ASUS INDIA PVT LTD., MUMBAI V. THE LD. ADDL/JOINT/DEPUTY/ACIT/ ITO, DELHI

ITA 2427/MUM/2022

AI Insights

Asus India Private Limited appealed against the assessment order for the year 2018-19, which included disallowances under section 40(a)(ia) and transfer pricing adjustments. The primary contention revolved around whether certain payments categorized as sales rebates and discounts were in the nature of commissions requiring TDS under sections 194C and 194H of the Income Tax Act. The Tribunal examined precedents and the specific nature of transactions between Asus and its distributors/dealers, ultimately deciding in favor of the assessee on most grounds, except for the issue of TDS on refurbish and rebate on defective products, which was set aside for re-evaluation.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 299736 (ITAT-MUMBAI)
• Duration Of Justice: 10 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-08-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: K
• Next Hearing Date: 18-05-2023
• Assessment Year: 2018-2019
• Appeal Filed On: 20-09-2022
• Other Referred Cases: CIT vs Intervet India private limited, Asus India (P.) Ltd. v. Asstt. CIT, Ahmedabad Stamp Vendor Association v. Union of India, CIT v. Ahmedabad Stamp Vendor Association, CIT v. United Breweries Ltd., CIT v. Intervate India Pvt. Ltd., PMS Diesels & Ors v. CIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Sale consideration of property below Jantri Value; Search and seizure; Non-deduction of tax; TDS
• Section: 37; 260A; 115JB; 40(a)(ia); 194C; 144C; 208; 194J; 13; 22; 92CA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “K” BENCH, MUMBAI BEFORE SHRI PRASHANT MAHARISHI, AM AND MS. KAVITHA RAJAGOPAL, JM ITA No. 2427/Mum/2022 (Assessment Year: 2018-19) Asus India P r i vate Lim ited 402, Suprem e Cha m bers, 17-18 Shah Indust r ial E state, Veera De sai Road, Andheri (W est), Mum bai-400 053 Vs. The Learned. Addl/Joint/Deputy/ACIT/ITO Room No.305, Ara Centre 2-E Jhandewalan Extn, New Delhi, Delhi-110055 (Appellant) (Respondent) PAN No. AAJCA6450C Assessee by : Mr. Vijay Mehta, Adv. Revenue by : Mr. Nihar Ranjan Samal, Sr. AR Date of hearing: 19.05.2023 Date of pronouncement : 16.08.2023 O R D E R PER PRASHANT MAHARISHI, AM: 01. ITA number 2427/M/2022 is filed by the Asus India private limited for assessment year 2018 – 19 against the assessment order passed under section 143 (3) read with section 144C (13) read with section 144B of The Income Tax Act, 1961 [ the Act] dated 26 July 2022 passed by assessment unit of income tax department wherein the return of income filed by the assessee on 30/11/2018 declaring a total income of ₹ 113,906,370 under the normal provisions and book profit under section 115JB of the act at ₹ 178,802,862 was assessed at ₹ 495,365,000 Page | 2 ITA No. 2427/Mum/2022; Asus India Private Ltd; 2018-19 as per normal computation and book profit at the returned income. 02. In the assessment order the learned assessing officer made an addition/disallowance under section 40 (a) (ia) of ₹ 370,175,198 and further transfer pricing adjustment of ₹ 11,193,854. 03. Brief facts of the case shows that assessee is a company engaged in the business of trading of notebooks, tablets, pad phones and Accessories. It filed its return of income on 30/11/2018. ROI was picked up for scrutiny. 04. During the course of assessment proceedings the learned AO noted that assessee has adjusted Gross turnover with the sales returns and sales rebate. The sales return was of ₹ 593,789,320 and sales repairs was of ₹ 993,522,306/– .This was reduced from Gross sales. Assessee was asked to furnish the details of sales rebate granted by to its dealers and distributors during the year under consideration. Assessee submitted the details stating that :- a. it has granted conditional discount of ₹ 783,149,122 which comprises of period wise and product -wise schemes floated by the assessee to push sales for already launched models and slow moving items. The learned assessing officer held that the discount floated by the assessee is in fact in the nature of commission on which tax is required to be deducted under section 194H of the act. Page | 3 ITA No. 2427/Mum/2022; Asus India Private Ltd; 2018-19 b. It has granted volume discount on achievement of target cells of ₹ 235,305,046/– being the additional price support payment given to the distributor once the quarterly targets allotted to the distributors are fulfilled. The assessing officer held that this is nothing but a commission on which tax under section 194H of the act is required to be deducted. c. It has granted reimbursement of October and insurance on actual bases amounting to ₹ 76,735,520/–, includes reimbursement of octroi paid by the distributor on actual bases and further in case any insurance claim is made against any assessee’s product the same is received by the assessee and reimbursed to the distributor on actual bases. The learned AO held that it is the primary responsibility of the dealer to discharge the burden of octroi and insurance. However the assessee has incentivized the dealers by raising the credit notes. Therefore such credit not submitted but in the in form of commission on which tax under section 194 H of the act is required to be made. d. Refurbished and rebate on defective products was given of ₹ 10,165,008/– in case of goods sold to the distributors are defective and brought to the notice of the assessee, the assessee gives an additional 30% discount to the distributors, the learned assessing officer held that this is in fact the reimbursement of the repair cost which is essentially labour charge payment Page | 4 ITA No. 2427/Mum/2022; Asus India Private Ltd; 2018-19 on which the assessee was lied liable to make tax deduction at source under section 194C of the act. e. Provision for sales rebate of ₹ 111,832,390/– was made which is set-aside from the sales to be granted to the dealers. The learned AO held it to be a commission on which tax is required to be deducted under section 194H of the act. 05. Assessee denied that any of such payment can be considered to be are commission on which tax is required to be deducted under section 194H of the act or under section 194C of the act so far as the issue of repairs are concerned. The assessee further relied upon the decision of the honourable Bombay High Court in case of CIT versus Intervet India private limited [49 taxmann.com 14] wherein the sales promotion scheme for distributors and dealers and stockist through sales credit notes are claimed as discount was not held to be commission on which tax is required to be deducted under section 194H of the act. 06. However the learned assessing officer rejected the contention of the assessee and held that assessee has incurred these expenses in the garb of sales rebate which are nothing but commission or contractual payment where the assessee should have deducted tax at source under section 194C/194J and section 194H of the act. Accordingly he held that a sum of ₹ 370,175,198 being 30% of ₹ 1,233,917,327 was disallowed under section 40 (a) (ia) of the income tax act. Page | 5 ITA No. 2427/Mum/2022; Asus India Private Ltd; 2018-19 07. The assessee has also entered into international transaction of provision of marketing support service fees amounting to ₹ 62,584,571/– as performed number 3CEB which was benchmarked by the assessee by adopting the transactional net margin method combining all other transaction of import of finished goods, purchase of marketing samples, purchase allowance and deemed international transactions. The fact shows that the assessee has provided marketing support services to its associated enterprise for which assessee gets a fee from its AE with of 14% mark up on the cost. The AO/TPO found that the mark-up on the cost of provision for marketing services are not according to the Indian market and therefore the benchmarking analysis of the assessee was rejected. The contention of the assessee was that the trading and distribution function and marketing support services are interrelated and therefore they are rightly aggregated with other functions. This argument was rejected for the reason that that these functions can be interrelated only when the assessee uses the services itself in its own distribution activity. The functions of the