M/s. Vishay Components India Private Limited, Pune V. Assistant Commissioner of Income-tax, Circle - 13, Pune

ITA 1969/PUN/2018

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 7418 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-01-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2014-2015
• Appeal Filed On: 31-12-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Depreciation; Transfer pricing; Double taxation relief; International transaction; Initiation of penalty proceedings; TDS
• Section: 271(1)(c); 143(3); 195; 73; 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, PUNE BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SHRI S.S. VISWANETHRA RAVI, J UDICIAL MEMBER . / ITA NO . 1969 /PUN/201 8 / ASSESSMENT YEAR : 20 1 4 - 15 M/S. VISHAY COMPONENTS INDIA PRIVATE LIMITED, LONI KALBHOR, NEAR PUNE (C. RLY.), PUNE 412201 PAN : AAACB9652L ...... / APPELLANT / V/S. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 13, PUNE / RESPONDENT ASSESSEE BY : SHRI MADHUR AGARWAL REVENUE BY : SHRI NAVIN GUPTA / DATE OF HEARING : 06 /07 - 01 - 2021 / DATE OF PRONOUNCEMENT : 19 - 01 - 2021 / ORDER PER S.S. VISWANETHRA RAVI, JM : TH IS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE FINAL ASSESSMENT ORDER DATED 26 - 10 - 2018 PASSED BY THE ASSESSING OFFICER (AO) U/S. 143(3) R.W.S. 144C(13) OF THE ACT FOR ASSESSMENT YEAR 2014 - 15. 2 ITA NO . 1969/PUN/2018, A.Y. 2014 - 15 2. THE BRIEF FACTS OF THE CASE AS EMANATING FROM RECORDS ARE THAT THE ASSESSEE IS A COMPANY ENGAGED IN THE BUSINESS OF MANUFACTURING OF RESISTORS I.E. HIGH VOLTAGE RESISTORS, LOW SURGE RESISTORS, POWER RESISTORS, ETC. AND CAPACITORS LIKE FILM CAPACITORS, TRIMMER CAPACITORS AND POWER CAPACITORS USED IN VARIOUS ELECTRONIC APPLICATIONS/PRODUCTS AND ALSO THE ASSESSEE PROVIDE BACK OFFICE SERVICES TO ITS OVERS EAS GROUP COMPANIES IN THE NATURE OF IT ENABLED SERVICES. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE FILED TRANSFER PRICING STUDY REPORT (TPSR) ALONG WITH OTHER DOCUMENTS AND DETAILED SUBMISSIONS TO JUSTIFY THE ARMS LENGTH PRICE COMPUTED REL ATING TO INTERNATIONAL TRANSACTIONS. THE SAID DETAILS ALONG WITH DOCUMENTS AND INFORMATION WERE EXAMINED BY THE TPO AND FOUND NOT ACCEPTABLE AND ISSUED A SHOW CAUSE NOTICE. 