COCA-COLA INDIA PVT. LTD.,PUNE V. ACIT, RANGE-1, PUNE

MA 200/PUN/2023

AI Insights

The case involves Coca Cola India Private Limited, which filed a Miscellaneous Application under section 254(2) of the Income Tax Act, 1961, seeking rectification of a mistake in a previous Tribunal order. The issue pertained to a transfer pricing adjustment of Rs. 3,32,28,390 related to support service charges and reimbursements for the Assessment Year 2005-06. Initially, the Tribunal had rejected the ground as academic, based on the submission that no such adjustment was made in the final assessment. However, the assessee argued that the adjustment was indeed made in the order giving effect to the appellate decision, and similar issues were adjudicated in other assessment years. The Departmental Representative did not oppose the MA, leading to the Tribunal's decision to recall the earlier order for a detailed examination of the ground.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 842077 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 6 month(s) 30 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 25-02-2026
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2005-2006
• Appeal Filed On: 26-07-2023
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHILPA N C
• Assessee Lawyers: NITESH JOSHI; NIKHIL GARG
• Keywords: Set aside; Transfer pricing; Depreciation; Rectification of order
• Section: 37

Judgement Text

" आयकर अपीलीय अधिकरण “सी” न्यायपीठ पुणे में । IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH, PUNE BEFORE MS. ASTHA CHANDRA, JUDICIAL MEMBER AND SHREE DR. DIPAK P. RIPOTE, ACCOUNTANT MEMBER धिधिि आिेदन सं. / MA No.200/PUN/2023 (Arising out of ITA No. 927/PUN/2011) धनिाारण िर्ा / Assessment Year : 2005-06 Coca Cola India Private Limited, Plot No. 1109-10, Village-Pirangut, Tal.-Munshi, Pune-412108 PAN : AAACB8573G Vs. ACIT, Range-1, Pune अपीलार्थी / Appellant प्रत्यर्थी / Respondent Assessee by : Shri Nitesh Joshi & Shri Nikhil Garg Department by : Smt. Shilpa NC Date of hearing : 20-02-2026 Date of Pronouncement : 25-02-2026 आदेश / ORDER PER ASTHA CHANDRA, JM : This Miscellaneous Application (“MA”) is filed by the assessee under section 254(2) of the Income Tax Act, 1961 (the “Act”) requesting for rectification of mistake crept in order dated 12.01.2023 in ITA No. 927/PUN/2011 for Assessment Year (“AY”) 2005-06 insofar it concerns Ground No.17 in the assessee‟s appeal wherein the Tribunal rejected the said Ground being academic in nature. 2. The Ld. AR drew our attention to the brief facts (reproduced below) relevant to the aforesaid issue mentioned in para 2 of the MA: “2. a. Coca-Cola India Inc. is a Corporation formed under the laws of the State of Delaware, USA and has a branch office in India. Pursuant to Service Agreement dated 29.07.2003 (effective from 01.04.2003) the Applicant had availed of business support services from them. The said support services comprised of services in relation to Marketing support, Technical, Finance, Legal etc. In consideration for such services, the Applicant had paid an amount of Rs.29,89,27,940 as support service charges and Rs.22,91,50,030 (including Rs. 8,90,77,648 for reimbursement of travelling expenses) as Printed from counselvise.com 2 MA No.200/PUN/2023, AY 2005-06 reimbursement of expenses in connection with rendering of the said services aggregating to Rs. 52,80,77,970. The support service charges included direct cost being personnel cost including moving and relocation cost, staff welfare cost and depreciation, which was increased by a markup of 5% thereon. The reimbursement of expenses comprised of pure reimbursement of expenditure broadly falling within Traveling & Conveyance, Legal and Professional charges, Rent, Telephone, Repair and Maintenance etc. heads without any mark up. b. The Applicant had benchmarked the said transaction by using the TNMM method. c. In the Order dated 20.10.2008 passed by the TPO, he has not followed any of the specified methods. He determined the ratio of cost to the company of all the employees including management other than those directly involved in production/manufacturing as a percentage of sales turnover. In respect of the seven comparable companies, as identified by him as operating in the Pune region, the average of the ratio came to 3.76%, while the said ratio in the Applicant's case was 4.23%. Based thereon, the TPO, suggested a transfer pricing adjustment for the excess payment of 0.47% which in monetary terms came to Rs. 3,32,28,390. d. In the assessment order dated 30.12.2008 passed by the AO, he has in detail discussed the relevant contents of the order dated 20.10.2008 passed by the TPO and the Applicant's submission thereon (see paragraph 7 at pages 33 to 43 of the Order). In paragraph 7.2 (viii) at page 43 thereof he has observed \"Accordingly addition of Rs.3,32,28,390 is being made to the taxable income,.....