marketing supports are entirely different from a trading function. The distribution function is a general trading activity while marketing support services require professional skill. Further in the transfer pricing study report of the assessee distribution activity of the assessee is earning a margin of 1.09% while on the provision of marketing support services assessee is earning 14% on cost plus margin. The comparable selected by the Page | 6 ITA No. 2427/Mum/2022; Asus India Private Ltd; 2018-19 assessee are entirely involved in trading and distribution activity which cannot be compared with an entity providing marketing support services. Therefore the learned TPO adopted the different benchmarking functions and selected different comparables. The learned transfer pricing officer as per the last transfer pricing order selected three comparable, removed one out of three stating that it has incurred loss on consecutive three years, retained only to comparable is whose average margin was operating profit/total cost was 34.39% whereas the margin of the assessee is just 14% and therefore on the total market support services fee of ₹ 62,584,571/– total adjustment of the arm’s-length price of ₹ 11,193,854/– was made as per order under section 92CA (3) of the act dated 5/7/2021. 08. Draft assessment order was passed on 29/9/2021 wherein the disallowance under section 40 (a) (ia) of ₹ 47,01,75,198 and transfer pricing adjustment of ₹ 11,193,854 was made determining the total income of the assessee at ₹ 495,275,430 as per the normal computation of total income. The computation of book profit remains at returned income. 09. Assessee preferred an objection before the learned dispute resolution panel wherein the directions were passed on 15/6/2022. The learned DRP noted that the identical issue arose in the case of the assessee for assessment year 2015 – 16 before dispute resolution panel and for assessment year 2016 – 17 and 2017 – 18 before the learned CIT – A. The learned DRP relied upon the finding Page | 7 ITA No. 2427/Mum/2022; Asus India Private Ltd; 2018-19 of the DRP for assessment year 2015 – 16 and rejected the argument of the assessee. However the assessee before the DRP categorically stated that the coordinate bench in assessee’s own case for assessment year 2016 – 17 and 2017 – 18 has rendered in favour of the assessee. However the learned dispute resolution panel held that the learned AO has been directed to file an appeal against the said order under section 260A of the IT act before the honourable Bombay High Court. Accordingly the learned DRP held that the assessee is required to deduct tax at source on sales rebate and refurbish rebate on defective products. The assessee also challenged that the distributors were in receipt of such sales rebate and discount have already offered such income and pay taxes at applicable rates thereon filing the return of income and therefore the disallowance should not be made in the hands of the assessee. The learned dispute resolution panel once again relying on the direction for assessment year 2015 – 16 wherein it has been held that that apart from making a statement that no details and evidences have been filed by the assessee to show that the distributors have filed the return of income including the above income. However the learned dispute resolution panel set-aside the issue to the file of the learned assessing officer directing him to examine this aspect from the details available while passing the order. Therefore, therefore the learned dispute resolution panel confirmed the finding of the learned assessing officer that on sales rebate the assessee is required to deduct tax at source Page | 8 ITA No. 2427/Mum/2022; Asus India Private Ltd; 2018-19 under section 194H or under section 194C of the act. With respect to the transfer pricing adjustment, assessee furnished additional evidences before the DRP. The remand report and rejoinders were called for. For this issue also the DRP followed its own direction for assessment year 2015 – 16. The assessee relied upon the decision of the coordinate bench in assessee’s own case for assessment year 2015 – 16 however the learned dispute resolution panel is stated that revenue is in the process of filing of the appeal before the honourable High Court and therefore the objection of the assessee on the transfer pricing issue was rejected. The directions were issued on 15/6/2022 which culminated into the final assessment order passed by the learned assessing officer on 26/7/2022 which is appeal against. 010. The learned authorized representative submitted that the ground number 1 of the appeal is general in nature and therefore same is not pressed as the arguments are covered by our ground number 2 and 3 of the appeal. Accordingly we dismiss ground number 1. 011. Ground number 2 of the appeal is with respect to the deduction of tax at source on conditional discount of ₹ 783,149,122, volume discount of ₹ 235,305,046, reimbursement of October and tax insurance expenditure of ₹ 76,735,520, refurbish and rebate on defective products of ₹ 10,165,008/– and provision for sales rebate of ₹ 128,562,631 on which tax should have been deducted under section 194C/194H or section 194J of the act and Page | 9 ITA No. 2427/Mum/2022; Asus India Private Ltd; 2018-19 therefore 30% of the total of the above sum amounting to ₹ 370,175,198/– was disallowed under section 40 (a) (ia) of the act. The learned authorized representative submitted that all the issues are covered in favour of the assessee by the decision of the coordinate bench in assessee’s own case for assessment year 2015-16 and therefore no disallowance can be made. However he submitted that in case of returns and rebates on refurbishment on defective products the ITAT has sent back to the file of the learned assessing officer for this year same is not required to be sent back. On the issue of the transfer pricing it is submitted that the issue is squarely covered in favour of the assessee wherein it has been held that the marketing support service fee be aggregated with the other services and the income of the assessee and therefore should not be benchmarked separately. Accordingly it was submitted that the issue squarely covered in favour of the assessee on the transfer pricing issue also. 012. The learned departmental representative supported the order of the learned dispute resolution panel and the learned assessing officer. However he objected to the fact that the issue with respect to the refurbish and rebate of defective products cannot be decided here and same is required to be sent back to the file of the learned assessing officer as has been made by the coordinate bench in earlier years. Page | 10 ITA No. 2427/Mum/2022; Asus India Private Ltd; 2018-19 013. Issue of TDS on refurbish Rebate / allowances learned authorized representative submitted that the issue may be decided here itself. He further stated that when the issue was set-aside by the coordinate bench before the learned assessing officer for assessment year 2015 – 16 the learned assessing officer has passed the appeal effect order on 27/4/2023 for assessment year 2015 – 16 wherein the identical addition/disallowance has been made therefore the issue is required to be decided here itself. The learned authorised representative gave a brief background of the issue and submitted that the above issue has been decided against the assessee has per the order of the coordinate bench for assessment year 2016 – 17 and 2017 – 18. However subsequently for assessment year 2015 – 16 the coordinate bench set-aside the issue to the file of the learned assessing officer with a direction to factually examine all the contention of the assessee and take a reasoned view uninfluenced by the either views taken in the assessment order or in the order of the learned dispute resolution panel or by the tribunal for assessment year 2016 – 17 and 2017 – 18. However despite the above specific direction, the learned assessing officer has repeated the disallowances. He referred to the several contentions raised before the learned assessing officer which have not been considered. He further submitted various submissions made before the learned assessing officer for assessment year 2015-16 also accordingly he submitted that the issue may be decided here