3. IT IS PERTINENT TO MENTION THE MOST APPROPRIATE METHOD ADOPTED BY THE ASSESS EE WAS TRANSACTIONAL NET MARGIN METHOD (TNMM) WHICH WAS ACCEPTED BY THE TPO. THE ASSESSEE ADOPTED PROFIT LEVEL INDICATOR OF OPERATING PROFIT BEFORE DEPRECIATION , INTEREST AND TAX TO OPERATING COST BUT HOWEVER, IT WAS HELD BY THIS TRIBUNAL IN ASSESSEES OW N CASE THAT THE OPERATING PROFIT OF ASSESSEE AND COMPARABLES SHOULD BE CALCULATED AFTER DEPRECIATION SINCE THE DEPRECIATION IS AN INTEGRAL PART OF OPERATING COST. REGARDING FOREIGN EXCHANGE GAIN/LOSS HAS BEEN TREATED AS NON - OPERATIVE BY THE TPO WHICH THE TRIBUNAL IN ASSESSEES OWN CASE WE NOTE THAT HELD THE AMOUNT OF FOREIGN EXCHANGE GAIN/LOSS ARISING OUT OF REVENUE TRANSACTIONS SHOULD BE CONSIDERED AS AN ITEM OF OPERATING REVENUE/COST FOR THE ASSESSEE AS WELL AS COMPARABLES. FURTHER, THE TP ADJUSTMENT SH OULD BE RESTRICTED TO THE INTERNATIONAL TRANSACTIONS AND NOT AT ENTITY LEVEL TRANSACTIONS. 3 ITA NO . 1969/PUN/2018, A.Y. 2014 - 15 THUS, TAKING INTO CONSIDERATION THE ABOVE ASPECTS, THE PLI OF THE ASSESSEE HAS BEEN SHOWN AS 9.69% UNDER THE CATEGORY OF MANUFACTURING ACTIVITY , BUT THE TPO REVISED AVERAGE PLI MARGIN OF COMPARABLES ON PBIT TO COST TREATING FORE X GAIN/LOSS AS NON - OPERATIVE AT 13.80%. 4. UNDER THE MANUFACTURING ACTIVITY, THE ASSESSEE CHOSEN TO HAVE FOUR COMPARABLES , OUT OF WHICH THE TPO/AO INCLUDED CTR MANUFACTURING INDUSTRIES AND EXCLUDED GUJARAT POLY AVX ELECTRONICS LIMITED. THE AO/TPO COMPUTED PLI MARGIN OF THE COMPARABLES ON PROFIT ON PBIT TO COST TREATING FORE X GAIN/LOSS AS NON - OPERATIVE AT 13.80%. THUS, THE TPO/AO PROPOSED TP ADJUSTMENT TO AN EXTENT OF RS.7,89,06,028/ - . THE DRP IN ITS DIRECTION ORDER DATED 17 - 09 - 2018 REJECTED THE OBJECTIONS OF ASSESSEE FOR INCLUSION OF CTR MANUFACTURING INDUSTRIES AND FOR EXCLUSION OF GUJARAT POLY AVX ELECTRONICS LIMITED. BEFORE US, THE ASSESSEE CHALLENGING THE I NCLUSION OF CTR MANUFACTURIN G INDUSTRIES LTD. 5. WE NOTE THAT ANNUAL REPORT OF CTR MANUFACTURING INDUSTRIES LTD. IS AT PAGE NO. 596 OF THE PAPER BOOK WHICH WAS ESTABLISHED IN 1964 AND IS A MAJOR PLAYER IN INDIA, MANUFACTURING A WIDE RANGE OF TRANSFORMER ANCILLARY PRODUCTS AND PLASTI C FILM CAPACITORS. IT OPERATES FROM THREE LOCATIONS I.E. PUNE, AURANGABAD AND NASHIK. IN PAGE NO. 607 THE GROSS REVENUE OPERATION SHOWN AT RS.18,216.16 LACS AND IN PAGE NO. 628 THE NET SALE OF PRODUCTS AT RS.1 7,720.55 LACS AMONGST WHICH THE SALE OF TRANSFORMER ANCILLARIES AND OTHERS AT RS.14,275.30 LACS AND RS.1,662.68 LACS , RESPECTIVELY WHICH ARE IN THE CATEGORY OF MANUFACTURING OF GOODS WERE GIVEN 4 ITA NO . 