\". In the said assessment order, he had independently disallowed the entire service charges and reimbursement of expenses paid by it as an expenditure not incurred wholly and exclusively for the purposes of carrying on its business (see paragraph 6 at pages 25 to 33 thereof). Though it is not specifically mentioned, since the AO had disallowed the entire claim of expenditure as not allowable under section 37 of the Act, in the computation part of the assessment order no addition in respect of the transfer pricing adjustment was made. e. The Applicant's appeal before the CIT(A), inter-alia including a challenge to the disallowance of support service charges and reimbursement of expenses connected therewith as an expenditure under section 37 of the Act as well as transfer pricing adjustment thereof, was disposed of by appellate order dated 29.11.2010. Insofar as the disallowance under section 37 of the Act was concerned, the CIT(A) was pleased to restrict such disallowance to 30% of the service charges and reimbursement of expenses (excluding reimbursement of travelling expenses) and 100% of the reimbursement of travelling expenses. Hence, he allowed deduction to the extent of 70% of service charges and reimbursement of expenses (excluding reimbursement of travelling expenses). With respect to the addition by way of transfer pricing adjustment, he observed in paragraph 6.4 at page 68 \"This adjustment, though determined was not made by the Assessing Officer in the assessment order, apparently because almost the entire payment made to CCI Inc., was held to be wholly and exclusively not for the purpose of the business. In view of the above, the discussions as well as the grounds of the appellant are found only academic in nature, as it has no impact on the assessment made by Assessing Officer. On careful consideration of objections raised by the appellant in appeal, I find that the same have been already considered and decided by the Assessing Officer as well as the TPO. I generally find in agreement to the same.\" Hence, without dealing with the Applicant's submissions he has expressed his agreement with the view of the AΟ/ΤΡΟ. Printed from counselvise.com 3 MA No.200/PUN/2023, AY 2005-06 f. Based on the aforesaid findings, in the appellate order, the AO in his order dated 31.05.2011 giving effect to the appellate order granted relief to the extent of 70% of the support service charges and the reimbursement of expenses (excluding reimbursement of travelling expenses) connected therewith and also made TP adjustment of Rs. 3.32,28,390. Therefore, the transfer pricing adjustment is not an academic issue but an issue which requires consideration (copy annexed as Exhibit A hereto). g. The Tribunal has disposed of the appeals relating to the Applicant from assessment years 2005-06 to 2016-17 by a common order dated 12.01.2023. Unfortunately, it escaped the Applicant's attention also that the transfer pricing adjustment had been made by the AO in the order giving effect passed by him giving effect to the appellate order passed by the CIT(A). Hence, in the Chart as filed by the Applicant before the Tribunal, it erroneously observed with respect to this ground as 'not pressed. It appears that based on the said submission of the Applicant, the Tribunal has observed in paragraph 10 at page 18 of its Order \"Learned Counsel could hardly dispute the clinching fact that the Assessing Officer had nowhere made any such adjustment in his final assessment dated 30.12.2008.” 