itself. Page | 11 ITA No. 2427/Mum/2022; Asus India Private Ltd; 2018-19 014. We have carefully considered the rival contention and perused the orders of the lower authorities. The ground number 2 of the appeal is with respect to the disallowance of various discounts and sales rebate expenditure on which the assessee should have been deducted tax at source under section 194C or under section 194H or under section 194J of the income tax act as per the learned assessing officer, same has not been deducted and therefore 30% of such expenditure as been disallowed. Before us the learned authorized representative are furnished paper book number 1 containing 218 pages on the disallowance under section 40 (a) (ia) of the act. The learned authorized representative further referred extensively to the various coordinate benches decisions in case of the assessee for assessment year 2015 – 16 and 2016 – 17 and 2017 – 18 passed on the similar issue. On the careful reading of the above decision of the coordinate bench we find that for assessment year 2016 – 17 and 2017 – 18 the coordinate bench passed an order on 5 October 2020. For assessment year 2015-16 the coordinate bench passed the order on 22 February 2022. Therefore, the coordinate bench order for assessment year 2000 1516 was also passed considering the order for assessment year 2016 – 17 and 2017 – 18 which were available at the time of the passing of the order. 015. We find that coordinate bench for assessment year 2015 – 16 in ITA number 7831/M/2019 [2022] 137 taxmann.com 407 (Mumbai - Trib.) has considered the issue that whether the amount of expenditure incurred on the conditional Page | 12 ITA No. 2427/Mum/2022; Asus India Private Ltd; 2018-19 discount scheme, volume discount scheme, octroi and insurance expenses and provisions for sales rebate whether taxes required to be deducted or not. As per paragraph number 3.3 of the order it followed the decision of the coordinate bench in assessee’s own case for assessment year 2016 – 17 and held that these items are exactly identical and the facts prevailing in the year under consideration. Both the parties agreed before us that for this year also similar facts exist. Though, it was stated that the revenue is in process of filing an appeal before the honourable High Court, however no such order was placed before us. In view of this we are duty-bound to follow the decision of the coordinate bench in assessee’s own case in absence of any change in the facts and circumstances of the case. Cordinate bench held as under :- “3.2 We find the disallowance made by the ld. AO u/s. 40(a)(ia) of the Act in respect of Ground No. 2, Ground No. 3, Ground No. 4 and Ground No. 6 as referred supra were subject matter of adjudication by this Tribunal in Asus India (P.) Ltd. v. Asstt. CIT [IT Appeal No. 943 (Mum.) of 2020, dated 5-10-2020] in assessee's own case for A.Y. 2016-17 dated 5-10-2020 wherein the facts relevant to the same and the decision rendered thereon are reproduced below :— "7. In ground no. 2, the assessee has challenged the disallowance made under section 40(a)(ia) of the Act out of the expenditure on account of discount given to the dealers/distributors under the conditional discount scheme. As discussed earlier, during the assessment proceedings, on being called upon by the Assessing Officer to justify the discount/rebate given amounting to Rs. 42,13,01,780. It was submitted by the assessee that period wise and product wise scheme are floated to push sales for already launched models/slow moving items. He submitted, such benefit/rebate is Page | 13 ITA No. 2427/Mum/2022; Asus India Private Ltd; 2018-19 based on dealers/distributors who ultimately sell the products in the market to the end users. Further explaining, it was submitted by the assessee that as per the discount scheme, the dealers/distributors sell the products at a special price which is below the maximum retail price (MRP). Therefore, the assessee gets a lesser margin on such sale. It was submitted, such special sales under project/tender, etc., the price quoted by the dealers/distributors are guided by special price set-ups. Therefore, to compensate the dealers/distributors for low margin, the assessee raises credit notes towards rebate/discount in favour of dealers/distributors. The Assessing Officer observed, the payment made by the assessee is out of contractual obligation or in the nature of commission. Therefore, such rebate/discount given to the dealers/distributors would get covered under section 194C/194H of the Act. The assessee having not deducted tax at the prescribed rate in terms of the aforesaid provisions, the Assessing Officer disallowed 30% out of the expenditure. As discussed earlier, the disallowance made was also upheld by the learned Commissioner (Appeals) accepting the reasoning of the Assessing Officer. 8. The learned Authorised Representative submitted, the assessee imports electronic goods such as note books, tablets, pad-phones, mobile phones and accessories for re-selling in India. He submitted, technology relating to these products gets upgraded/developed very fast and within a short period of launch of a particular product, it becomes obsolete. Therefore, the company conceives various rebate/discount schemes to push sales of such obsolete/slow moving products. Drawing our attention to Note-17 of the Profit & Loss Account, a copy of which is at Page-3 of the paper book, the learned Authorised Representative submitted, major revenue during the year was generated from sale of notebooks, tablets, pad-phones, mobile phones and accessories, which have a fiercely competitive market. Due to quick technological advance, these products become out dated/obsolete within a very short span, therefore, have to be sold at a discounted price. The learned Authorised Representative submitted, the assessee does not have any principal-agent relationship with any of the dealers/distributors and once the assessee sells/delivers the goods to the dealers/distributors, sale is complete. The assessee does not enter into any sales with the end users. Therefore, the sale Page | 14 ITA No. 2427/Mum/2022; Asus India Private Ltd; 2018-19 contract between the assessee and the dealers/distributors ends on delivery of goods to them. That being the case, there is no principal- agent relationship. In this context, he drew our attention to the agreement entered with Flipkart India Private Ltd. (in short "Flipkart"). Drawing our attention to various clauses of such agreement, the learned Authorised Representative submitted, the agreement makes it clear that once the assessee sells goods to Flipkart, sale is complete. Therefore, there is no principal-agent relationship, but it is a principal- to-principal sale. That being the case, the provisions of section 194H of the Act would not be applicable. Drawing our attention to the tax invoice and credit note, the learned Authorised Representative submitted, these are simple sale transactions between two principals without involvement of any agency. Further, drawing our attention to the items sold, he submitted, these are slow moving goods and have to be sold with discount, otherwise, they cannot be sold at all. Thus, he submitted, the provisions of section 194H of the Act is not applicable. As regards applicability of section 194C of the Act, the learned Authorised Representative submitted, the transaction between the assessee being sale transaction of specific goods/items, it cannot be brought within the purview of section 194C of the Act, which is applicable only in respect of carrying out any work. Finally he submitted, though, similar rebate/discount was given in earlier years, no disallowances were made under section 40(a)(ia) of the Act. Thus, he submitted, disallowance made under section 40(a)(ia) of the Act for alleged violation of section 194C / 194H of the Act is legally unsustainable. In support of such contention, the learned Authorised Representative relied upon the following decisions :— (i) Ahmedabad Stamp Vendor Association v. Union of India [2002] 257 ITR 202; (ii) CIT v. Ahmedabad Stamp Vendor Association [2012] 348 ITR 378; (iii) CIT v. United Breweries Ltd. , [2017] 387 ITR 150; and (iv) CIT v. Intervate India Pvt. Ltd., [2014] 364 ITR 238. Page | 15 ITA No. 2427/Mum/2022; Asus India Private Ltd; 