1969/PUN/2018, A.Y. 2014 - 15 AND WE NOTE NO DETAILS OF MANUFACTURING OF CAPACITORS ARE PRESENT. AT PAGE NO. 637 THE SEGMENT INFORM ATION AS REQUIRED UNDER AS 17 WERE GIVEN AND NO QUANTITATIVE DETAILS REGARDING THE CAPACITORS WERE SHOWN. THEREFORE, THE CTR MANUFACTURING INDUSTRIES IS PRIMARILY INTO MANUFACTURING OF TRANSFORMER ANCILLARIES AND OTHERS AND ITS REVENUES AND EXPENSES DIREC TLY ATTRIBUTABLE TO SEGMENTS TRANSFORMER ANCILLARIES AND OTHERS BUT NOT CAPACITOR AS IN THE CA SE OF ASSESSEE. THE SAME ISSUE CAME UP BEFORE THIS TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y. 2010 - 11 WHEREIN THIS TRIBUNAL CONSIDERING THE FACTS AND CIRCUMSTANCES INVOLVING ABOUT THE MANUFACTURING SEGMENT RELATING TO CAPACITORS HELD THE CTR MANUFACTURING INDUSTRIES LTD. IS NOT COMPARABLE. THE LD. DR REPORTED THERE WAS NO CHANGE IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 6. WE NOTE THAT IN PROFIT AND LOSS ACCOUNT OF ASSESSEE WHICH IS PLACED AT PAGE NO. 186 OF THE PAPER BOOK WHEREIN WE NOTE THAT THE GROSS REVENUE FROM OPERATIONS IS AT RS.2,433.38 MILLION (RS.243.338 CRORES). THE SEGMENTAL ACCOUNT OF REVENUE OPERATIONS WERE GI VEN AT PAGE NO. 199 OF THE PAPER BOOK WHEREIN IT IS NOTED THE FINISHED CAPACITORS WAS SOLD AT RS. 1,539.36 MILLION (RS.153.936 CRORES) AND RESISTORS AT RS.593.06 MILLION (RS.59.306 CRORES). THEREFORE, IT APPEARS THE SALE OF PRODUCTS IN FINISHED CATEGORY OF CAPACITORS AND RESISTORS AMOUNTS TO RS.2,132.42 MILLION (RS.213.242 CRORES) AS AGAINST THE GROSS REVENUE FROM OPERATIONS RS.2,433.38 MILLION (RS.243.338 CRORES). IT CLEARLY SHOWS THE ASSESSEE HAS SHOWN THE REVENUE OPERATIONS UP TO 60% TO 70% FROM THE SAL E OF CAPACITORS AND RESISTORS WHEREAS THERE WAS NO SEGMENTAL INFORMATION ABOUT MANUFACTURING AS WELL AS SALE OF CAPACITORS AND RESISTORS IN THE 5 ITA NO . 1969/PUN/2018, A.Y. 2014 - 15 ANNUAL STATEMENT OF CTR MANUFACTURING INDUSTRIES LTD. THEREFORE, IN OUR VIEW CTR MANUFACTURING INDUSTRIES LTD. CANNOT BE A COMPARABLE TO THAT OF ASSESSEE. HENCE, IT SHOULD BE EXCLUDED FROM THE COMPARABLES. THEREFORE, WE DIRECT THE AO TO EXCLUDE THE CTR MANUFACTURING INDUSTRIES LTD. FROM THE FINAL LIST OF COMPARABLES IN THE CATEGORY OF MANUFACTURING SEGMENTS. THE LD. AR FAIRLY ADMITTED IF THIS TRIBUNAL CONSIDERS THE EXCLUSION OF CTR MANUFACTURING INDUSTRIES LTD AS FOLLOWED IN THE EARLIER YEAR 2010 - 11, THE ASSESSEE WOULD NOT PROSECUTE THE INCLUSION OF GUJARAT POLY AVX ELECTRONICS LIMITED. SINCE, WE HAVE TAKEN A VI EW IN THE LIGHT OF THIS TRIBUNAL ORDER IN A.Y. 2010 - 11 IN EXCLUDING THE CTR MANUFACTURING INDUSTRIES LTD. FROM THE LIST OF COMPARABLES, THE ADJUDICATION OF INCLUSION OF GUJARAT POLY AVX ELECTRONICS LIMITED IS NOT WARRANTED. I . T . E NABLED SERVICES /BACK