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TMI Blog2021 (11) TMI 529X X X X Extracts X X X X X X X X Extracts X X X X ..... view being maintained by the Co ordinate Bench of the Tribunal in assessee s own case cited supra, similar directions are issued on this issue also. Consequently, we have no hesitation in upholding the order of the learned CIT(A) by dismissing the grounds no.1 to 3, raised by the Revenue. Disallowance of grossed up expenses to the extent of taxes withheld u/s 195A - HELD THAT:- We find that identical issue has been decided by the Co ordinate Bench of the Tribunal in assessee s own case in ACIT v/s Anheuser Busch InBev India Ltd. [ 2020 (3) TMI 212 - ITAT MUMBAI ] and Anheuser Busch InBev India Ltd. v/s ACIT. [ 2020 (3) TMI 212 - ITAT MUMBAI ] wherein the Tribunal has decided the issue in favour of the assessee and against the Revenue as held that assessee has computed TDS on a net of tax basis and no tax has been separately debited to the Profit Loss Account. It is also a fact on record that as per the borrowing arrangement, the tax liability, if any, on payment of interest has to be borne by the assessee. Therefore, the tax withheld has to be allowed as expenditure to the assessee. TDS liability on commission payment - CIT(A) did not consider the additional eviden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case and in law, the Ld.CIT(A) justified in deleting the addition made by the AO of ₹ 4,97,36,399/- as TDS deducted on account of payment of management fee and interest without examining the fact that whether the TDS amount was actually deposited in the government account or retained or got refund of the same by the assessee? 3. The issue arising out of grounds no.1, 2 and 3, relates to disallowance of 16,17,97,500, under section 40(a)(i) of the Act on account of Foster s Brand. 4. The assessee had purchased Foster s Brand and Intellectual Property, Foster s Brewing Intellectual Property and Foster s Trademarks from Foster s Australia Ltd., for a consideration of 157,92,00,000 (approximately US Dollar 35 million) on which no TDS was deducted. The said amount was capitalized by the assessee in the books under Fixed Assets and depreciation on the same was claimed @ of 25% under section 32(1) of the Act. The assessee during the year under consideration also claimed depreciation amounting to 16,17,97,500, on the same. The Assessing Officer disallowed the depreciation under section 40(a)(i) of the Act for non deduction of TDS under section 195 r/w section 200 of the Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowed the deduction in AY 11-12 but disallowed in AYs 12-13,13-14 and 14- 15. Further, in WP(C) 6962/2008 dated 25.07.2016 CUB PTY LIMITED (Formerly Known as Foster's Australia Limited) vs UOI ORS, the Bombay High Court against AAR ruling considered the following question: (i) On the facts and circumstances of the case, whether the receipt arising to the applicant, from the transfer of its right, title and interest in and to the trademarks, Foster's Brand Intellectual Property and grant of exclusive perpetual licence of Foster Brewing Intellectual Property is taxable in India, having regard to the provisions of the Income Tax Act, 1961 and the Double Taxation Avoidance Agreement between India and Australia. The following decision was made by Hon. High Court 2.1 As a consequence of the foregoing discussion, the view taken by the AAR on question (1), which was placed before the AAR, cannot be accepted and the answer to the said question would be that the income accruing to the petitioner from the transfer of its right, title or interest in and to the trademarks in Foster's brand intellectual property is not taxable in India under the Income Tax Act, 1961. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion in upholding the order of the learned CIT(A) by dismissing the grounds no.1 to 3, raised by the Revenue. 10. Ground no.4, relates to disallowance of grossed up expenses to the extent of taxes withheld therein amounting to 4,97,36,399, under section 195A of the Act. 11. The Assessing Officer during the assessment proceedings, found that in the Profit Loss Account filed by the assessee, the assessee debited an amount of 46,17,25,791, under the head Management Fees' and interest of 7,27,79,493, on the external commercial borrowings. In Schedule 8 to notes to accounts, Point no.9 (giving details of expenditure of foreign currency on accrual basis), the auditor has clarified that the same includes withholding of tax of 4,77,16,128, and 20,20,271, on account of interest expenses on a grossed up basis @ 10%. The assessee submitted that in a net tax arrangement, payee s tax liability agreed to be borne by the payer forms part of the base cost for availing the services. Accordingly, the Assessing Officer disallowed management fees and interest to the extent of 4,77,16,128, and 20,20,271, respectively aggregating to 497,36,399, which were added back to the total income of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 39. We have considered rival submissions and perused the material on record. As could be seen, the assessee had entered into a borrowing arrangement with Standard Chartered Bank on a net of tax basis. As per the terms of the agreement, the assessee has computed TDS on a net of tax basis and no tax has been separately debited to the Profit Loss Account. It is also a fact on record that as per the borrowing arrangement, the tax liability, if any, on payment of interest has to be borne by the assessee. Therefore, the tax withheld has to be allowed as expenditure to the assessee. In view of the aforesaid, we do not find any infirmity in the directions of the DRP. Gorund is dismissed. 16. Since the issue in hand is covered by the aforesaid decision of the Co ordinate Bench of the Tribunal, for the sake of consistency, respectfully following the aforesaid decision, similar directions are issued in this year as well. Consequently, we uphold the order of the learned CIT(A) by dismissing the ground no.4, raised by the Revenue. 17. In the result, Revenue s appeal is dismissed C.O. no.71/Mum./2021 (Arising out of Revenue s appeal being ITA no.7110/Mum./2019) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hout considering the fact that the Hon'ble ITAT's order in the Appellant's own case for AY 2007-08, AY 2008-09, AY 2009-10 and AY 2011-12 has already decided the issue in favour of the Appellant wherein it was held that depreciation on capital expenditure cannot be disallowed under section 40(a)(i) of the Act. Disallowance of grossed up expenses to the extent of taxes withheld therein 4,97,36,399 10. erred in disallowing an amount of 4,97,36,399 being tax deducted on payments made after grossing up as per Section 195A of the Act; 11. erred in disregarding the well settled principle of law that TDS withheld on remittance is an allowable expenditure; 12. erred in objecting the CIT(A) order without appreciating the fact that the Appellant has duly deposited the tax deducted on management fees of 4,77,16,128 and on interest of 20,20,271 aggregating to 4,97,36,399 in the Government account and which was not the ground for disallowance in the assessment order passed under Section 143(3) of the Act; 19. As it appears from the above, grounds no.1 to 4, relates to disallowance of 4,36,32,364, on account of commission to agents under section 40(a)(ia) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 23. The learned Departmental Representative has objected to the order of the learned CIT(A). 24. We have considered the rival submissions of the learned Counsel appearing for the parties and perused the material on record in the light of the decisions relied upon. As it transpires from the record available before us as well we note it from the submissions of the learned Counsel for the assessee that the assessee during the course of first appellate authority, had filed certain additional evidences in support of its claim which were ignored by the learned CIT(A) consequent to which the order of the learned CIT(A) in the instant case becomes cryptic one which is without deliberating upon the provisions of the Act in disregarding the admissibility of the additional evidences filed by the assessee. Considering the legal proposition, the learned CIT(A) ought to have considered the additional evidences adduced by the assessee and could have decided the issue on merit and since the learned CIT(A) is failed to do so, therefore, we deem it fit and proper to admit the additional evidences filed by the assessee. Consequently, we set aside the impugned order passed by the learned CIT(A) a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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