2018-19 9. The learned Departmental Representative strongly relying upon the observations of the Assessing Officer and learned Commissioner (Appeals) submitted, the contract between the parties are not conclusive, therefore, the true nature and character of the transaction has to be examined to find out whether it is a transaction of sale between two principals or there is a principal-agent relationship. In this context, he relied upon the decision of the Hon'ble Supreme Court in Durga Prasad More, 83 ITR 540 (SC). To emphasis upon the fact that the contract of sale does not end with the sale made to the dealers/distributors, the learned Departmental Representative drew our attention to certain clauses of the contract between the assessee and Flipkart. The learned Departmental Representative submitted, as per the terms of the contract, the packaging of the goods is being carried out by the assessee. Further, the assessee also undertakes the liability to replace any defective goods. Drawing our attention to the copy of the invoice placed at Page-27 of the paper book, the learned Departmental Representative submitted, assessee's contention that there is a principal-to-principal relationship with Flipkart and the sale contract concludes upon sale being effected to Flipkart is also incorrect as the assessee has raised the invoice in the name of end user i.e., Rashi Enterprises. Thus, he submitted, in the given facts of the case, Flipkart has acted as an agent between the assessee and the end user to whom the product has been ultimately sold. The learned Departmental Representative submitted, as per the terms of the contract with Flipkart, the assessee has to indemnify for any loss or defect in the product sold. That shows that there is no principal-to- principal relationship in respect of the sale made. He submitted, merely relying upon the contract one cannot determine the true nature and character of the transaction, but all other ancillary and incidental facts have to be seen. In support of this contention, the learned D.R. relied upon the decision of the Hon'ble P&H High Court in PMS Diesels & Ors v. CIT [2015] 374 ITR 562 (P&H). 10. In rejoinder, the learned Authorised Representative submitted, the learned Counsel for the Revenue has misconceived the facts as the assessee has not sold any product directly to the end user. As regards the invoice placed at Page-27 of the paper book referred to Page | 16 ITA No. 2427/Mum/2022; Asus India Private Ltd; 2018-19 by the learned Departmental Representative, the learned Authorised Representative submitted, the invoice is raised in the name of another dealer/distributor namely Rashi Enterprises which is in no way connected to the sales effected to the Flipkart. In this context, he drew our attention to the invoice as well as the list of dealers/distributors to whom goods have been sold. 11. We have considered the rival submissions and perused the material on record. Admittedly, the assessee imports certain electronic goods such as notebooks, tablets, pad-phones, mobile phones and accessories and sells them in India through dealers/distributors who, in turn, sell them to end users. It is common knowledge that the products dealt by the assessee have fiercely competitive market and there is constant up- gradation/advancement in the technology concerning these products. As a result of such regular up- gradation /advancement in technology, the products become obsolete/outdated within a very short span of time and it becomes difficult to sell them in the market. Therefore, it is understandable that for pushing sale of such slow moving/outdated products, all the manufacturers dealing in such products provide rebate/discount schemes to sell their products at a rate below the MRP. Likewise, the assessee from time-to-time has formulated rebate/discount schemes for dealers/distributors towards sale of such products. Undisputedly, the rebate/discount given by the assessee to the dealers/distributors have been treated as payment coming within the ambit of section 194C/194H of the Act while making disallowance under section 40(a)(ia) of the Act. 12. Before we deal with the correctness of the aforesaid disallowance, it is necessary to briefly deal with certain crucial facts. It is evident from the material on record that during the year under consideration, the assessee had provided conditional rebate/discount of Rs. 42,13,01,780 to 29 distributors/dealers to whom various products, such as, notebooks, zenphones, tablets, zenpads, eeebooks, accessories, etc., were sold for a total amount of Rs. 1768,78,77,006. It is further relevant to observe, out of the 29 dealers/distributors to whom products were sold, the assessee had entered into a written contract only with Flipkart. On a perusal of the agreement with Flipkart, a copy of which is at Page-5 of the paper Page | 17 ITA No. 2427/Mum/2022; Asus India Private Ltd; 2018-19 book, it is seen that as per the terms of the contract, the assessee is required to sell goods/products as per the purchase order to be placed by Flipkart. As per Para-(iii) of the agreement, the assessee is required to deliver the product to Flipkart in accordance with the specifications and prices as specified in the purchase order. Further, the terms of the agreement makes it clear that the total ownership to the products shall pass on to Flipkart at the time of delivery of such products to Flipkart. Para-(iv) of the agreement provides that Flipkart has to provide the assessee relevant information in order to supply products as sought by Flipkart from time-to-time. It further says that Flipkart shall make payment to the supplier in a timely manner as provided in the agreement. Para-(v) of the agreement sets out the obligation of the assessee towards Flipkart. Para-(vi) of the agreement provides for pricing and discount. Whereas, Para-(vii) provides for invoicing and payment. As per the aforesaid clause, the assessee is required to issue invoice to Flipkart from time-to-time with regard to supply of products. It further stipulates that invoice shall contain various details including the reference to relevant purchase order and item number, price, VAT details, etc. Para-(ix) provides that the assessee shall deliver the products to Flipkart in due time and in accordance with the delivery dates as mentioned in the purchase order. 13. So, from the aforesaid broad terms of the agreement, it is very much clear that it is a principal-to-principal sale contract and the contract of sale concludes once the goods/products are delivered to Flipkart at which point the ownership to the product passes on to Flipkart. Though, learned Departmental Representative drawing our attention to certain clauses of the contract, such as, requirement of the assessee to do the packaging of the goods products as well as the indemnity clause tried to impress upon the fact that it is not a principal-to-principal sale but is essentially a principal-agent relationship, however, we are unable to accept such contention. It is well settled legal principal that to ascertain the true intention of the parties, the contract has to be read as a whole and cannot be referred to in piecemeal manner. Therefore, simply relying upon certain clauses of the contract on a standalone basis, it cannot be said that it is a contract having principal-agent relationship. Insofar Page | 18 ITA No. 2427/Mum/2022; Asus India Private Ltd; 2018-19 as the transaction with other dealers/distributors are concerned, the Revenue has not brought on record any material to negate assessee's contention that it is a concluded sale transaction between two principals and there is no element of agency involved. The sample invoices, credit notes, etc., placed in the paper book clearly demonstrate the aforesaid factual position. 