9911796707
TMI Blog2025 (1) TMI 1475X X X X Extracts X X X X X X X X Extracts X X X X ..... ompared to A.Y. 2009-10, the facts on the basis of which the Tribunal has decided the issue in A.Y. 2009-10, has got substantially changed. Therefore, close inter-linking between all the transactions are required to be established with documentary evidence, before deciding, whether aggregate transactions approach can be adopted or not. Therefore, we set aside the issue to the file of Ld. TPO to verify with the documentary evidence and confirm whether there is any close inter- linking between all the transactions or not and decide as per law. Accordingly, the grounds of the assessee are dismissed. Adjustment for payment of interest on Masala Bond - assessee has paid interest on Masala Bond @ 8.70% per annum and the Ld. TPO bench marked the same at 7.53% per annum - HELD THAT:- Considering the factual matrix of the case, we are of the opinion that, the bench marking of the interest on Masala Bond can be taken at 8.70% per annum. Therefore, we direct the Ld. TPO to consider the rate of interest on Masala Bond at 8.70% per annum and delete the addition. Accordingly, these grounds of assessee are allowed. Refund of excess Dividend Distribution Tax ("DDT") - HELD THAT:- We are of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the Appellant in terms of the Section 92D of the Act read with Rule 10D of the Income Tax Rules, 1962 ("the Rules") and proceeded to make the TP addition based on re-determination of the arm's length price ("ALP") of the international transactions. Grounds on Rejection of combined Transactional Net Margin Method ("TNMM") selected as Most Appropriate Method ("MAM") by the Appellant and adopting Comparable Uncontrolled Price ("CUP") Method/ Other Method without any comparable transaction or any basis for applying such method. 5. That on the facts and circumstances of the case and in law, the TPO/ DRP has erred by not accepting the combined TNMM analysis undertaken by the Appellant to establish ALP of the international transactions and instead conducting separate analysis for following international transactions namely: a) Payment for Technical service fee and license fee; b) Sub License Fee for Trademark; c) Intra-group service fee; and d) Interest on outstanding receivables. (Hereinafter referred as 'impugned transactions') using CUP Method/ Other Method and holding that the value of these impug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lant undertook an external corroborative CUT search to substantiate the ALP of the said international transaction. The corroborative analysis was rejected by the TPO and affirmed by the DRP without providing any cogent reasons thereof. 13. The DRP/TPO erred in the inappropriate application of the Other Method without providing any particulars for the comparability of the independent transactions. Grounds on Incorrect Economic Analysis of Payment of Sub-license fee undertaken by the TPO and DRP-INR 11,37,28,509 14. The DRP/TPO/ AO have erred, on facts and in law, by determining the ALP of payment of sub-license fee for the use of the trademark at 'NIL' using Other Method, accordingly, arriving at the TP adjustment amounting to INR 11,37,28,509. 15. The DRP/TPO erred by applying commercial expediency and thereby concluded that no tangible benefit and no corresponding economic or commercial value was derived by the Appellant. 16. The DRP/TPO erred in disregarding the commercial agreement entered with the AE and did not give cognizance to the evidence filed by the Appellant to demonstrate the benefits received by it from the use of the trademark of the AE. 17. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eceipt of services from the AE. 25. The DRP/TPO erred in assessing that the ALP for the Intra Group services is Nil stating that no Functions, Assets and Risk ("FAR") analysis was submitted by the Assessee in its TP Documentation. 26. The DRP/TPO erred in the inappropriate application of the Other Method without providing any particulars for the comparability of the independent transactions. Grounds on Incorrect Economic Analysis in relation to Payment of Interest on Masala Bonds undertaken by the TPO and DRP - INR 5,83,39,725. 27. The DRP/TPO/ AO has erred, on facts and in law, by determining the ALP of payment of interest on masala bonds using Other Method, accordingly, arriving at the TP adjustment amounting to INR 5,83,39,725. 28. The DRP/TPO erred in rejecting the economic analysis undertaken by the Appellant in the TP documentation. 29. The DRP/TPO has erred, on the facts and in law, in applying an arbitrary interest rate at 7.53 percent while determining the interest on the masala bonds without providing any cogent reasons. 30. The DRP/TPO erred by not appreciating the order passed by the TPO in the Appellant's own case for AY 2017-18, wher ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... RP/ AO has erred, on the facts of the case, in not allowing the refund of the excess DDT paid by the Assessee inadvertently at the rate of 20.92 percent instead of 20.357 percent amounting to INR 46.83 lakhs. Other Grounds on Erroneous Computation 39. The AO has erred by not allowing the set-off of the Minimum Alternate Tax ("MAT") credit amounting to INR 15,33,21,507 while determining the net tax liability of the Appellant, at the time of passing the final assessment order. 