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TMI Blog2023 (1) TMI 1320X X X X Extracts X X X X X X X X Extracts X X X X ..... ia, has accepted the former s claim of various expenses restricted to 30% in entirety by following its earlier orders, partly uphold the learned lower authorities action disallowing travelling expenses @ 10% only on estimation basis and rejected the department s stand on depreciation on coolers provided to bottlers/vendors vis- -vis their WDV in full, respectively. Both the parties are fair enough in not pinpointing any distinction on facts or law in the impugned assessment year as well so far as these three issues are concerned. We thus adopt judicial consistency to decide the first and foremost issue of reimbursement [restricted to 30% in the CIT(A)'s order] to full extent assessee s favour, uphold only 10% of travelling expenses and accept it s stand relating to depreciation on coolers in very terms. TP Adjustment - We advert to assessee s pleadings raised during the course of hearing that the department, and more particularly, the TPO took a diametrically opposite view in case of the assessee and its AE regarding the very issue. Faced with the situation and more particularly in light of the fact that the learned Panel has not discussed even the most appropriate me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ings u/s. 144C(13) r.w.s. 143(3) of the Income Tax Act, 1961 (in short the Act ). 1.2. Third assessment year 2007-08 contains the assessee s appeal ITA.No.1578/PUN./2011 directed against the Addl. CIT, Range-1, Pune s assessment dated 13.10.2011 framed as per the DRP Pune s directions dated 26.09.2011, in proceedings u/s. 143(3) r.w.s. 144C of the Income Tax Act, 1961 (in short the Act ). 1.3. Fourth assessment year 2008-09 involves assessee s appeal ITA. No. 2596/PUN./2012 directed against the DCIT, Circle-1(1) s assessment dated 25.10.2012 framed as per the DRP Pune s directions dated 05.09.2012, in proceedings u/s. 143(3) r.w.s. 144C(13) of the Income Tax Act, 1961 (in short the Act ). 1.4. Fifth assessment year 2008-09 herein comprises of assessee s and Revenue s cross-appeals ITA.Nos.815 and 860/PUN./2014 arising against DCIT, Circle-1(1) Pune s assessment dated 27.02.2014 finalised as per the DRP Pune s directions dated 31.12.2013, in proceedings u/s. 143(3) r.w.s. 144C(13) of the Income Tax Act, 1961 (in short the Act ). 1.5. Sixth assessment year 2010-11 herein comprises of assessee s and Revenue s cross-appeals ITA.Nos.516 539/ PUN./2015 preferred against ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... impugned order of the CIT(A) is untenable as it proceeds to make adhoc disallowance of expenditure purely based on presumptions without citing any specific reasons as to how the expenditure under different heads is not for the business of appellants, and completely ignores to consider the detailed factual explanations offered at the time of assessment and the appellate proceedings. Re: Disallowance of service charges including reimbursements 3. CIT(A) erred in disallowing the appellant's business expenditure representing service charges including reimbursements and restricting the same to the 30% of the claim. 4. CIT(A) erred in disallowing 30% of the Service charges including reimbursements without giving any reasonable basis and proceeded merely on ground that these had been disallowed by his predecessor. 5. CIT(A) has grossly erred in sustaining disallowance of an amount of 30% of service charges including reimbursements on ad-hoc basis without citing any reasons for such a conclusion. 6. CIT(A) has grossly erred in disallowing the 30% of service charges including reimbursements paid to the service providing company mechanically by followin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rlier years. 13. The CIT(A) failed to appreciate that the activity of placing coolers directly results in increased sales of appellants products and has a immediate nexus with the business. Further the CIT(A) failed to appreciate that the coolers were placed as part of the joint promotion activity undertaken for appellants business. 14. CIT(A) has failed to appreciate that: (a) The Appellant's sales are directly linked to the sale of the final beverages as the product of the appellant has no other commercial use except as ingredient in the manufacture of beverages. (b) The coolers were an important marketing tool used by the appellants to advertise and create awareness and demand for the products, and that the cost for all the marketing efforts was recovered in the price of concentrate sold to the bottlers. (c) That such expenditure was part of the joint marketing efforts undertaken by your appellant for furthering its business interests. 15. The CIT(A) has erred in ignoring the nature of the industry in which the Appellant operates and the obligation cast on the Appellant by business customs and trade practices. 