14. Having dealt with the facts involving in the issue, now we will deal with the legal aspect. Undisputedly, the Assessing Officer has disallowed the rebate/discount given under section 40(a)(ia) of the Act on the reasoning that such payments come within the purview of section 194C/194H of the Act. A reading of section 194C of the Act would suggest that in respect of any payment made to a contractor/sub-contractor for carrying out any work, including supply of labour, would be subject to deduction of tax at source at the appropriate rate. In the facts of the present case, the assessee has entered into a sale contract, simpliciter, for sale of its products to dealers/distributors. Certainly, the transaction between the assessee and the dealers/distributors cannot be termed as a contract for work. The assessee simply sells its products to dealers/distributors who, in turn, sell them to the end users. Therefore, there is no element of work as defined under clause (iv) of Explanation to section 194C of the Act. Therefore, under no circumstances, section 194C of the Act would be applicable to the discount/rebate. 15. Insofar as applicability of section 194H is concerned, a reading of the said section would make it clear that while making any payment which is in the nature of commission/brokerage other than insurance commission, would be subject to deduction of tax at the appropriate rate. Explanation to the aforesaid provision defines commission or brokerage to include any payment received or receivable directly or indirectly by a person acting on behalf of another person for services rendered or for any service in the course of buying or selling of goods. Thus, the primary conditions for qualifying as commission or brokerage are, the person receiving such payment must be acting on behalf of the payer and must be rendering some services in the course of buying or selling of goods. Undisputedly, in the facts of the present case, the dealers/distributors are not providing any service to the assessee in the course of buying or selling of goods. The Page | 19 ITA No. 2427/Mum/2022; Asus India Private Ltd; 2018-19 assessee is simply selling its products to dealers/distributors who in turn sell them to end users. There is no contract of sale between the assessee and end users so as to conclude that the dealers/distributors act as intermediary between the assessee and the end users to facilitate sale of products. At least, the Department has not brought on record any material to establish the fact that the dealers/distributors are simply acting as intermediaries to facilitate sale of products to end users so as to infer a principal-agent relationship. In view of the aforesaid factual position, we have no hesitation in holding that the rebate/discount given to the dealers/distributors would not attract the provisions of section 194H of the Act. Our aforesaid view is well supported by the decisions cited by the learned Authorised Representative. In case of Ahmedabad Stamp Association (supra) affirmed by the Hon'ble Supreme Court, the Hon'ble Gujarat High Court after examining the true import of the term 'commission' and 'discount' and their basic difference and further, referring to the provisions of section 194H of the Act, has held that for attracting the aforesaid provision, the element of agency has to be there. The Hon'ble High Court while providing by way of illustration, the nature of transaction between a dealer in car and its manufacturer has observed that a service in the course of buying or selling of goods has to be something more than the act of simply buying or selling of goods. Therefore, the discount/rebate given cannot be termed as commission. The Hon'ble Andhra Pradesh High Court in United Beveries Ltd. (supra) while dealing with identical nature of dispute has held that when the sale transaction between two parties is on principal-to-principal basis, there is no element of service being rendered by one party to another and discount given to retailers is only for promoting sales, therefore, cannot be termed as commission. The Hon'ble Jurisdictional High Court in Intervate India Pvt. Ltd. (supra) has expressed similar view that when the relationship between the seller and buyer is that of a principal-to- principal, the discount given cannot be termed as commission. On the contrary, the decision in case of PMS Diesels & Ors. (supra) cited by the learned Departmental Representative is contextually different, hence, would not be applicable to the facts of the present case. Page | 20 ITA No. 2427/Mum/2022; Asus India Private Ltd; 2018-19 16. It is relevant to observe, in course of hearing the learned Departmental Representative drawing our attention to Page-27 of the paper book had submitted that the assessee has not directly sold its products to Flipkart but has sold to end users as the invoice is raised in the name of end user. However, on a perusal of the facts on record, we find the aforesaid submission of the learned Departmental Representative factually incorrect. A reference to Page-27 of the paper book would reveal that it has nothing to do with any sale effected to Flipkart but is in respect of a sale made to another distributor/dealer, Rashi Peripherals Pvt. Ltd. and such sale is co- related with the credit note issued in the name of the said party. In view of the aforesaid, we hold that the rebate/discount given by the assessee to the dealers will not coming either within the purview of section 194C or section 194H of the Act, therefore, would not require deduction of tax at source. At this point, it is relevant to observe, the Assessing Officer while invoking the provisions of section 40(a)(ia) of the Act has stated that it attracts section 194C / 194H of the Act. The aforesaid statement of the Assessing Officer makes it clear that he himself is not sure whether it is a payment for carrying out any work or is in the nature of commission/brokerage for any service rendered by another party in the course of buying and selling a product. That being the case, no disallowance under section 40(a)(ia) of the Act can be made. Accordingly, we delete the disallowance. 17. In ground no. 3, the assessee has challenged the disallowance under section 40(a)(ia) of the Act amounting to Rs. 3,99,46,787, being 30% of the volume discount given of Rs. 13,31,55,945. 18. In the course of assessment proceedings, the assessee had submitted that the volume discount is given to dealers/distributors once the quarterly targets allotted to distributors are fulfilled. However, the Assessing Officer held that volume discount is nothing but in the nature of commission as it is essentially a reward given by the principal to its agent for achieving the target set for sales. Thus, he held that the payment has to be treated as commission as per section 194H of the Act and proceeded to compute disallowance under section 40(a)(ia) of the Act. Page | 21 ITA No. 2427/Mum/2022; Asus India Private Ltd; 2018-19 19. The leaned Counsel for the assessee submitted, volume discount is nothing but additional price support system provided to the dealers/distributors in respect of sale of certain specific products. The leaned Counsel submitted, in respect of such sale transactions, no third party is involved. Therefore, the provision of section 194H of the Act is not attracted. Further, he reiterated his submissions made in respect of ground no. 2. 20. The learned Departmental Representative relied upon the observations of the Assessing Officer and learned Commissioner (Appeals). 21. Having considered rival submissions and perused the material on record, we are of the view that our reasoning while deleting the disallowance under section 40(a)(ia) of the Act in respect of ground no. 2 would equally apply to this issue as well, since, the Revenue has failed to establish any principle-agent relationship between the assessee and the dealers/distributors to whom volume discount was given. Therefore, following our detailed reasoning given in respect of ground no. 2, we delete the disallowance made by the Assessing Officer. 22. In ground no. 4, the assessee has challenged the disallowance under section 40(a)(ia) of the Act made by the Assessing Officer in respect of reimbursement of octroi and insurance to dealers/distributors. 23. As could be seen from the facts on record, the assessee had reimbursed octroi paid on the products sold by the dealers/distributors as well as insurance claimed against ASUS products to the dealers/distributors on actual basis. The Assessing Officer was of the view that such reimbursement amounting to Rs. 4,13,94,071, is in the nature of commission as the liability to pay octroi and insurance claimed is solely on the dealers/distributors. Therefore, any reimbursement of octroi and insurance is in the nature of commission and will be covered under section 194C/194H of the Act. Accordingly, he disallowed an amount of Rs. 1,24,18,434, out of the expenditure claimed by invoking the provisions of section 40(a)(ia) of the Act. Page | 22 ITA No. 2427/Mum/2022; Asus India Private Ltd; 2018-19 24. The learned Commissioner (Appeals) also sustained the disallowance. 