M/s. Philips India Limited (formerly Philips Electronics India Litd.), Kolkata V. ACIT, Circle - 12(2), , Kolkata

ITA 2600/KOL/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 5319 (ITAT-KOLKATA)
• Duration Of Justice: 5 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-05-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2014-2015
• Appeal Filed On: 13-12-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR P K SRIHARI
• Keywords: Depreciation; Transfer pricing; Double taxation relief; International transaction; Rule of consistency; Capital expenditure; TDS; Set aside
• Section: 92C; 143(3); 32; 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C, BENC H KOLKATA BEFORE SHRI S. S. GODARA, JM &DR. A.L.SAINI, AM ./ITA NO.2600/KOL/2018 ( / ASSESSMENT YEAR:2014-15) M/S PHILIPS INDIA LTD. 3 RD FLOOR, TOWER-A, DLF PARK, 08, BLOCK-AF, MAJOR ARTERIAL ROAD, NEW TOWN (RAJARHAT), KOLKATA-700156. VS. ACIT, CIRCLE-12(2), KOLKATA ./ ./ PAN/GIR NO.: AABCP 9487 A (ASSESSEE) .. (REVENUE) ./SA NO.13/KOL/2019 A/O OF ITA NO.2600/KOL/2018 ( / ASSESSMENT YEAR:2014-15) M/S PHILIPS INDIA LTD. 3 RD FLOOR, TOWER-A, DLF PARK, 08, BLOCK-AF, MAJOR ARTERIAL ROAD, NEW TOWN (RAJARHAT), KOLKATA-700156. VS. ACIT, CIRCLE-12(2), KOLKATA ./ ./ PAN/GIR NO.: AABCP 9487 A (ASSESSEE) .. (REVENUE) ASSESSEE BY :SHRI P. J. PARDIWALA, SR. ADVOCATE, MR . KETAN V. VED& MS. PURBA BANERJEE, ADVOCATE RESPONDENT BY : DR. P. K. SRIHARI, CIT DR / DATE OF HEARING : 13/03/2019 /DATE OF PRONOUNCEMENT : 15/05/2019 / O R D E R PER DR. A. L. SAINI: THE ABOVE STAY PETITION, SA NO. 13/KOL/2019, WAS LI STED FOR HEARING TODAY. HOWEVER, WITH THE CONSENT OF BOTH THE PARTIES, THE RELATED APPEAL ITSELF HAS BEEN HEARD TODAY, AND, AS SUCH, THE STAY PETITION IS DIS MISSED AS INFRUCTUOUS. M/S PHILIPS INDIA LTD. (FORMERLY PHILIPS ELECTRONIC S INDIA LTD.) ITA NO.2600/KOL/2018 SA NO. 13/KOL/2019 (ARISING OUT OF I.T.A. NO. 2600/ KOL/2018) ASSESSMENT YEAR:2014-15 P PP PA AA AG GG GE EE E | || | 2 22 2 2. NOW, WE SHALL TAKE ASSESSEE`S APPEAL IN ITA NO.2 600/KOL/2018, FOR A.Y. 2014-15. THE CAPTIONED APPEAL FILED BY THE ASSESSEE PERTAINI NG TO ASSESSMENT YEAR 2014-15, IS DIRECTED AGAINST THE FAIR ASSESSMENT ORDER PASSE D BY THE ASSESSING OFFICER U/S 143(3)READ WITH SECTION 92CA(3) AND 144C(5) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) DATED 30.10.2018, WHICH INCORPORAT ES THE DIRECTION GIVEN BY THE DISPUTE RESOLUTION PANEL-2, KOLKATA,VIDE ORDER DAT ED 11.09.2018. 3. GROUND NO.1 RAISED BY THE ASSESSEE IS GENERAL IN NATURE AND HENCE DOES NOT REQUIRE ADJUDICATION. 4. GROUND NO. 2 RAISED BY THE ASSESSEE RELATES TO D ETERMINATION OF ARMS LENGTH PRICE BY THE ASSESSING OFFICER / TPO / DRP FOR MANA GEMENT SUPPORT SERVICES RECEIVED BY THE ASSESSEE. 