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TMI Blog2019 (7) TMI 1826X X X X Extracts X X X X X X X X Extracts X X X X ..... t year 2012-13 [ 2018 (12) TMI 691 - ITAT PUNE ] - MS. SUSHMA CHOWLA AND SHRI D. KARUNAKARA RAO, JJ. Appellant by : Shri Amol Kamat Respondent by : Shri R. D. Onkar ORDER D. KARUNAKARA, J. This appeal is filed by the Revenue against the order of the CIT(A)-6, Pune dated 20.12.2017 for the assessment year 2013-14. 2. The grounds raised by the Revenue are as under :- 1. Whether on the facts and circumstances of the case and in law the Ld. CIT(A) erred in deleting the adjustment of ₹ 20,38,53,136/- made by the AO/TPO on account of management services fees relying on the decision of Hon'ble Pune Bench of ITAT in assessee's own case for A.Y. 2009-10 and decision of DRP in assessee's own case for A.Y. 2011-12 ? 2. Whether on the facts and circumstances of the case and in law the Ld.CIT(A) erred in deleting the adjustment of ₹ 20,38,53,136/- made by the AO/TPO on account of management services fees relying on the decision of Hon'ble Pune Bench of ITAT in assessee's own case for A.Y. 2009-10 and decision of DRP in assessee's own case for A.Y. 2011-12 ignoring the fact that the above decisions were rendered in the context of addition made under section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... when scientific basis of the provision of warranty is not conclusively established ? 8. The appellant craves leave to add, amend or alter any of the above grounds of appeal. 3. Summarizing the above grounds, ld. Counsel for the assessee submitted that there are couple of issues raised in the above extracted grounds for adjudication. The first issue relates to the TP adjustments qua the payment of management services fee of ₹ 20,38,53,136/-. The second issue being Non-TP issue relates to the disallowance on account of warranty provision of ₹ 30,00,000/-. 4. Briefly stated the relevant facts include that the assessee company is a Joint Venture between the Anand Automotive Systems and Dana Corporation, USA. The assessee is engaged in the business of manufacturing and sale of axles, propeller shafts, assemblies and components. The assessee is also engaged in exporting activity of its product to Dana Group of USA and India. The assessee filed the return of income declaring total income of ₹ 88,33,460/-. Subsequently, the case was selected for scrutiny. As the assessee filed audit report in form 3CEB detailing its international transactions during the year. A reference ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted that the e-mails, communication, vouchers are all general evidences without quantitative value attached with such services. The assessee tried to substantiate the ALP on the basis of TNMM. In the preceding year AY 2010-11 the CITA and A.Y. 2011-12 the DRP upheld addition of management fees. This year also the assessee failed on need test, evidence test and rendition test. (Para 6 Page 29 of TPO). Learned CIT A has given the finding that the issue is covered in favour of the assessee for the A.Y. 2009-10 by the ITAT and the DRP for the A.Y. 2011-12, there is no reason to differ from the same in the current AY In the immediate preceding A.Y. 2012-13 Honourable Tribunal in assessee s own case has deleted the disallowance of management services fees on the backdrop of identical set of facts and by following its own orders for the A.Y. 2009-10 and 2010-11. Reliance is placed on the said decisions. Tata Johnson Control Automotive Ltd. Pune ITAT (copy placed on record) Max India Limited Punjab and Haryana High Court (copy placed on record) It is also submitted that it also bears vital notice that SIL has benchmarked its transactions under the TNMM at entity level. (Page 23 of TPO) Ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to its vital functions viz. HR training, performance appraisal, productivity improvement, value engineering, technical advice, environmental protection, financial budgeting, foreign currency management, etc. The services were provided pursuant to Corporate Services Agreement dated 14.12.2004 entered into with Asia Investments P. Ltd. 8. The Tribunal in assessee s own case had allowed the said issue in favour of assessee in assessment year 2009-10 vide para 24 at pages 16 and 17 of the order dated 10.02.2017, which has been followed in assessment years 2010-11 and 2011-12. The said findings of Tribunal in assessment year 2009-10 are as under:- 24. In the facts of the present case, the assessee was paying Royalty to Dana Corporation @ 2.85% and was also paying management fees to AIPL for rendering several types of services at remuneration which was equivalent to the amount of Royalty i.e. 2.85% of sales. The perusal of agreement reflects the nature of services to be provided and the fees to be charged for providing the said services. The majority of support services are being rendered by the said concern to the assessee and the perusal of expenses debited by the assessee reflects tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the Tribunal relied heavily on the earlier orders of the Tribunal in assessee s own case for the assessment years 2009-10 to 2011-12. Considering the commonness of the issue, we find it relevant to follow the order of the Tribunal in assessee s own case for the assessment year 2012-13 (supra) and confirm the order of the CIT(A). Accordingly, the relevant grounds on this issue raised by the Revenue are dismissed. 11. The second issue relates to the allowability of the warranty provision . The Assessing Officer disallowed a sum of ₹ 30,00,000/- out of total debit of ₹ 1.51 crores and utilized provisions of warranty only ₹ 1.21 crores. Similar disallowances were made by the Assessing Officer in the past and the matter reached the Tribunal for adjudication. In this regard, ld. Counsel filed the written submission and the relevant comments on the warranty provision being related additions is extracted as under :- Appellant is engaged in the business of manufacture, assembly and sale of Axles, Propeller Shafts and components thereof that are finally used by the Original Equipment Manufacturers (OEMs) in the manufacture of vehicles in the automotive industry segment. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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