25. The leaned Counsel for the assessee reiterating the submissions made in respect of other disallowances made by the Assessing Officer, as contested in the earlier grounds, submitted that though the payment of octroi and insurance claimed are the liabilities of the dealers/distributors, however, the reimbursement of such payments on actual basis cannot be termed as commission or contract for work as provided under section 194C and 194H of the Act. He submitted, such payments were made purely keeping in view the business expediency. Thus, he submitted, no disallowance should be made. 26. The learned Departmental Representative submitted, the liability to pay octroi and insurance claimed is completely the burden of the dealers/distributors. Therefore, the reimbursement of such expenditure even on actual basis would be in the nature of commission. 27. We have considered rival submissions and perused the material on record. There cannot be any dispute that the payment of octroi and insurance claimed is the liability of the dealers/distributors. Just to incentivize the dealers/distributors, the assessee has reimbursed the payment made towards octroi/insurance claimed to the dealers/distributors on actual basis. However, in the facts of the present case, we are not called upon to decide the allowability of such expenditure at the hands of the assessee as business expenditure. The Assessing Officer himself has not disputed that the expenditure is allowable. The part disallowance made by him is only on account of alleged non- deduction of tax at source while making such payment. According to the Assessing Officer, the reimbursement of octroi and insurance claimed is covered under the provision of section 194C and 194H of the Act. As discussed in detail while dealing with ground no. 2 (supra), we have held that neither there is any contract for work between the assessee and the dealers/distributors as provided under section 194C of the Act, nor there is any principal-agent relationship between the assessee and the dealers/distributors to treat the payment made as commission in terms of section 194H r/w its Explanation. Therefore, we are of the Page | 23 ITA No. 2427/Mum/2022; Asus India Private Ltd; 2018-19 view that since the payment made by the assessee are not covered under section 194C/194H of the Act, no disallowance under section 40(a)(ia) of the Act could have been made. At the cost of repetition, we must observe that considering the limited issue arising in the present appeal as to whether the reimbursement of octroi/insurance claimed is covered under section 194C/194H of the Act, thereby, requiring deduction of tax at source, we refrain from expressing any opinion whether the expenditure is allowable as a business expenditure at the hands of the assessee. This ground is allowed. 34. In ground no. 6, the assessee has challenged the disallowance of Rs. 1,40,91,023, being the provision for sales rebate under section 40(a)(ia) of the Act. 35. Brief facts are, during the assessment proceedings, the Assessing Officer noticed that the assessee has created provision for an amount of Rs. 4,69,70,076, towards sales rebate on the basis of ratio of percentage of sales rebate to sales of past years. Justifying such claim, the assessee has submitted before the Assessing Officer that the quantum of provision is computed after reversing the preceding years provision. The Assessing Officer, however, was not convinced with these submissions. He observed, the provision is nothing but a commission to incentivize the dealers/distributors. He observed, such working of provision does not consider any aspect of sales promotion done by the dealers/distributors during the current year. Thus, treating the provision made as commission under 194H of the Act, the Assessing Officer made the disputed disallowance under section 40(a)(ia) of the Act for the alleged failure on the part of the assessee to deduct tax at source. The learned Commissioner (Appeals) also upheld the disallowance. 36. The leaned Counsel for the assessee submitted, there being no principal agent relationship between the assessee and the dealer/distributor, the provision for sales rebate cannot be treated as commission under section 194H of the Act. 37. The learned Departmental Representative submitted, firstly the expenditure claimed by the assessee is merely a provision. Therefore, it cannot be allowed as expenditure. Further, he Page | 24 ITA No. 2427/Mum/2022; Asus India Private Ltd; 2018-19 submitted, even if it is a provision still since the assessee has claimed it as deduction, TDS provision would be applicable. He submitted, mere mentioning of wrong provision by the Assessing Officer would not invalidate the disallowance made. Further, he submitted, though the Assessing Officer has not dealt with the allowability of the expenditure under section 37 of the Act, however, the Revenue can raise such plea before the Tribunal. In support of such contention, the leaned Counsel for the assessee relied upon the following decision :— Pavankumar M. Sanghvi v. ITO, [2017] 81 taxmann.com 208 (Ahmedabad - Trib.). 38. In rejoinder, the learned Counsel submitted, neither the Assessing Officer nor learned Commissioner (Appeals) had any doubt with regard to the genuineness or allowability of expenditure. A part disallowance under section 40(a)(ia) was made only because the assessee had not deducted tax at source. Therefore, the Revenue cannot raise a completely new plea at this stage regarding the allowability of expenditure. 39. We have considered rival submissions and perused the material on record. No doubt, the Assessing Officer has disallowed a part of the provision made towards sales rebate under section 40(a)(ia) of the Act by treating it as commission under section 194H of the Act. The learned Commissioner (Appeals) has also confirmed the aforesaid decision of the Assessing Officer. Therefore, the precise issue arising before us is the validity of disallowance made under section 40(a)(ia) of the Act by treating the expenditure claimed as payment towards commission. As discussed earlier, while dealing with the issue raised in other grounds which are more or less identical to the issue raised in this ground, we have held that as per the facts on record, a principal-agent relationship between the assessee and the dealers/distributors is not discernible. Therefore, the rebate/discount given cannot be treated as commission under section 194H of the Act. Our aforesaid reasoning rendered in context of ground no. 2, would equally apply to this ground as well. Therefore, the disallowance made under section 40(a)(ia) deserves to be deleted. As regards the contention of the learned Departmental Page | 25 ITA No. 2427/Mum/2022; Asus India Private Ltd; 2018-19 Representative that the provision is not allowable as expenditure, we are afraid, we cannot entertain such claim at this stage. As could be seen from the facts on record, the Assessing Officer has not raised any doubt with regard to the genuineness or allowability of expenditure. He has disallowed part of such expenditure simply for the reason that tax has not been deducted at source in terms of section 194H of the Act. Learned Commissioner (Appeals) has also approved the aforesaid decision of the Assessing Officer. Therefore, the limited issue before us is the validity of disallowance under section 40(a)(ia) of the Act. In view of the aforesaid, we decline to entertain the fresh plea of learned Departmental Representative. The decisions cited by the learned Departmental Representative being factually distinguishable would not apply to the facts of the present case. The ground raised by the assessee is allowed." 3.3 We find that the facts prevailing in A.Y. 2016-17 with regard to the aforesaid four items are exactly identical with the facts prevailing in the year under consideration. Hence, the decision rendered by this Tribunal for A.Y. 2016-17 shall apply mutatis mutandis to this assessment year also except with variance in figures. Accordingly, Ground Nos. 2,3,4 & 6 raised by the assessee are allowed.” 