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TMI Blog2020 (6) TMI 42X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee asserted that the facts in the assessment year under appeal are identical. Disallowance of royalty expenditure - HELD THAT:- As assessee fulfilled all the prescribed conditions, he is entitled for the benefit of the same and hence, we are inclined to delete the impugned additions and allow the appeal of the assessee. See assessee's own case [ 2019 (8) TMI 698 - ITAT MUMBAI] Brought forward unabsorbed depreciation - AO disallowed unabsorbed depreciation on the ground that assessee could carry forward unabsorbed depreciation upto a maximum period of eight years - HELD THAT:- The authorities below have erred in not considering the judgment of Hon'ble Bombay High Court in the case of CIT vs. Hindustan Unilever Ltd. [ 2016 (7) TMI 1245 - BOMBAY HIGH COURT] wherein it has been held that the assessee can set off brought forward unabsorbed deprecation without any cap of years. Computation of interest u/s 234B of the Act without considering set off of credit of MAT Tax paid - HELD THAT:- Contention of the assessee is that interest under section 234B has been computed without set off of credit of MAT tax paid for assessment year 2009-10, 2010-11 and 2011-12. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... utation of depreciation under section 32 of the Act. Aggrieved against the draft assessment order dated 27/03/2015, the assessee filed objections before the DRP. The DRP vide directions dated 28/12/2015 partly accepted the objections raised by the assessee. The Assessing Officer vide impugned order dated 29/01/2016 gave effect to the direction of the DRP. Against the said assessment order both, the assessee and the Revenue are in appeal before the Tribunal. 4. Shri Hirali Desai appearing on behalf of the assessee submitted at the outset that he is not pressing ground No.1 of the appeal. Thus, the effective grounds for adjudication in the appeal by assessee are ground No.2 3. Ground No.4 of the appeal is against initiation of penalty proceedings under section 271(1)(c) of the Act, the said ground is premature at this stage. 5. The ld. Authorized Representative for the assessee submitted that in ground No.2 of the appeal, the assessee has assailed action of Assessing Officer in reclassification of interest income of ₹ 74,61,945/- as Income from Other Sources as against Business Income declared by the assessee. The ld. Authorized Representative for the assessee su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f recomputation of depreciation under section 32 of the Act is dismissed as not pressed. 8. The ground No.2 of the appeal is against reclassification of interest income. The assessee has earned interest income of ₹ 74,61,945/- and has offered the same to tax under the head Business Income . The Assessing Officer has held that the interest income earned by the assessee is to be assessed under the head Income from Other Sources . We find that in assessee s own case this issue has travelled to the Tribunal in earlier assessment years i.e. assessment year 2007-08, 2008-09 and 2009-10. The Co-ordinate Bench of the Tribunal in ITA No.2866/Mum/2014 for assessment year 2009-10 (supra) has restored the issue back to the file of Assessing Officer by following the decision of the Tribunal in assessee s own case in assessment year 2007-08 and 2008-09. Since the issue in the assessment year under appeal is identical, we deem it appropriate to restore this issue to the file of Assessing Officer for denovo examination in line with the direction of the Tribunal in ITA NO.431/Mum/2010 for assessment year 2007-08 (supra). The ground No.2 of the appeal is allowed for statistical purpose in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see asserted that the facts in the assessment year under appeal are identical. 12.1 In respect of ground No.2 of the appeal by Revenue, the ld.Authorized Representative of the assessee submitted that Revenue has assailed order of DRP in deleting the disallowance of royalty expenditure amounting to ₹ 2,63,71,271/-. The ld.Authorized Representative of the assessee pointed that this issue was also subject matter of appeal before the Tribunal in ITA No.431/Mum/2011 for assessment year 2007-08. The facts in the assessment year under appeal are identical. The Tribunal deleted the disallowance of royalty by holding that the assessee fulfils all the prescribed conditions of section 10(6A) of the Act and hence, royalty is exempt from tax. The Assessing Officer erred in grossing up the same under section 195A of the Act. Similar issue had come up in the appeal the assessee for assessment year 2009-10 before the Tribunal. The Tribunal in principle accepted that if condition set out in section 10(6A) of the Act are satisfied, payment of royalty is not taxable, however, the matter was restored to the file of Assessing Officer for limited purpose of verification as to whether the condit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ricing Officer has also agreed with the assessee that the AMP expenditure was incurred with the third parties in India, hence, do not constitute international transaction. Having held so, the Transfer Pricing Officer has still proceeded to determine the arm's length price of the AMP expenditure on the reasoning that the compensation required in the arrangement between the assessee and the AE for improving the brand intangible of the owner has to be determined. Further, he has observed that the AMP expenditure incurred by the assessee not only benefits the assessee but also the AE in terms of increase in the brand value of Kellogg. Thus, the Transfer Pricing Officer has inferred that there is an arrangement between the assessee and the AE with regard to promotion of the brand of the AE by incurring AMP expenditure. However, he has not provided any factual basis on which he has drawn such inference. By merely stating that there is an arrangement between the assessee and the AE, the Transfer Pricing Officer cannot bring the AMP expenditure within the purview of international transaction. If the Transfer Pricing Officer alleges that the AMP expenditure comes within the purview of i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied upon the decision of the Hon'ble Delhi High Court in Maruti Suzuki India Ltd. (supra). Thus, viewed in the light of the ratio laid down in the decisions cited by the learned Authorised Representative, including the decision of the Hon'ble Delhi High Court in Martuti Suzuki India Ltd. (supra), it has to be concluded that the AMP expenditure incurred by the assessee in India cannot come within the purview of the international transaction. Hence, the Transfer Pricing Officer has no jurisdiction to determine the arm's length price of AMP expenditure. 