OFFICE SUPPORT SERVICES SEGMENT 7. IT IS AGREED BY BOTH THE PARTIES THAT THE COMPARABILITY OF CERTAIN COMPANIES IN THE BACK OFFICE SUPPORT SEGMENT , THIS TRIBUNAL REMANDED THE MATTER TO THE FILE OF AO/TPO TO ASCERTAIN THE PRECISE NATURE OF SERVICES RENDE RED BY THE ASSESSEE UNDER ITES AND T O EXAMINE THE COMPARABILITY OR OTHERWISE OF THE COMPANIES CHALLENGED IN THIS SEGMENT IN A.Y. 2010 - 11. THE SAID ORDER IS PLACED AT PAGE NOS. 314 TO 341 OF THE PAPER BOOK WHEREIN THE RELEVANT PORTION AT PAGE NO. 336 AT PA RA 23 IS REPRODUCED AS UNDER : 23. AS THE ASSESSEE HAS ONLY CHALLENGED THE COMPARABILITY OF CERTAIN COMPANIES, WE CONSIDER IT EXPEDIENT TO FIRST EXAMINE THE NATURE OF SERVICES RENDERED BY THE ASSESSEE IN THIS SEGMENT. PAGE 4 OF THE TPOS ORDER GIVES AN OV ERVIEW OF THE SERVICES RENDERED BY THE ASSESSEE TO VARIOUS AES IN THIS SEGMENT, WHICH HAVE BEEN STATED TO BE: IN THE NATURE OF INFORMATION TECHNOLOGY ENABLED SERVICES WHICH, INTER ALIA, INCLUDE ACCOUNTS RECEIVABLE PROCESSING (ARP SERVICES), GLOBAL IT SUPP ORT (IT SUPPORT SERVICES), BILL OF MATERIALS CONVERSION (BOMCON SERVICES), MARKETING LOGISTICS SUPPORT SERVICES (SUPPORT SERVICES), DESIGNING SERVICES, RESTRICTION OF HAZARDOUS SUBSTANCE (ROHS) AND CERTAIN ENVIRONMENT COMPLIANCE SUPPORT SERVICES. THIS IS A GENERALIZED DESCRIPTION OF SERVICES WITHOUT REFERENCE TO THE FURTHER DETAILS AS TO THEIR COMPREHENSIVE NATURE AND ALSO WHETHER THESE ARE HIGHEND OR LOW - END SERVICES AND FURTHER THE EXTENT OF 6 ITA NO . 1969/PUN/2018, A.Y. 2014 - 15 RENDITION OF SUCH SERVICES INDIVIDUALLY. ON A PERUSAL OF THE AM OUNT RECEIVED BY THE ASSESSEE FROM ITS AE FOR RENDERING THE ABOVE SERVICES, IT COMES TO THE FORE THAT OUT OF TOTAL RECEIPT OF RS.9.88 CRORE UNDER THIS INTERNATIONAL TRANSACTION, THE ASSESSEE RECEIVED A SUM OF RS.5.40 CRORE FROM VISHAY INTERTECHNOLOGY ASIA PTE LTD. ONLY FOR RENDERING I.T. SUPPORT SERVICES. IN ADDITION, THE ASSESSEE ALSO RENDERED ARP SERVICES, BOMCON SUPPORT SERVICES AND LOGISTIC, POWER MOSFETS SERVICES AND IEHS SERVICES TO SMALL EXTENTS. SINCE THE MAJOR COMPONENT IS FROM I.T. SUPPORT SERVICE S, WE DIRECTED THE LD. AR TO PLACE ON RECORD A COPY OF AGREEMENT UNDER WHICH SUCH SERVICES WERE PROVIDED TO THE AE SO AS TO PROPERLY ASCERTAIN THEIR NATURE FOR DECIDING THE COMPARABILITY OR OTHERWISE OF THE COMPANIES CHALLENGED. ON THE NEXT DATE OF HEARING , THE LD. AR EXPRESSED HIS INABILITY TO PRODUCE THE RELEVANT AGREEMENT IN TERMS OF WHICH THE I.T. SUPPORT SERVICES WERE RENDERED. IT GOES WITHOUT SAYING THAT UNLESS THE TRUE