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TMI Blog2024 (12) TMI 978X X X X Extracts X X X X X X X X Extracts X X X X ..... ITAT BANGALORE] for AY 2015-16 wherein addition made u/s. 28(iv) on assets received from AEs charged to tax by the revenue authorities was deleted. Decision of Mahindra Mahindra Limited [ 2018 (5) TMI 358 - SUPREME COURT] (SC) was on issue of waiver of loan whether taxable u/s 41 (1) of the Act or u/s 28 (iv) of The Act. The issue before us is not related to waiver of loan but, assets received by the assessee on returnable basis for the purposes of carrying out the work of assessee s AE. Provisions of section 28 (iv) taxes value of any benefit or perquisites arising from exercise of business or profession. In this case the assets are provided by the AE to assessee for carrying out of the work of the assessee and assessee is remunerated by considering the depreciation in the cost basis as per APA. Even otherwise what is the benefit to the assessee when a prototype is provided by the principal recipient of the services to the assessee being provider of the services for carrying on the work of service recipient according to that proto type. We confirm the order of the ld. CIT(A) in deleting the addition in the hands of assessee and accordingly ground no.1 of the appeal of revenue is d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ursement payment made by the assessee to seconded employees? 4) Whether in the facts and circumstances of the case, the ld. CIT(A) failed to appreciate that amounts reimbursed by assessee to overseas companies and employees in terms of secondment agreement amounted to fee for technical services liable to tax in India and, thus, assessee was required to deduct tax at source under section 195 of Income Tax Act? 2. The CO is filed by the assessee on the following grounds:- 1. The order of the learned CIT(A)-12, Bangalore to the extent prejudicial to the Respondent is bad in law. GROUNDS RELATING TO ASSETS RECEIVED ON RETURNABLE BASIS 2. The learned CIT(A) has erred in not appreciating that: a. Addition of Rs. 1,44,73,422/- u/s 28(iv) of the Act for fixed asset received on returnable basis from various sister concerns located outside India for testing purposes is bad in law on the ground that no benefit is received by the Respondent. b. Not appreciating that ownership of the Assets has not been transferred to the Respondent and assets received on returnable basis being capital in nature cannot be taxed u/s 28(iv) of the Act and the Respondent has also re-exported assets back to sister ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssets received on returnable basis and their correct status. The assessee also submitted that assessee has entered into Advance Pricing Agreement and already considered the depreciation on such fixed assets for determination of agreed transfer pricing value of the services. Therefore, if further addition is made, it will amount to double addition. 6. The ld. AO did not accept the explanation of assessee, according to the AO, assessee has derived immense benefit on receiving such assets free of cost and by not having purchased the intellectual property related items, assessee has avoided payment of TDS on the same and therefore income is required to be taxed in the hands of assessee u/s. 28(iv) of the Act. Bases on this, a show cause notice was issued on 12.4.2021 which was replied by assessee on 14.4.2021, but the ld. AO did not accept the justification and therefore he made an addition of Rs. 1,44,73,422 on the goods received free of cost u/s. 28(iv) of the Act. He also rejected the argument of the assessee that the cost of depreciation has already been considered as cost while determining the margin of arm s length price (ALP) of services provided to the AEs who provided the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd therefore treating the same as fees or technical services by the ld. AO is not acceptable. According to the ld. CIT(A), no tax was required to be deducted u/s. 195 of the Act and consequent disallowance was deleted. 11. So the revenue is aggrieved by the deletion of the above two additions/disallowance. 12. Ground no.1 of the appeal of the revenue is with respect to addition u/s 28(iv) of the Act of Rs. 1,44,73,422 deleted by the ld. CIT (A). 13. The ld. DR explained the shareholding of the company and further that assessee has been provided with fixed assets which have been considered as income of assessee and the ld. CIT(A) has wrongly deleted the addition. 14. The ld. AR submitted a detailed chart and stated that list of items received by the assessee from its AE are provided to the AO. He further gave complete details that out of the above assets, 115 items have been re-exported to its associated concern and 27 items have been destroyed on completion of the project. He gave complete details of these expenses and reiterated his submission made before the ld. AO. He further referred to the Advance Pricing Agreement entered into by the assessee wherein the assets have been take ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .4 We have heard the rival submissions and perused the materials available on record. We find force in the arguments of the assessee s counsel. If the depreciation on assets is considered as part of operating profit margin arising from the transaction, and the income from which it is offered to tax, no addition u/s 28(iv) of the Act is warranted, which is already subject to tax pursuant to APA and no further addition is necessary, otherwise it amounts to double taxation. Accordingly, we allow this ground taken by the assessee. 19. Decision of Honourable Supreme court in case of CIT V Mahindra Mahindra Limited [2018] 93 taxmann.com 32 (SC)/ [2018] 255 Taxman 305 (SC) was on issue of waiver of loan whether taxable u/s 41 (1) of the Act or U/s 28 (iv) of The Act. The issue before us is not related to waiver of loan but, assets received by the assessee on returnable basis for the purposes of carrying out the work of assessee s AE. 20. Provisions of section 28 (iv) taxes value of any benefit or perquisites arising from exercise of business or profession. In this case the assets are provided by the AE to assessee for carrying out of the work of the assessee and assessee is remunerated by ..... X X X X Extracts X X X X X X X X Extracts X X X X
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