M/s DSM Sinochem Pharmaceuticals India Pvt. Ltd. , Toansa V. DCIT, C-1(1), Chandigarh

ITA 1592/CHANDI/2018

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 9927 (ITAT-CHANDIGARH)
• Duration Of Justice: 3 year(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-01-2022
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: A
• Assessment Year: 2014-2015
• Appeal Filed On: 20-12-2018
• Result in Favour of: Matter Remanded
• Court: TRIBUNAL
• Department Lawyers: VIKRAM BATRA
• Assessee Lawyers: NISHANT
• Keywords: Transfer pricing; Business expenditure; International transaction; Additional evidence; Corroborative evidences; TDS; Set aside
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 271(1)(c); 144; 10; 90; 154; 2; 11; 15; 43B; 271(1)(b); 139; 143(3); 92; 40(a)(ia); 195; 192; 13

Judgement Text

आयकर अपीलीय अिधकरण चंडीगढ़ पीठ “ऐ”, चंडीगढ़ 炈ी एन.के सैनी, उपा瀇य楹 एवं 炈ी िवकास अव瀡थी,瀈याियक सद瀡य के सम楹 IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH “A”, CHANDIGARH BEFORE SHRI N.K. SAINI, VICE-PRESIDENT & SHRI VIKAS AWASTHY, JUDICIAL MEMBER आअसं. 253/ चंडीगढ़/2016(िन.व. 2011-12) ITA NO.253/Chd./2016 (A.Y.2011-12) आअसं. 1592/ चंडीगढ़/2018(िन.व. 2014-15) ITA NO.1592/Chd./2018 (A.Y.2014-15) Centrient Pharmaceuticals India Pvt. Ltd. (Earlier known as DSM Sinochem Pharmaceuticals India Ltd.), Bhai Mohan Singh Nagar, Toansa, District-Nawanshahr, Punjab-144533 PAN: AABCM4314K ...... अपीलाथ牸 /Appellant बनाम Vs. DCIT, Circle-1(1), Room No. 214, Aayakar Bhavan, Sector-17E, Chandigarh. ..... 灹ितवादी/Respondent अपीलाथ牸 獧ारा/ Appellant by : Sh.K.M Gupta, Adv., Sh. Nishant Gupta, CA & Sh. Anshul Agarwal, CA 灹ितवादी 獧ारा/Respondent by : Sh. Vikram Batra, CIT-DR सुनवाई क琉 ितिथ/ Date of hearing : 25/10/2021 घोषणा क琉 ितिथ/ Date of pronouncement : 20/01/2022 2 आअसं.253/ चंडीगढ़/2016(िन.व.2011-12) ITA NO.253/Chd./2026 (A.Y.2011-12) आअसं.1592/ चंडीगढ़/2018(िन.व.2014-15) ITA NO.1592/Chd./2018 (A.Y.2014-15) आदेश आदेशआदेश आदेश/ ORDER PER VIKAS AWASTHY, J.M: These two appeals by the assessee are directed against the assessment order passed under section 144(C)(13) r.w.s. 143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) for Assessment Years (AY) 2011-12 & 2014- 15, respectively. Since, the issues raised in grounds of appeal for both the impugned AYs are identical, these appeals are taken up together for adjudication and are decided by this common order. 2. For the sake of convenience, facts are narrated from appeal of the assessee in ITA No. 253/Chd/2016. ITA No. 253/Chd/2016 for AY 2011-12 Transfer Pricing Issue 3. The brief facts of the case as emanating from records are the assessee is engaged in manufacturing of intermediaries and bulk drugs. The assessee imports the basis raw-material i.e. Penicillin G, from DSM Anti Infective DV, Netherlands and ZGB, China. During the period relevant to the AY under appeal, the assessee entered into various international transactions with its Associated Enterprises (AE), as tabulated in para-2 of order of the Transfer Pricing Officer (TPO). The assessee in ground of appeal No. 2 & 3 before the Tribunal has assailed the adjustment made by the TPO in respect of ‘Payment of Corporate Service Fees’. The assessee in order to bench mark its aforesaid transaction applied Transactional Net Margin Method (TNMM) as the most appropriate method. The TPO rejected TNMM applied by the assessee and instead applied CUP to benchmark the transaction. The TPO determined Arm’s Length Price 3 आअसं.253/ चंडीगढ़/2016(िन.व.2011-12) ITA NO.253/Chd./2026 (A.Y.2011-12) आअसं.1592/ चंडीगढ़/2018(िन.व.2014-15) ITA NO.1592/Chd./2018 (A.Y.2014-15) (ALP) of the transaction at Nil and made addition of Rs.8,25,04,450/-. The TPO after examining the documents furnished by the assessee concluded that the assessee has not been able to show that any services have actually been received. The assessee filed objections before the DRP, the DRP vide directions dated 21.12.2015 dismissed the objections filed by the assessee and upheld the adjustment. The Assessing Officer (A.O) vide impugned order made, addition in respect of Corporate Service Fee in line with the directions of DRP. 4. Sh. K. M. Gupta appearing on behalf of the assessee submitted at the outset that for similar reasons T.P. Adjustment in respect of corporate services charges were made in AYs 2007-08, 2008-09, 2009-10 & 2010-11. After being unsuccessful before the DRP/CIT(A), the assessee carried the issue in appeal before the Tribunal. The Tribunal has consistently decided this issue partly in favour of assessee by allowing 50% of gross benefit from financial services received by the assessee. The ld. DR referred to the order of Tribunal in ITA No. 438/Chd/2015 for AY 2010-11 decided on 04.12.2015. 