16. The CIT(A) failed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of expenses thereby leading to artificially lowering of profits thus causing huge loss to the revenue. 5. For these and such other reasons as may be urged at the time of hearing, the order of the Ld. Commissioner of income-tax (Appeals) may be vacated and that of the Assessing officer be restored. 6. The appellant craves leave to add, amend, alter or delete any of the above grounds of appeal during the course of appellate proceedings before the Hon'ble Tribunal. 6. Learned counsel submits at the outset that the assessee s 1 st , 2 nd and 18 th substantive grounds are general in nature. Rejected accordingly. 7. Next comes the common issue between the parties regarding disallowance of service charges and other reimbursement(s) made by the Assessing Officer to the tune of Rs. 62,58,70,252/- in his assessment order dated 30.12.2008, as restricted to that @ 30% only in the CIT(A)'s order which leaves both the parties aggrieved. 8. The assessee s next twin substantive grievances are regarding disallowance of reimbursement of travelling expenses and depreciation on coolers involving varying sums. We find in this factual backdrop that all these issues are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ournment petition. 13. The assessee appears to have raised its substantive ground nos.1 to 2.1.0 on both corporate as well as transfer pricing issues. It s former substantive ground-1 involving [sub- grounds 1.1 to 1.9] pleads twin grievances of disallowance of advertisement, sales and marketing expenditure as well as depreciation on coolers, involving varying sums. Needless to say, the assessee has already succeeded on both these issues in the first and foremost assessment year 2005-06 in preceding paragraph. The Revenue could hardly pinpoint any distinction on the assessee s arrangement of having incurred advertising and sales promotion expenses followed by its depreciation claim on coolers. We thus see no reason to adopt a different approach in this second assessment year 2006-07. These twin disallowances accordingly stand reversed therefore. 14. Mr. Muralidharan at this stage invited our attention to the CIT(A)'s detailed discussion regarding the assessee s substantive ground nos.2 to 2.10 raising the transfer pricing adjustments issue. We note that the DRP s detailed discussion in para-8 onwards on this issue reads as follows: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee s 2 nd substantive grievance of transfer pricing adjustment [sub-grounds 2.1 to 2.18] deserves to be restored back to the learned DRP as we have done in assessment year 2006-07 deduction in preceding paragraph. Both the learned representatives are ad idem during the course of hearing that there is no distinction involved in the impugned assessment year 2007-08 qua the same. We thus adopt judicial consistency to adopt the very course of action herein as well in the same terms. These assessee s 2nd substantive ground stand set aside to the learned DRP for its afresh adjudication as per law. 20. Further there arises purely a legal question in the impugned assessment year regarding the assessee s payments involving advertisement, marketing promotion and marketing support segment [in short AMP ] expenses. Learned CIT-DR could hardly dispute that case law Maruti Suzuki India Ltd., [2016] 381 ITR 117 (Delhi) has already held that such AMP transactions do not amount to an international transaction u/s. 92B of the Act. Faced with the situation, we reverse learned lower authorities action to this limited extent. Ordered accordingly. 21. This assessee s appeal ITA.No.1571 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r accordingly. 26. This appeal ITA.No.815/PUN./2014 is partly accepted in above terms. ITA.No.516/PUN./2015 A.Y. 2010-11 [ Assessee s appeal] : 27. Sixth assessment year 2010-11 involves assessee s and Revenue s cross-appeals ITA. No. 516 539/PUN./2015. 28. We note at the outset that both these parties raise their first and foremost identical substantive ground qua issue of expenditure of reimbursements which we have already decided in assessee s favour and against the Revenue. We thus reject the Revenue s instant cross-appeal ITA.No.539/PUN./2015 for this precide reason alone by adopting judicial consistency. 29. The assessee s remaining twin substantive grounds of depreciation on coolers and under corporate tax and ALP adjustment on advertising and marketing promotion AMP are accepted as per our detailed discussion on the very issues in the preceding paragraph. The assessee s instant appeal ITA.No.516/PUN./2015 succeeds therefore. ITA.No.822/PUN./2016 A.Y. 2011-12 [Revenue s appeal] ITA.No.830/PUN./2016 A.Y. 2011-12 [Assessee s appeal] 30. Seventh assessment year 2011-12 contains Revenue s and assessee s cross-appeals ITA.No.822/Pu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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