NATURE OF SERVICES RENDERED BY THE ASSESSEE IS PRECISELY FOUND OUT, THE COMPARABIL ITY OF OTHER COMPANIES CANNOT BE CONCLUSIVELY DECIDED. IN VIEW OF THE FACT THAT THE RELEVANT AGREEMENT IS NOT AVAILABLE ON RECORD, WE DEEM IT FIT TO SET - ASIDE THE IMPUGNED ORDER ON THIS SCORE AND REMIT THE MATTER TO THE FILE OF AO/TPO. WE ORDER ACCORDINGLY AND DIRECT THE AO/TPO TO FIRST ASCERTAIN THE PRECISE NATURE OF SERVICES RENDERED BY THE ASSESSEE UNDER THE I.T. SUPPORT SERVICES AND THEN EXAMINE THE COMPARABILITY OR OTHERWISE OF THE COMPANIES CHALLENGED IN THIS SEGMENT, NAMELY, INFORMED TECHNOLOGIES IND IA LTD., INFOSYS BPO LTD., B N R UDYOG LTD. (MEDICAL TRANSCRIPTION SEGMENT), ACCENTIA TECHNOLOGIES LTD., JEEVAN SOFTECH AND R SYSTEMS. THE LD. AR FAIRLY AGREED TO IT. 8. IN THE LIGHT OF THE ABOVE, THE AO IS DIRECTED TO ASCERTAIN THE NATURE OF SERVICES RENDERED BY THE ASSESSEE AND EXAMINE THE COMPARABILITY OF THE COMPANIES INDICATED THEREIN. ACCORDINGLY, THIS ISSUE IS REMANDED THE FILE OF AO/TPO FOR FRESH EXAMINATION. THE ASSESSEE IS LIBERTY TO FILE EVIDENCES, IF ANY, IN SUPPORT OF ITS CLAIM. 9. GROUND NO. 23 RAISED BY THE ASSESSEE CHALLENGING THE DISALLOWANCE OF RS.6,47,15,145/ - U/S. 40(A)(I) OF THE ACT MADE IN THE FINAL ASSESSMENT ORDER BY THE AO IN THE FACTS AND CIR CUMSTANCES OF THE CASE. 10. THE ASSESSEE FOR CONVENIENCE VISHAY INDIA HEREAFTER PAID AN AMOUNT OF RS.6,47,15,145/ - TO ITS ASSOCIATED ENTERPRISE (AE) I.E. VISHAY INTERTECHNOLOGY ASIA PTE LTD., SINGAPORE (IN SHORT VISHAY SINGAPORE). THE AO ASKED THE AS SESSEE TO EXPLAIN WHY DISALLOWANCE U/S. 40(A)(I) OF THE ACT SHOULD NOT BE MADE FOR NON - DEDUCTION OF TAX. 7 ITA NO . 1969/PUN/2018, A.Y. 2014 - 15 11. IT WAS EXPLAINED THAT THE VISHAY SINGAPORE HAS CROSS CHARGED CERTAIN EXPENSE TO VISHAY INDIA IN THE NATURE OF LEASED LINE CHARGES (COMMUNICATION COST OR EQUANT CHARGES) INVOLVING IT CHARGES, IT SUPPORT COST, AND ALLOCATION TOWARDS DEVELOPMENT, MAINTENANCE, UP GRADATION, BACKUP, SECURITY MAINTENANCE OF GLOBAL IT INFRASTRUCTURE/SECURITY/WEB CHARGES. VISHAY SINGAPORE INITIALLY PAID THAT AMOUNT AND GO T REIMBURSEMENT FROM VISHAY GROUP SITUATED ALL OVER INCLUDING THE ASSESSEE ON COST TO COST BASIS. VISHAY SINGAPORE DID NOT CHARGE ANY MARK UP NOR ANY INCOME INVOLVED IN IT. THE SAME WAS ACCEPTED BY THE TPO DURING THE TRANSFER PRICING PROCEEDINGS THAT THE PAYMENTS MADE TO VISHAY SINGAPORE ARE IN THE NATURE OF COST TO COST ALLOCATION ONLY. FURTHER, IT WAS EXPLAINED THAT THE ASSESSEE WAS NOT REQUIRED TO WITHHOLD TAX AT SOURCE IN INDIA TO REMITTANCES ON COST ALLOCATION AND AS SUCH NO TDS WAS DEDUCTED AS IT I S NOT TAXABLE IN INDIA. 