5. Sh. Vikram Batra representing the Department vehemently defended the assessment order and the directions of DRP. However, the ld. DR fairly admitted that identical issue has been decided by the Tribunal in assessee’s own case in preceding AYs. 6. Both sides heard, orders of the authorities below examined. In ground No. 2 & 3 of appeal, the assessee has assailed Transfer Pricing Adjustment of Rs.8,05,24,450/- in respect of corporate services fees. The TPO applied CUP as the most appropriate method and determined ALP of the transaction as Nil. The TPO has further observed that no independent party would have made a similar 4 आअसं.253/ चंडीगढ़/2016(िन.व.2011-12) ITA NO.253/Chd./2026 (A.Y.2011-12) आअसं.1592/ चंडीगढ़/2018(िन.व.2014-15) ITA NO.1592/Chd./2018 (A.Y.2014-15) payment in uncontrolled circumstances. We find that this issue is perennial in nature, the TPO has been consistently making TP adjustment in respect of corporate services fee for similar reasons. The co-ordinate bench in appeal by the assessee for AY 2010-11 in ITA No. 438/Chd/2015 (supra) has decided this issue by placing reliance on the earlier orders of the Tribunal for AYs 2007-08 & 2008-09. The relevant extract of Tribunal order is reproduced herein-under: “10. We have considered the rival submissions and perused the orders of the authorities below. We find that the issue before us is the adjustment made on account of determination of ALP of corporate services received by the assessee from its Associate Enterprises (AE). We find that this issue has been adjudicated in AY 2007-08 and 2008-09 wherein the Hon’ble Tribunal held that the assessee was receiving corporate services from its AE's in the area of production and sales, market information, business intelligence, safety, health and investment and finance related strategic planning support. It was further held by the Tribunal that no adjustment was required to be made in respect of normal corporate services. We find that the Tribunal further held at para 110 of its order for AY 2007-08 and 2008-09 that on account of the financial services received by the assessee, regarding issuance of guarantee and sanctioning of various bank limits at lower interest rate, the payment on account of corporate services should be restricted upto 50% of the benefit received on account of these services. Thereafter, the assessee moved a miscellaneous application against the order of the Tribunal for both the year which was adjudicated vide Miscellaneous Application No. 6 & 7/Chd/2015 vide order dt.19/02/2015 dismissing the Miscellaneous Application filed. The issue came up for consideration in AY 2009-10 also where in after taking into consideration the order of the Hon’ble ITAT in AY 2007-08 and 2008-09 and also the order of the Hon’ble Tribunal on the Miscellaneous Application filed by the assessee against the order for AY 2007-08 and 2008-09, the Hon’ble Tribunal gave a direction to allow payment on account of corporate services subject to the rider that 50% benefit received on account of financial services should be reduced from such payment. The Hon’ble Tribunal held at para 12-14 of its order as follows: “12. From the above paras it becomes clear that the Tribunal has given a direction to basically allow the payment made on account of corporate services 8 subject to 5 आअसं.253/ चंडीगढ़/2016(िन.व.2011-12) ITA NO.253/Chd./2026 (A.Y.2011-12) आअसं.1592/ चंडीगढ़/2018(िन.व.2014-15) ITA NO.1592/Chd./2018 (A.Y.2014-15) the rider that 50% benefit received on account of financial services should be reduced from such payments. 