016. Accordingly we direct the learned assessing officer to delete the disallowance on conditional discount, volume discount reimbursement of octroi and insurance expenses and provision for sales rebate. 017. Now we come to the issue of refurbish and rebate on defective product of ₹ 10,165,008/–. We find that this issue has been considered by the coordinate bench for assessment year 2015 – 16 as per paragraph number 4 of that order. Before the coordinate bench the assessee pleaded that though in the earlier year this issue is decided against the assessee but it should not be done for assessment year 2015 – 16 in view of certain additional Page | 26 ITA No. 2427/Mum/2022; Asus India Private Ltd; 2018-19 facts. The coordinate bench despite the issue already decided against the assessee in the earlier year did not follow that decision and held that as the learned authorized representative before us has brought several fresh facts which were not argued before the tribunal for earlier years and therefore the issue was set-aside to the file of the learned assessing officer to decide a fresh. It was stated before us that the learned assessing officer has decided this issue as per order dated 27/4/2023 passed under section 143 (3) read with section 254 read with section 144C (13) of the act 1961 wherein on the refurbish and rebate on defective products the expenditure paid disallowance of ₹ 4,02,78,144/– is repeated. We also appreciate that as the assessment order is passed on 27/4/2023, the assessee might have challenged the same before the learned CIT – A. Further the assessment order is also passed in pursuance of direction of the coordinate bench and therefore such order also binds us. Cordinate bench held as under :- “4. The ground No. 5 raised by the assessee is challenging the disallowance made u/s. 40(a)(ia) of the Act by disallowing the expenditure on account of refurbish and rebate on defective products. 4.1 We have heard rival submissions and perused the materials available on record. We find that assessee had incurred a sum of Rs. 13,56,11,831/- on account of refurbish and rebate on defective products by debiting the same under total sales Page | 27 ITA No. 2427/Mum/2022; Asus India Private Ltd; 2018-19 rebate of Rs. 69,31,68,513/-. We find that the assessee had incurred expenditure of Rs. 13,56,11,831/- towards additional discount given to dealers/distributors to get the defective product repaired at their end. According to the assessee, to avoid getting the products back from the dealers/distributors getting them repaired and again re- selling them, the assessee asks the dealers/distributors to repair the products at their end and makes good the cost of such repair by reimbursing at fixed rate of 30%. The ld. AO was of the view that had the dealers/distributors would not have repaired the products, the assessee would have hired the services of a professional to undertake repairs. Therefore, the assessee would have been liable to deduct tax at source while making payment for such repairs to the professional as it would be covered under section 194C/194J of the Act. The assessee having failed to deduct tax at source, the ld. AO disallowed 30% amounting to Rs. 4,06,83,549, under section 40(a)(ia) of the Act. The disallowance was also sustained by ld. CIT(A). 4.2 At the outset, the ld. AR before us stated that this issue had been decided against the assessee by this Tribunal for A.Y. 2016-17 in Asus India (P.) Ltd.'s case (supra). But he stated that terms agreed upon by the assessee with dealers is that the dealers have to completely undertake the repair works at their end if there occur any repairs and Page | 28 ITA No. 2427/Mum/2022; Asus India Private Ltd; 2018-19 assessee would compensate the dealers by giving 30% flat discount on the price of the product sold to them, to take care of the same on their regular sales. The ld. AR pointed out that this fact was not argued before the Tribunal in A.Y. 2016-17. Accordingly, he pleaded that the decision rendered by this Tribunal in A.Y. 2016-17 becomes factually distinguishable. He also drew our attention to the sample invoice and credit note raised by the assessee which apparently revealed that the assessee merely compensates dealers/distributors @30% of original price of the defective product. The ld. AR also placed reliance on an affidavit of Shri Suhas Joshi, Sr. Manager-Accounts working with the assessee company wherein the said Senior Manager-Accounts had affirmed that the assessee does not ask or insist upon the dealers/distributors to actually repair the damaged products and that the repairs done by the distributors is absolutely an independent task undertaken by them. The ld. AR also pointed out that the outcome of the repair work whether the same was successful or not, was not the look out of the company and accordingly, it could not be stated that the amount paid by the assessee by way of 30% flat discount of the original price was towards the cost of the repairs for the product. The ld. AR also drew our attention to the agreement with Flipkart enclosed in page 53 of the paper book wherein it has been agreed that in case Page | 29 ITA No. 2427/Mum/2022; Asus India Private Ltd; 2018-19 of defective products, the assessee is required to either remove the defect or replace the product and that neither of these two tasks were performed by the assessee. Instead, the assessee and the distributors had agreed for a compensation at 30% of the price of the product. The ld. AR argued that issuing credit note to the dealers/distributors amount to novation of the contract requiring assessee to perform either of the aforesaid tasks. He also drew our attention to section 62 of the Indian Contract Act 1872 wherein it is stated that if the party has agreed to substitute a new contract in place of the original contract or alter the same, the original contract need not be performed. The ld. AR alternatively argued on without prejudice basis that even assuming that the dealers/distributors are getting the defective products repaired at the instance of the assessee, then the 30% discount on the original cost price of the product would be nothing but reimbursement of the repair work done by the dealer on which no TDS could be made applicable as the reimbursement portion does not represent the income of the recipient. 4.3 We find that at the outset, this decision has been decided against the assessee by this Tribunal in A.Y. 2016-17 as referred supra. But the ld. AR before us had brought several fresh facts which was apparently either not argued before this Tribunal or stated before the lower authorities while Page | 30 ITA No. 2427/Mum/2022; Asus India Private Ltd; 2018-19 adjudicating the issue under consideration. Hence, we deem it fit and appropriate in the interest of justice and fair play, to set aside this issue to the file of the ld. AO for denovo adjudication in accordance with law. In the said set aside assessment proceedings, the ld. AO shall factually examine all the contentions of the assessee and take a reasoned view uninfluenced by either his views taken in the assessment order or by the order of the ld. DRP or by this Tribunal in A. Yrs. 2016-17 and 2017-18. This direction is given in view of the fact that this issue being a repetitive issue as pointed out by the ld. AR, would have the recurring effect in all the years for the assessee. So, it would be relevant to bring all the facts pertaining to this issue on record. Accordingly, the ground No. 5 raised by the assessee is allowed for statistical purposes subject to above mentioned directions.” 