12. THE AO WAS OF THE OPINION THAT THE HONBLE SUPREME COURT IN THE CASE OF GE INDIA TECHNOLOGY CEN (P) LTD. VS. CIT REPORTED IN 327 ITR 456 DID NOT SUGGEST THAT THE QUANTUM OF INCOME EMBEDDED IN THE SUM PAID TO THE NON - RESIDENT WHICH IS CHARGEABLE TO TAX IS THE TEST FOR DEDUCTING TAX AT SOURCE AND BY REFERRING TO SUB - SECTION (1) OF SECTION 195 OF THE ACT THAT THE QUANTUM OF INCOME EMBEDDED IN THE SUM PAID IS A SUBJECT OF THE SUM PAID TO THE NON - RESIDENT. HE OBSERVED THAT SUM PAI D BY THE ASSESSEE IS CHARGEABLE TO TAX U/S. 195 OF THE ACT AND PROPOSED DISALLOWANCE OF THE AFORESAID AMOUNT. 8 ITA NO . 1969/PUN/2018, A.Y. 2014 - 15 13. IN ORDER TO COME TO ABOVE CONCLUSION, THE AO PLACED RELIANCE ON THE DIRECTIONS OF DRP IN ASSESSEES OWN CASE FOR A.YS. 2012 - 13 AND 2013 - 14 W HEREIN ON THE CONSISTENCY METHOD IT WAS HELD VISHAY SINGAPORE HAS MADE AVAILABLE VARIOUS FACILITIES TO THE ASSESSEE FOR WHICH THE ASSESSEE HAS MADE AFORESAID PAYMENT AND THE NATURE OF FACILITIES INDICATES THAT THE PAYMENT IS IN THE NATURE OF ROYALTY AS DEF INED U/S. 19 R.W. ARTICLE 12 OF THE DTAA BETWEEN INDIA AND SINGAPORE. ACCORDINGLY, DISALLOWED THE SAID EXPENDITURE FOR VIOLATION OF NON - DEDUCTION OF TDS U/S. 40(A)(I) OF THE ACT. 14. THE DRP IN ITS DIRECTIONS VIDE PARA 24.2 REFERRED TO THE DISCUSSION M ADE BY THE DRP IN A.Y. 2012 - 13 IN ASSESSEES OWN CASE. WE NOTE THAT THE DRP WHILE DEALING THE ISSUE IN A.Y. 2012 - 13 PLACED RELIANCE IN THE CASE OF AMD RESEARCH & DEVELOPMENT CENTER INDIA PVT. LTD. REPORTED IN TS - 649 - ITAT - 2014 (HYD) WHICH HELD THE PAYMENT MADE TO THE PARENT COMPANY WITH THE SERVICES RENDERED BY THE THIRD PARTY , WOULD NOT MEAN THAT THE PAYMENT IS REIMBURSEMENT AND NOT PAYMENT IN THE NATURE OF ROYALTY. IN THE CASE OF CGI INFORMATION SYSTEMS AND MANAGEMENT CONSULTANTS PVT. LTD. REPORTED IN TS - 519 - HC - 2014 (KAR) THE HONBLE KARNATAKA HIGH COURT HELD THAT THE PAYMENT FOR INTRANET FACILITY UNDER COST SHARING ARRANGEMENT IS TAXABLE AS ROYALTY. IN THE CASE OF VERTEX CUSTOMER MANAGEMENT LTD. REPORTED IN (2016) 67 TAXMANN.COM 105 (DELHI - TRIB.) IT WAS HELD THAT WHERE THE ASSESSEE RECEIVED REIMBURSEMENT FROM ITS INDIA ENTITY FOR USE OF EQUIPMENT SITUATED OUTSIDE INDIA IS TAXABLE AS ROYALTY IN INDIA. THE DRP HELD THE FACTS AND CIRCUMSTANCES IN A.Y. 2014 - 15 IS IDENTICAL TO FACTS IN A.Y. 2012 - 13 AND ACCOR DINGLY CONFIRMED THE DISALLOWANCE MADE BY THE AO FOR VIOLATION OF SECTION 195 U/S. 40(A)(I) OF THE ACT. 9 ITA NO . 