13. This situation further becomes clear from the contentions made in the synopsis filed on 5.6.2014 in this appeal. The brief synopsis in this regard reads as under:- “The appellant also submitted that financial services forming part of the CSC also include provisioning of guarantee(s) by AE on behalf of DSP India (please refer to point b(iii) of Article 4 of the corporate service contract (placed at page 33 of the paperbook). In this regard, the assessee has also submitted the details of an unconditional and irrevocable guarantee provided by DSM N.V., an AE of DSM India, to the bank (Citibank International Plc.) on behalf of DSM India amounting to Euro 10 million (approx 68 crores) in connection with any overdraft, loan, credit facility etc. In this regard, a copy of the letter providing this inter company guarantee facility to DSM India has also been submitted by the assessee to the Ld. TPO as Appendix 6B to the submission dated August 16, 2012 (placed at pages 300 to 303 of paperbook). Furthermore a letter by Royal Bank of Scotland, providing the details of credit facilities existing for DSM India in various financial years wherein security has been provided by Koninklijke DSM NV, was also submitted with the Ld. TPO as appendix 6 to the submission dated September 17,2012(placed at page 338 of the paperbook). The detailed benchmarking report along with credit rating analysis is provided as Appendix 2. It is respectfully submitted that as per the analysis conducted by the appellant, the credit rating was calculated in a scientific manner and the same was determined at B3. The results of the aforesaid benchmarking are as under:- Nature of facility Amount of facility Equivale nt INR Guarant ee fee Benefit to the appellant (INR in Cr) Packing Credit EUR to million 68 Crores 2.56% 1.74 LC/Guarantee EUR 30 million 204 Crores 3.50% 7.14 Total 8.88 Your honour would appreciate from the above that the services availed by DSM India resulted in benefit to the assessee and indeed added economic and commercial value to the business of the assessee. In case these services were not provided by the AEs the assessee would have left with no choice but to pay an independent enterprise (third party) for the activity performed for it or would have performed the activity in house for itself.” 6 आअसं.253/ चंडीगढ़/2016(िन.व.2011-12) ITA NO.253/Chd./2026 (A.Y.2011-12) आअसं.1592/ चंडीगढ़/2018(िन.व.2014-15) ITA NO.1592/Chd./2018 (A.Y.2014-15) 14. The above also clearly shows that how assessee has received the financial services which have led to the benefits to the assessee to the tune of Rs. 8.88 crores. Therefore, we set aside the order of Assessing Officer and direct him to recompute the amount of adjustment by reducing 50% of Rs. 8.88 crores from the total Corporate service charges i.e. Rs. 7,99,31,741/- minus Rs. 4.44 crores (i.e. 50% of Rs. 8.88 crores) i.e. (Rs. 7,99,31,741 – Rs. 4,44,00,000) = Rs. 3,55,31,741/-. The Assessing Officer may also examine the amount of benefit calculated by the assessee and verify the amount if the conclusion is different, the Assessing Officer may decide the issue accordingly. Otherwise adjustment shall be made for Rs. 3,55,31,741/-. Admittedly the facts in the present case are identical to those in the preceding year i.e; 2007-08, 2008-09 and 2009-10 wherein disallowance on account of corporate services was made for the same reason as in the impugned assessment year. Since this issue has already been adjudicated upon by the Hon’ble Tribunal in the preceding year, respectfully following the same in the impugned assessment year also, we remit the matter back to the file of the AO and direct him to compute the ALP of the corporate services charge paid by reducing 50% of the benefit if any received by the assessee from the financial services received. The AO is directed to examine the amount of benefit as calculated by the assesee and thereafter decide the issue as per the direction given. 11. This ground of appeal of the assesse is partly allowed.” Since, the facts in the impugned AYs are undisputedly identical, we find no reason to take a different view. Consequently, ground nos. 2 & 3 of the appeal are partly allowed in similar terms. 