40. The AO has erred by not granting the partial credit for Tax Collected at Source ("TCS") while determining the net tax liability of the Appellant, at the time of passing the final assessment order, while there is no discussion about these in the order of the AO. 41. Based on the facts and circumstances of the case and in law, the AO has erred in proposing to initiate penalty proceedings under Section 270A of the Act, against the Appellant. 42. Based on the facts and circumstances of the case and in law, the AO has erred in proposing to levy interest under Section 234B and Section 234C of the Act." 3. The brief facts of the case are that, the assessee is a limited company, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Limited Reimbursement of expenses 9,80,139 18 Singha Cement Pvt. Ltd. Trade Receivables 33,52,854 19 HC Trading Malta Limited Trade Receivables 2,15,60,010 20 CimentsCalcia SA Trade Payables 17,78,547 21 HC Trading Malta Limited Trade Payables 2,24,25,072 22 Italcement S p A Trade Payables 14,49,24,523 23 Heidelberg Cement AG Trade Payables 7,27,54,364 24 Heidelberg Cement Asia Pte Limited Trade Payables 49,60,847 25 C T C G S p A Trade Payables 7,46,106 26 Ciments Francais S A Trade Payables 3,75,05,066 27 Buta Heide Bergcement SDN BHD Advances received 6,89,539 28 Heidelberg Cement AG Interest payable 8,34,22,808 29 Heidelberg Cement AG Outstanding loan balance 5,00,00,00,000 4.1 The Ld. AR further submitted that, the assessee had adopted the aggregate transactions approach and applied Transactional Net Margin Method ("TNMM") for bench marking of the international transactions. However, the Ld. TPO and Ld. DRP adopted the Comparable Uncontrolled Price ("CUP") and Other Method ("OM") and rejected the TNMM adopted by the assessee. The Ld. AR further submitted that, under the similar issue, in assessee's own case, the co- ordi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on are permitted under the Rules and it is also supported by OECD transfer pricing guidelines. In order to examine whether the number of transactions are closely linked or continuous so as to aggregate for the purpose of evaluation it is to be considered that one transaction is follow-on of the earlier transaction and then the subsequent transaction is carried out and dependent wholly or substantially on the earlier transaction. It can be vice-versa when the earlier transaction has been entered into between parties by keeping in mind that a continuous transaction of similar nature will be entered into between the parties thereafter. Therefore, when the transactions are influenced by each other and particularly in determining the price and profit involved in the transactions then those transactions can safely be regarded as closely linked transactions. The OECD guidelines has referred a portfolio approach as business strategy consisting of tax payers bundling certain transaction for the purpose of earning an appropriate return across portfolio rather than single product. For instance some products may be marketed by the tax payer with a low profit or even at loss because they create ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A.Y. 2009-10 are reproduced as under : Name of AE Nature of transaction Amount (INR) Climent Francais SA Technical know and research and other fee 12,53,26,000 Climent Francais SA Sub-license fee for use of trade mark 6,26,62,000 Italcementi Fabbriche Riunite Cemkento SPA Procurement service fee paid 7,11,82,000 Bravo Solutions SPA Consultancy fee paid 38,10,000 CTGA SPA Consultancy service fee paid 42,10,94,000 Climent Francais SA Reimbursement of expenses 82,95,000 Bravo Solutions SPA Reimbursement of expenses 4,07,000 Climent Francais SA Reimbursement of expenses 13,25,000 Italcementi Fabbriche Riunite Cemkento SPA Reimbursement of expenses 26,79,000 CTGA SPA Reimbursement of expenses 9,29,000 On going through the above details, it is abundantly clear that there is a substantial change in the nature of services received by the assessee and the service provider in A.Y. 2018-19 as compared to A.Y. 2009-10. It is also a fact that, the co-ordinate bench of ITAT in assessee's own case for A.Ys. 2011-12 to 2014-15, 2016-17 and 2017-18 has given their findings in favour of the assessee relying on the findings of A.Y. 2009-10. As there is substantia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Ld. TPO / Ld. DRP and prayed before the bench to dismiss these grounds of the assessee. 11. We have heard the rival contentions and also gone through the record in the light of the submissions made by either side. We have gone through the APA entered into by the assessee (Annexure 9 of paper book), wherein, the rate of interest on Masala Bond for A.Y. 2021-22 to A.Y. 2025-26 has been agreed at 8.70% per annum. Further, in A.Y. 2017-18 no adverse inference has been taken by the Ld. TPO with regards to bench marking of interest on Masala Bond. No changes in facts and circumstances affecting the bench marking of the rate of interest on Masala Bond has been brought to our notice by the Revenue. Therefore, considering the factual matrix of the case, we are of the opinion that, the bench marking of the interest on Masala Bond can be taken at 8.70% per annum. Therefore, we direct the Ld. TPO to consider the rate of interest on Masala Bond at 8.70% per annum and delete the addition. Accordingly, these grounds of assessee are allowed. 12. With regards to ground nos.36 to 38, regarding refund of excess Dividend Distribution Tax ("DDT"), the Ld. AR fairly accepted that, their case is co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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