018. Grievance of the assessee that assessing officer did not consider the contentions raised by the assessee with respect to the tax deduction at source on refurbish and rebate on defective products. a. The assessee merely compensates the dealer/distributor sat the ad hoc rate of 30% of the original price of the product on account of repair of such products, which may be undertaken by the dealer/distributors. Page | 31 ITA No. 2427/Mum/2022; Asus India Private Ltd; 2018-19 b. While giving the aforesaid discount, the assessee does not ascertain as to what extent the products sold to the dealer/distributors are actually damaged c. the assessee does not ask or insist upon the dealer/distributors to actually repair the damage products d. the work of repair, if done, is an independent task undertaken by the dealers and distributors. The repairing contract in such case would be between the dealer/distributor and the person carrying on the repair work on principal to principal basis. e. The cost of repair may be moronic were less than 30% of the price of the product. The outcome of the repair works whether successful or not is not the outlook of the assessee. f. The assessee has obtained declaration from its two key distributors with whom the assessee having substantial transactions. These declarations were filed before the assessing officer in the set-aside proceedings for the assessment year 2000 1516 which confirms that (1) that the discount is in the nature of refurbish and rebate given by the assessee has nothing to do with the repairs of the defective products, (2) there is no obligation on the distributor to utilise the discount in the nature of refurbish and repaired for repairing the defective products. Page | 32 ITA No. 2427/Mum/2022; Asus India Private Ltd; 2018-19 g. Without prejudice of the above and strictly in the alternative, it was submitted that even assuming that the dealership and distributors are getting the defective products repaired at the instance of the assessee, then 30% of discount on the original cost price of the product would be nothing but reimbursement of the repair work done by the dealer. It is submitted that on reimbursement of the expenditure, no tax deduction at source is applicable as the amount does not represent income of the recipient. The assessee relied upon several judicial precedents which stated that the reimbursement of expenditure cannot be subject to taxation. 019. We completely agree with the argument of the assessee that in the assessment order passed by the learned assessing officer in pursuance to the direction of the coordinate bench on 27/4/2023, none of these issues were discussed and deliberated. The learned assessing officer has merely confirmed the disallowance. However we are afraid that without the learned assessing officer giving a categorical finding on each of the arguments of the assessee, the coordinate bench can decide on all those arguments here itself for this assessment year wherein coordinate bench in earlier years thought it fit to set-aside to the file of the learned AO. If the issued have been so simple, the coordinate bench for assessment year 2015 – 16 would also have decided the issue here itself only, but in their own wisdom they did not thought it fit. Therefore in the interest of justice, we set-aside the issue for Page | 33 ITA No. 2427/Mum/2022; Asus India Private Ltd; 2018-19 assessment year 2018 – 19 back to the file of the learned assessing officer. In view of this we set-aside the whole issue back to the file of the learned assessing officer to decide the issue by categorically dealing with all the above contentions raised by the assessee before him for this year at least. Therefore we set-aside the issue of tax deduction at source on refurbish and rebate on defective products of ₹ 10,165,008/– back to the file of the learned assessing officer with the specific direction to deal with each and every contentions of the assessee stated above and decide the issue afresh. We find that the order passed by the learned AO on 27/4/2023 is bald, and without any reasoning. 020. Accordingly ground number 2 of the appeal of the assessee is allowed with above directions. 021. Ground number 3 of the appeal is with respect to the addition of ₹ 11,193,854/– on account of transfer pricing adjustment by determining the arm’s-length price of the market supports fees received from the associated enterprise separately instead of adopting the aggregation approach of the assessee. The coordinate bench in the assessee’s own case for assessment year 2015 – 16 has decided this issue in favour of the assessee. We find that for assessment year 2015 – 16 as per paragraph number 5 of the order these controversies dealt with. As per paragraph number 5.7 of the order the learned authorised representative categorically objected that the marketing support services and distribution functions are to be Page | 34 ITA No. 2427/Mum/2022; Asus India Private Ltd; 2018-19 aggregated as provision of marketing support services and integral part of the main transaction of the distribution business. The coordinate bench in paragraph number 5.8 has categorically held that from the functions performed by the assessee, both distribution and marketing functions are performed by the assessee for promoting sale of products in India and therefore the marketing services becomes an integral part of the distribution business as they are interlinked and interdependent. It held that :- “5.6 As could be seen from the business of the assessee, as stated supra, while undertaking distribution activity, the assessee also provides Marketing Support Services to its AE for which the assessee is compensated at cost plus mark-up. For the purpose of benchmarking, the assessee aggregated Marketing Support Services transactions with the transactions of distribution business. The ld. TPO benchmarked Marketing Support Services transactions separately and made the addition after selecting 3 comparable companies. 5.7 The ld. AR argued that marketing support services and distribution functions are to be aggregated as provision of marketing support services is an integral part of the main transaction of distribution business. He argued that none of these functions could be performed in isolation. He specifically drew our attention to the fact that Page | 35 ITA No. 2427/Mum/2022; Asus India Private Ltd; 2018-19 the assessee also undertakes selling and distribution activity and in the process, purchases finished products and accessories from AE and distributes it for the purpose of marketing. Thus, both the parties incur cost on marketing which shows that transactions are intended towards ultimate goal of marketing and distribution and, hence, to be benchmarked together. Once marketing support services transactions are clubbed with distribution services transactions, there would not be any transfer pricing adjustment as the assessee's margin in respect of distribution services is within the permissible range. 5.8 The ld. DR argued that aggregation of transactions for benchmarking is resorted to when the prices and functions are so inextricably linked that one cannot survive without the other. He argued that this is not the case with the assessee. We are unable to persuade ourselves to accept to this argument of the ld. DR. In fact we find that from the functions performed by the assessee, both distribution and marketing functions are performed by assessee for promoting sale of products in India. Hence, marketing services becomes an integral part of distribution business as they are interlinked and interdependent. None can function in isolation. Hence, we hold that all these transactions are to be aggregated.” Page | 36 ITA No. 2427/Mum/2022; Asus India Private Ltd; 2018-19 022. Accordingly it was held that all these transactions are to be aggregated. In view of this we respectfully following the decision of the coordinate bench for assessment year 2015 – 16 allow ground number 3 of the appeal of assessee. 023. Ground number 4 is against the comparability analysis. As we have already decided ground number 3 in favour of the assessee deleting the adjustment made by the learned assessing officer on the arm’s-length price of the marketing support fees segregating it from the other services, we do not find any reason to adjudicate ground number 4 is the addition of transfer pricing does not survive. Thus ground number 4 of the appeal is dismissed. 024. In the result, appeal of the assessee is partly allowed. Order pronounced in the open court on 16.08. 2023. Sd/- Sd/- (KAVITHA RAJAGOPAL) (PRASHANT MAHARISHI) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) Mumbai, Dated: 16.08. 2023 Sudip Sarkar, Sr.PS Copy of the Order forwarded to : 1. The Appellant 2. The Respondent 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. BY ORDER, True Copy// Sr. Private Secretary/ Asst. Registrar Income Tax Appellate Tribunal, Mumbai