7. In ground no. 4 of appeal, the assesse has made alternate prayer to allow the expenditure in respect of corporate services fee under section 37 of the Act as business expenditure. Since, we have accepted the contentions raised by the assessee in ground no. 2 & 3 of the appeal, the alternate prayer made by the 7 आअसं.253/ चंडीगढ़/2016(िन.व.2011-12) ITA NO.253/Chd./2026 (A.Y.2011-12) आअसं.1592/ चंडीगढ़/2018(िन.व.2014-15) ITA NO.1592/Chd./2018 (A.Y.2014-15) assessee in ground no. 4 has become academic and the same is left open at this stage without further deliberations. Corporate Issues 8. In ground no.5 of appeal, the assessee has assailed disallowance of interest expenses under section 36(1)(iii) of the Act in respect of interest expenditure on borrowed funds utilized for capital expansion project. The ld. AR submitted that similar disallowance was made by the AO in AYs 2009-10 & 2010- 11. The Tribunal in principle decided the issue in favour of the assessee by observing that if no particular loan has been taken for the asset which has been shown under the head “Capital work-in-progress” then disallowance could not have been made. The Tribunal restored the issue back to the file of AO to ascertain details of various loans and their utilization. 9. The ld. DR fairly admitted that the issue of disallowance of interest expenses in respect of capital expansion has been adjudicated by the Tribunal in assessee’s own case for preceding AYs and the same has been restored back to the file of AO for verification. 10. We have heard the submissions made by rival sides. The assessee had outstanding capital working-in-progress of Rs.5.53 million as on 31/03/2011 and the total interest of Rs.88.56 million was paid on loan of Rs.1203.52 million. The AO observed that no part of expenditure was capitalized by the assessee under proviso to section 36(1)(iii) of the Act. After considering submissions of assessee the Assessing Officer was not convinced and proportionately capitalized interest thereby making addition of Rs.4,06,900/-. Both sides are unanimous in stating that the issue raised by the assessee in ground no.5 of appeal is identical to the 8 आअसं.253/ चंडीगढ़/2016(िन.व.2011-12) ITA NO.253/Chd./2026 (A.Y.2011-12) आअसं.1592/ चंडीगढ़/2018(िन.व.2014-15) ITA NO.1592/Chd./2018 (A.Y.2014-15) one adjudicated by the Tribunal in the appeals filed by the assessee for AYs 2009-10 & 2010-11 in ITA No. 155/Chd/2014 and ITA No. 438/Chd/2015, respectively. We find that in the immediately preceding Assessment Years i.e. AY 2010-11, the Tribunal restored the issue back to the file of AO with a direction to ascertain the utilization of various loans. The relevant extract of the findings of the Tribunal on this issue are reproduced here-in-below: “33. We have heard the rival contention and perused the orders of the authorities below and the documents placed before us. We find that on identical set of facts the Hon’ble Tribunal has adjudicated this issue in AY 2009-10 and has held that in the absence of nexus between interest borrowing funds and investment in capital work in progress, no disallowance u/s 36(1)(iii) can be made. The Hon’ble Tribunal has further remitted the issue back to the file of the AO for verification of utilization of interest bearing loans. The Hon’ble Tribunal at para 33 of the order has held as follows while deciding the issue. 33. After considering the rival submissions principally we find force in the submissions of Ld. Counsel for the assessee that if no particular loan has been taken for the asset which has been shown under the head ‘capital work in progress’ then disallowance could not have been made. However, each loan and its utilization requires fresh examination, therefore, we remand this issue to the file of Assessing Officer with a direction to ascertain details of various loans and how they were fully utilized and then only decide the issue in accordance with law. Respectfully following the same we hold that no disallowance u/s 36(1)(iii) can be made if no loan has been taken for investment in capital work in progress, and further for the verification of this fact, we remit the matter back to the file of the AO with a direction to ascertain the utilization of various loans taken by the assessee and thereafter decide the issue in accordance with law. 34. This ground of appeal of the assessee is therefore allowed.” 