1969/PUN/2018, A.Y. 2014 - 15 15. WE NOTE THAT THE SIMILAR ISSUE ON SAME IDENTICAL FACTS , THIS TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y. 2012 - 13 AT PAGE NOS. 343 TO 351 OF THE PAPER BOOK WHEREIN THE ISSUE ON HAND DISCUSSED BY THIS TRIBUNAL FORM PARAS 6 TO 12 OF THE SAID ORDER , WHEREIN WE NOTE THAT THE ASSESSEE AVAILED SIMILAR SERVICES FROM ITS HOLDING COMPANY IN USA FOR WHICH THE VISHAY SINGAPORE PAID THE SAID AMOUNT ON BEHALF OF OTH ER ENTITIES SITUATED WORLDWIDE AND CHARGED WITHOUT NO MARKUP FROM THE ASSESSEE AS WELL AS FROM OTHER ENTIT IES. NO DISALLOWANCE WAS MADE IN THIS REGARD BY THE RESPONDENT AUTHORITIES IN THE EARLIER YEARS . THE TRIBUNAL EXAMINED THE FINAL ASSESSMENT ORDERS/TPOS ORDERS OF EARLIER YEARS ALONG WITH THE NECESSARY DOCUMENTATION FILED BY THE ASSESSEE THEREIN AND HELD THE REIMBURSEMENT OF EXPENSES FOR LEASELINE ARE NOT IN THE REALM OF ROYALTY AND SECTION 9 OF TH E ACT OR ARTICLE 12 OF DTAA IS ATTRACTED. THE TRIBUNAL FURTHER PLACED RELIANCE IN THE CASE OF JOHN DEERE INDIA PVT. LTD. REPORTED IN (2019) 70 ITR (TRIB.) 73 (PUNE) WHEREIN THE SIMILAR ISSUE WAS RAISED AND HELD THAT THE PAYMENT MADE FOR SUCH LEASE LINE CHA RGES WAS NOT ROYALTY UNDER DTAA AND NO OBLIGATION TO DEDUCT TAX AT SOURCE. HAVING CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE FOR THE YEAR UNDER CONSIDERATION BE THAT OF THE FACTS AROSE IN A.Y. 2012 - 13, IN OUR OPINION , ARE IDENTICAL AND SQUARELY C OVERED BY THE ORDER OF THIS TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y. 2012 - 13, HENCE, THE DISALLOWANCE AS CONFIRMED BY THE AO IN ACCORDANCE WITH THE DIRECTIONS OF DRP IS NOT JUSTIFIED AND ACCORDINGLY, DELETED. THUS, THE ASSESSEE IN POINT NO. 23 IN GROUND NO. II SUCCEEDS AND IT IS ALLOWED. 16. IN GROUND NO. III THE ASSESSEE HAS ASSAILED INITIATION OF PENALTY PROCEEDINGS U/S. 271(1)(C) OF THE ACT. CHALLENGE TO PENALTY PROCEEDINGS AT 10 ITA NO . 1969/PUN/2018, A.Y. 2014 - 15 THIS STAGE IS PRE - MATURE. ACCORDINGLY, GROUND NO. III RAISED IN THE APPEAL IS DISMISSED. 17. IN THE RESULT, THE APPEAL OF ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 19 TH JANUARY, 202 1 . SD/ - SD/ - ( R.S. SYAL ) ( S.S. VISWANETHRA RAVI ) VICE PRESIDENT JUDICIAL MEMBER / PUNE; / DATED : 19 TH JANUARY, 202 1 . RK / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE DISPUTE RESOLUTION PANEL - 3, MUMBAI 4. THE CIT (IT& TP), PUNE 5. , , , / DR, ITAT, C BENCH, PUNE. 6. / GUARD FILE. // // TRUE COPY// / BY ORDER, / PRIVATE SECRETARY, , / ITAT, PUNE