9. Having held so, it is now necessary to deal with the contention of the learned Departmental Representative to restore the issue to the Assessing Officer for keeping it pending till the issue is settled by the Hon'ble Supreme Court. In our view, the aforesaid contention of the learned Departmental Representative is not acceptable. As per the prevailing legal position, the AMP expenditure incurred by the assessee in India cannot come within the purview of international transaction. That being the case, the adjustment made by the Transfer Pricing Officer cannot survive. Therefore, we do not find any necessity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uarely entitled for the benefit of the same. The Ld. DR paced reliance on stand of lower authorities. We have heard rival contentions. The short dispute is with regard to correct interpretation of Section IO(6A) which is extracted below:- (6A) where in the case of a foreign company deriving income by way of royalty or fees for technical services received from Government or an Indian concern in pursuance of an agreement made by the foreign company with Government or the Indian concern after the 31st day of March, 1976 but before the 1st day of June, 2002 and,- (a) where the agreement relates to a matter included in the industrial policy, for the n force, of the Government of India, such agreement is in accordance with that policy ; and (b) in any other case, the agreement is approved by the Central Government, the tax on such income is payable, under the terms of the agreement, by Government or the Indian concern to the Central Government, the tax so paid. (emphasis supplied by us) After analyzing the above provisions, we cull out the following essential requirements to be fulfilled to claim the benefits thereof;- i. The income is derived ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Department in assessment year 2011-12. The submissions made therein would equally apply to the present ground of appeal. The ld AR pointed that DRP in para-2.12 of the directions has observed that there is no arrangement/agreement between the assessee and its ASSOCIATED ENTERPRISE for incurring AMP expenditure. The DRP has further observed that in the immediately preceding assessment year the DRP has decided the issue in favour of the assessee. However, the DRP in the current assessment year decided the issue against the assessee as the decision of DRP was not appealable by the Department and the Department wanted to keep the issue alive. 18.1 In respect of ground No.2 of the appeal, the ld. Authorized Representative for the assessee submitted that the issue is identical to ground No.2 of the appeal in assessment year 2011-12, therefore, the submissions made in the appeal for assessment year 2011-12 would equally apply to the assessment year 2012-13. 18.2 In respect of ground No.3 of the appeal, the ld. Authorized Representative for the assessee submitted that the Assessing Officer has erred in not allowing brought forward unabsorbed depreciation of ₹ 7,15,99,575/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Representative vehemently defended the impugned order. However, the ld. Departmental Representative fairly admitted that the issues raised by the assessee in ground No.1 2 of the appeal are similar to the one raised in assessment year 2011-12 in the appeals by the Revenue and the assessee, respectively. 20. Both sides heard Orders of the authorities below perused. Both sides are unanimous in admitting that ground No.1 of the appeal relating to TP adjustment on account of AMP expenditure ₹ 33,14,18,401/- is identical to ground No.1 raised in appeal by the Department for assessment year 2011-12. On examination of the directions of DRP we find that the DRP has decided this issue against the assessee in the impugned assessment year only to keep the issue alive, as the Department could not have filed appeal against the directions of the DRP in the impugned assessment year consequent to the amendment in the provisions of the Act. The DRP has categorically observed that on same set of facts in the immediately preceding assessment year the DRP has allowed assessee s claim. The DRP further observed that there is no explicit agreement between the assessee and its AE for incurrin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing of interest under section 234B of the Act. Charging of interest under section 234B is consequential and mandatory. Accordingly, ground No.4 of the appeal is dismissed. 24. The ground No.5 of the appeal is in respect of computation of interest under section 234B of the Act. The contention of the assessee is that interest under section 234B has been computed without set off of credit of MAT tax paid for assessment year 2009-10, 2010-11 and 2011-12. It is no more res-integra that interest under section 234B is to be charged after MAT credit available under section 115JAA is set off against tax payable on total income[CIT vs. Sage Metals Ltd., 354 ITR 675(SC)]. The ground No.5 of the appeal is allowed, accordingly. 25. The ground No.6 is qua charging of interest under section 234C on returned income. The contention of the assessee is that the Assessing Officer has erred in charging interest under section 234C on assessed income. A bare perusal of the provisions of section 234C would make it clear that the interest under section 234C is to be charged on returned income and not assessed income. The Assessing Officer is directed to recompute interest under section 234C of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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