11. Thus, in view of parity of facts in the impugned AYs, we deem it appropriate to restore this ground to the file of AO with a similar directions. Consequently, ground no.5 of appeal is allowed for statistical purpose. 9 आअसं.253/ चंडीगढ़/2016(िन.व.2011-12) ITA NO.253/Chd./2026 (A.Y.2011-12) आअसं.1592/ चंडीगढ़/2018(िन.व.2014-15) ITA NO.1592/Chd./2018 (A.Y.2014-15) 12. In ground no.6 of appeal, the assessee has assailed the disallowance of ex- gratia payment to its employees during the period relevant to the AY under appeal. The ld. AR submitted that this issue is recurring. In assesse’s own case for AY 2009-10, the Tribunal held that ex-gratia is allowable on accrual basis and not as per section 43B of the Act. The Tribunal remanded the matter back to the file of AO for re-computation of ex-gratia and allow the same on accrual basis. In AY 2010-11, the Tribunal followed its earlier order in AY 2009-10. 13. The ld. DR vehemently supported the findings of AO, however, the ld. DR fairly stated that this issue in the appeal has been adjudicated by the Tribunal in assessee’s own case in preceding AYs. 14. Both sides heard. We find that in the preceding AY, the issue of disallowance of ex-gratia payment to the employees had come up for adjudication in the appeal by the assessee in ITA No.438/Chd/2015 (supra), the Tribunal after placing reliance on the order of Tribunal for AY 2009-10 in assessee’s own case held as under: “39. After considering the rival submissions, we find that this issue had been adjudicated in the assesses own case in AY 2009-10 Para—43 of the order of the Tribunal in ITA No. 155/ Chd. / 2014 which reads as under- “After considering the rival submissions we do not agree with the submissions that ex. gratia should be construed as part of the bonus. We have carefully perused the judgement of Hon'ble Calcutta High Court and in that case there is no such principle laid down. However, the Hon'ble Court has clearly held that ex-gratia payment made to employees which consists of bonus payment over and above the Bonus Act should be allowed as business expenditure. Therefore, if sum of the ex-gratia payment was payable for that year, the same was required to be allowed on accrual basis as part of the business expenditure. Since this aspect has not been examined by the Assessing Officer, therefore, we set aside his order and remand the matter back to his file for reexamination of the computation of the ex-gratia payment and if some of the ex- gratia payment pertains to the assessment before us i.e. Assessment year 2009-10, then the same should be allowed on accrual basis as business expenditure otherwise the issue may be decided in accordance with law”. 10 आअसं.253/ चंडीगढ़/2016(िन.व.2011-12) ITA NO.253/Chd./2026 (A.Y.2011-12) आअसं.1592/ चंडीगढ़/2018(िन.व.2014-15) ITA NO.1592/Chd./2018 (A.Y.2014-15) Following the same, we hold that ex-gratia payment pertaining to the impugned year only is allowable as business expenditure and since this aspect has not been examined by the AO, we set aside the order and remand the matter back to the file of the A.O. for re-examination in terms of the direction contained in para—43 of the order of Tribunal for A.Y. 2009-10. 40. This ground of appeal of the assessee is therefore allowed for statistical purpose.” Since, both sides are unanimous in stating that the facts in impugned AY are identical, we find that no reason to take contrary view. Ergo, respectfully following the order of co-ordinate bench, we restore this issue back to the file of AO for parity of reasons. 