3. The Ld. AR then referred to para 10 of the Tribunal‟ s order (supra) which reads as under: “10. This leaves us with the assessee’s 17th substantive ground regarding transfer pricing adjustment of Rs.3,32,28,390/- alleged to have been treated as a mere academic issue at page-68 in para-6.4 of the CIT(A)'s order. Learned counsel could hardly dispute the clinching fact that the Assessing Officer had nowhere made any such adjustment in his final assessment dated 30.12.2008. We thus reject this 17th substantive grounds in very terms.” 4. In the aforesaid factual background, it is contended in the MA that ground No. 17 in appeal of the assessee dealing with transfer pricing adjustment in respect of support service charges including reimbursement of expenses was not an academy issue and the Assessing Officer had increased income of the assessee by the transfer pricing adjustment. Hence rejection of the said ground No. 17 as academic without adjudication of the same is a mistake apparent from the record. 5. The Ld. AR has also contended that similar adjustments had been made by the Transfer Pricing Officer (TPO) for AYs 2006–07 to 2009-10 and the Tribunal in those AYs restored the said ground to Dispute Resolution Panel (DRP) for fresh adjudication. He submitted that the facts of the present AY 2005-06 is similar to those of AYs 2006-07 to 2009-10 except that in the present AY the matter was appealed before the Ld. CIT(A) Printed from counselvise.com 4 MA No.200/PUN/2023, AY 2005-06 instead of raising objection before the DRP. Hence if this ground would have been adjudicated it would have been set aside to the file of the Ld. CIT(A) for decision afresh. The order of the Tribunal thus suffers from an apparent mistake as the rejection of the aforesaid ground of appeal is contrary to the finding given by the Tribunal on the same issue for AYs 2006-07 to 2009-10. 6. The Ld. DR did not oppose the MA of the assessee and fairly conceded to the above submission of the Ld. AR. 7. We have carefully considered the contents of the MA as also the submissions of the Ld. AR and perused the records. Sub-section (2) of section 254 provides that the Appellate Tribunal may, at any time, within six months from the end of the month in which the order was passed, with a view to rectify any mistake apparent from record, amend any order passed by it under sub-section (1), and shall make such amendment if the mistake is brought to its notice by the assessee or the Assessing Officer. We find that while deciding the ground no. 17, the Tribunal making reference to the said ground alleged to have been treated as a mere academic issue in CIT(A)‟s order and observing that no TP adjustment has been made by the AO in his final assessment order, has rejected this ground of appeal in the very terms i.e. being academic in nature. However, the Ld. AR in his above submission has brought the relevant facts to the notice of the Bench and contended that this ground is not an academic ground but it ought to have been decided by the Tribunal on merits. We find some force in the arguments advanced by the Ld. AR. Considering the totality of facts and in light of the above submission of the Ld. AR, in our view, rejection of Ground no. 17 as academic in nature constitute „mistake‟ rectifiable under section 254(2) of the Act deserving recall of the Tribunal‟s order as requested in the MA. We therefore recall the order of the Tribunal (supra) for the limited purpose of adjudicating Ground no. 17 raised by the assessee in its appeal before the Tribunal for relevant AY 2005-06. The registry is directed to fix the matter for hearing in due course and inform both the parties accordingly. Printed from counselvise.com 5 MA No.200/PUN/2023, AY 2005-06 8. In the result, MA of the assessee is allowed. Order pronounced in the open court on 25th February, 2026. Sd/- Sd/- (Dr. Dipak P. Ripote) (Astha Chandra) ACCOUNTANT MEMBER JUDICIAL MEMBER पुणे / Pune; दिन ांक / Dated : 25th February, 2026. रदि आदेश की प्रधिधलधप अग्रेधर्ि / Copy of the Order forwarded to : 1. अपील र्थी / The Appellant. 2. प्रत्यर्थी / The Respondent. 3. The Pr. CIT concerned. 4. दिभ गीय प्रदिदनदि, आयकर अपीलीय अदिकरण, “सी” बेंच, पुणे / DR, ITAT, “C” Bench, Pune. 5. ग र्ड फ़ इल / Guard File. //सत्य दपि प्रदि// True Copy// आिेश नुस र / BY ORDER, सहायक पंजीकार/ Assistant Registrar आयकर अपीलीय अदिकरण ,पुणे / ITAT, Pune Printed from counselvise.com "