established excessiveness of the payment. This has not been done. Considering the decision of the Tribunal in assessee's own case, in the light of the observations made by the Ld. CIT(A), we do not find any reason to interfere with the findings of the Ld. CIT(A). Ground No. 7 is accordingly dismissed. 37. Considering the decision of Tribunal in assessee's own case for A.Y. 2002- 03 in ITA No.4092/Mum/2007, which was followed in A.Y. 2006-07, A.Y. 2003-04 & A.Y. 2004-05, we confirm the order of ld. CIT(A). In the result, ground no.11 of the appeal is dismissed. C.O. No. 47/Mum/2018 by assessee 38. Considering the fact that we have dismissed all grounds of appeal raised by revenue, the grounds of cross objection raised by assessee have become infructuous. Hence, dismissed. 39. In the result, appeal of the Revenue and Cross Objection of assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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