15. In ground no.7 of appeal, the assessee has assailed disallowance of expenditure aggregating to Rs.25,11,533/- for want of supporting evidence. The ld. AR submitted that the expenditure was disallowed by AO on the ground that it is not supported by bills, vouchers, etc. The assessee filed requisite bills before the DRP as additional evidence. The DRP failed to consider the additional evidence filed by the assessee while giving directions. Thereafter, the assessee filed rectification petition before the DRP. Consequent to rectification application filed by the assessee, the DRP vide its revised directions, directed the AO to examine additional evidence filed by the assessee, in accordance with law. Thereafter, the assessee filed application before the AO to give effect to revised DRP directions. The said application is still pending before the AO. The ld. AR submitted that a direction may be given to the AO to dispose of the application in accordance with the directions of the DRP. 16. The ld. DR submitted that the directions may be given to AO to dispose of the application of the assessee. 11 आअसं.253/ चंडीगढ़/2016(िन.व.2011-12) ITA NO.253/Chd./2026 (A.Y.2011-12) आअसं.1592/ चंडीगढ़/2018(िन.व.2014-15) ITA NO.1592/Chd./2018 (A.Y.2014-15) 17. Both sides heard. The application of assessee to give effect to revised directions of the DRP is pending before the AO. The AO is directed to dispose of the said application by the assessee, expeditiously and preferably within a period of six months from the date of receipt of this order. 18. In ground no. 8 & 9 of appeal, the assessee has assailed disallowance made under section 40(a)(ia) of the Act. The ld. AR submitted that the assessee had made certain payments/reimbursements during the period relevant to the AY under appeal. The reimbursements are in respect of fee for training services, travelling expenses and international assignments charges and expenses. The ld. AR pointed that in so far as reimbursements of fee for training services and travelling expenses, similar disallowance was made in AY 2009-10. The co- ordinate bench in ITA No. 155/Chd/2014(supra) has held that reimbursements of expenses does not attract provisions of section 195 and hence, no tax was required to be deducted at source. The ld. AR pointed that in the impugned AY, the AO has made disallowance under section 40(a)(ia) in respect of salary reimbursement also. The ld. AR pointed that the assessee had deducted tax at source under section 192 of the Act, as against under section 195 of the Act. It is not a case where the assesse has not deducted tax at source. The ld. AR submitted that since the assessee has deducted tax at source albeit under different section, no disallowance under section 40(a)(ia) is warranted. To support his contention, the ld. AR placed reliance on the decision of Hon’ble Calcutta High Court in the case of CIT vs. S.K. Tekriwal reported as 361 ITR 432. 12 आअसं.253/ चंडीगढ़/2016(िन.व.2011-12) ITA NO.253/Chd./2026 (A.Y.2011-12) आअसं.1592/ चंडीगढ़/2018(िन.व.2014-15) ITA NO.1592/Chd./2018 (A.Y.2014-15) 19. On the other hand, the ld. DR vehemently defended the assessment order and the directions of the DRP to contend that disallowance under section 40(a)(ia) was rightly made in the hands of assessee in respect of non/short deduction of tax at source on reimbursements of expenses and payment of salary. 20. We have heard the submissions made by rival sides. The AO has made disallowance under section 40(a)(ia) of the Act in respect of fee for training services to DSM Expert, Netherland and reimbursement of travelling expenses and international assignment charges. We find that in AY 2009-10 similar disallowance was made in respect of reimbursement of expenses. The Tribunal after examining the issue in detail concluded that reimbursement of expenses does not attract provisions of section 195 and hence, no tax was deductible. Since, the facts in the impugned AY are identical, we find no reasons to take a different view. 20.1. The assessee has also assailed disallowance made under section 40(a)(ia) of the Act in respect of reimbursements of salary. The assessee has deducted tax at source on salary reimbursements under section 192 of the Act, as against under section 195 of the Act. The tax has been deducted by the assessee under wrong provision. It is not a case where the assesse has not deducted tax at source at all. The Hon’ble Calcutta High Court in the case of CIT Vs. S.K. Tekriwal (supra) has upheld the decision of Tribunal wherein it was held that if tax is deducted at source, but there is some shortfall due to difference of opinion about provisions applicable, no disallowance can be made under section 40(a)(ia). Thus, in the light of aforesaid decision, we hold that no disallowance under section 40(a)(ia) of the Act is warranted qua TDS made under different 13 आअसं.253/ चंडीगढ़/2016(िन.व.2011-12) ITA NO.253/Chd./2026 (A.Y.2011-12) आअसं.1592/ चंडीगढ़/2018(िन.व.2014-15) ITA NO.1592/Chd./2018 (A.Y.2014-15) provision in respect of reimbursements of salary. Consequently, ground no. 8 & 9 of the appeal are allowed. 21. In ground no. 10 of appeal, the assessee has raised an alternate plea to the relief sought in ground no. 8 & 9 above. Since, ground no. 8 & 9 of appeal have been decided in favour of the assessee, the alternate plea raised in ground no.10 has become infructuous and the same is dismissed as such. 22. In ground no.11 of appeal, the assessee has assailed initiation of penalty under section 271(1)(c) of the Act. Challenge to penalty proceedings at this stage is premature, hence, ground no.11 of appeal is dismissed. 23. In the result, appeal of the assessee is partly allowed, in the terms aforesaid. ITA No. 1592/Chd/2018 for AY 2014-15. 24. The ld. AR of assessee submitted at the outset that the grounds assailing Transfer Pricing Adjustment in AY 2014-15 are identical to AY 2011-12. The reasons for making adjustment in respect of corporate service fee are identical to AY 2011-12. The ld. AR submitted that the arguments made while addressing this issue in AY 2011-12 would equally apply to TP addition made in AY 2014-15. 25. The ld. AR further submitted that the only issue under Corporate Tax is disallowance of interest expenditure under section 36(1)(iii) of the Act. The facts germane to the issue are identical to the issue raised in ground no.5 of the appeal for AY 2011-12. 26. The ld. DR admitted that the issue raised in grounds of appeal for AY 2014- 15 are identical to the issues raised in appeal by the assessee for AY 2011-12. 14 आअसं.253/ चंडीगढ़/2016(िन.व.2011-12) ITA NO.253/Chd./2026 (A.Y.2011-12) आअसं.1592/ चंडीगढ़/2018(िन.व.2014-15) ITA NO.1592/Chd./2018 (A.Y.2014-15) 27. Submissions made by rival sides heard. In ground no.2 & 3 of appeal, the assessee assailed TP adjustment in respect of Corporate Service Charges. We find that the addition assailed in ground no. 2 & 3 germinates from same set of fact as has been adjudicated by us in ground no.2 & 3 of appeal by the assessee for AY 2011-12. The findings given while adjudicating the grounds in AY 2011-12 would mutatis mutandis apply to the present appeal. Consequently, ground no. 2 & 3 of the present appeal are partly allowed for similar reasons. 28. In ground no.4 of appeal, the assessee has assailed disallowance of interest expenditure under section 36(1)(iii) of the Act in respect of capital expansion project. We find that identical issue was raised by the assessee in ground no.5 of the appeal for Ay 2011-12. For parity of reasons, the ground no.4 of appeal is allowed for statistical purpose. 29. In ground no.5 of appeal, the assessee has assailed initiation of penalty proceeding under section 271(1)(c) of the Act. Challenge to penalty proceedings at this stage is premature. Accordingly, ground no.5 of appeal is dismissed. 30. In the result, appeal of the assessee is partly allowed. 31. To sum up, appeal of the assessee for AY 2011-12 & 2014-15, are partly allowed. Order pronounced in the open court on Thursday, the 20 th day of January, 2022. Sd/- Sd/- (N.K. SAINI) (VIKAS AWASTHY) उपा य / VICE-PRESIDENT या यक सद य/JUDICIAL MEMBER चंडीगढ़/Chandigarh, 琈दनांक/Dated: 20/01/2022 SK, Sr. PS 15 आअसं.253/ चंडीगढ़/2016(िन.व.2011-12) ITA NO.253/Chd./2026 (A.Y.2011-12) आअसं.1592/ चंडीगढ़/2018(िन.व.2014-15) ITA NO.1592/Chd./2018 (A.Y.2014-15) 灹ितिलिप अ灡ेिषत 灹ितिलिप अ灡ेिषत灹ितिलिप अ灡ेिषत 灹ितिलिप अ灡ेिषत/Copy of the Order forwarded to : 1. अपीलाथ牸/The Appellant , 2. 灹ितवादी/ The Respondent. 3. आयकर आयु猴(अ)/ The CIT(A)- 4. आयकर आयु猴 CIT 5. िवभागीय 灹ितिनिध, आय.अपी.अिध., चंडीगढ़/DR, ITAT, Chandigarh 6. गाड榁 फाइल/Guard file. BY ORDER, //True Copy// (Dy./Asstt. Registrar) ITAT, Mumbai