5. WHEN THIS APPEAL WAS CALLED OUT FOR HEARING, THE LD. COUNSEL FOR THE ASSESSEE INVITED OUR ATTENTION TO THE ORDER DATED 04.04.2018 , PASSED BY THE TRIBUNAL IN ASSESSEES OWN CASE IN I.T.A. NO. 2489/KOL/2017, FO R ASSESSMENT YEAR 2013-14, WHEREBY THE ISSUE OF MANAGEMENT SUPPORT SERVICES (M SSA) HAVE BEEN DISCUSSED AND ADJUDICATED IN FAVOUR OF THE ASSESSEE. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE PRESENT ISSUE IS SQUARELY COVERE D BY THE ABOVE SAID ORDER OF THE TRIBUNAL, A COPY OF WHICH IS ALSO PLACED BEFORE THE BENCH. 6. THE LD. DR RELIED UPON THE ORDERS OF THE AUTHORI TIES BELOW. 7. WE SEE NO REASON TO TAKE ANY OTHER VIEW OF THE MATTER THEN THE VIEW SO TAKEN BY THE DIVISION BENCH OF THIS TRIBUNAL IN ASSESSEES O WN CASE VIDE ORDER DATED 04.04.2018. IN THIS ORDER, THE TRIBUNAL HAS INTER A LIA OBSERVED AS UNDER: 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD INCLUDING THE PAPER BOOK OF THE ASSESSEE. W E FIND THAT SIMILAR ISSUE HAD CROPPED UP BEFORE THIS TRIBUNAL IN ASSESSEES OWN C ASE FOR THE ASST YEARS 2009-10 , 2010-11 , 2011-12 AND 2012-13 AND SIMILAR ARGUMEN TS WERE ADVANCED BY BOTH M/S PHILIPS INDIA LTD. (FORMERLY PHILIPS ELECTRONIC S INDIA LTD.) ITA NO.2600/KOL/2018 SA NO. 13/KOL/2019 (ARISING OUT OF I.T.A. NO. 2600/ KOL/2018) ASSESSMENT YEAR:2014-15 P PP PA AA AG GG GE EE E | || | 3 33 3 THE SIDES. WE FIND THAT IN THE ORDER PASSED FOR TH E ASST YEAR 2011-12, THIS TRIBUNAL HAD HELD AS UNDER:- 10. WE HAVE HEARD THE RIVAL CONTENTIONS & PERUSED T HE MATERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE THE TPO HAS TREATED THE MSSA RECEIVED BY THE ASSESSEE AS STEWARDSHIP SERVICES AND FOR THE BE NEFIT OF AE. ACCORDINGLY THE TPO VALUED THE ALP OF THESE SERVICE S AT NIL VALUE. THE ORDER OF THE TPO WAS SUBSEQUENTLY CONFIRMED BY THE LD. DRP. HOWEVER WE NOTE THAT THE ASSESSEE HAS PROVIDED THE DETAILS OF THE BENEFIT DERIVED BY IT FROM THE MSSA RECEIVBED FROM AE AT TH E TIME OF ASSESSMENT PROCEEDINGS. HOWEVER THE ORDER OF THE TPO IS SILEN T ON THIS ASPECT. SIMILARLY WE ALSO NOTE THAT THE REVENUE IN THE OWN CASES OF THE ASSESSEE PERTAINING TO OTHER ASSESSMENT YEARS AS DISCUSSED A BOVE HAS ACCEPTED CLAIM OF MSSA OF THE ASSESSEE. BESIDES WE ALSO NOT E THAT THE HONBLE ITAT IN THE OWN CASE OF THE ASSESSEE HAS DECIDED IM PUGNED ISSUE IN FAVOUR OF ASSESSEE IN ITA NO. 1141/KOL/2016 FOR THE AY 2009-10 VIDE ORDER DATED 5.4.2017. THE RELEVANT EXTRACT OF THE ORDER IS REPRODUCED BELOW: 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD INCLUDING THE PAPER BOOK OF THE ASSESSEE. WE FIND THAT THE LD AR REFERRED TO THE AGREEMENT ENTERED INTO BY THE ASSESSEE WHICH IS ENCLOSED IN PAGE 194 OF VOLUME 1 OF PAPER BOOK AS U NDER:- 5.2 CONCERN SERVICES FURNISHED BY PHILIPS IN GENERAL, WHEN A QUALIFIED PHILIPS SUBSIDIARY ENT ERED INTO GSA AGREEMENT WITH PHILIPS, IT WILL BE PROVIDED CONCERN SERVICES. THE MAJOR CONCERN ACTIVITIES PERFORMED BY PHILIPS IS RELATED TO SERVICES IN COMMERCIAL, ACCOUNTING, AUDITING, FINANCIAL, FISCAL , SOCIAL AND LEGAL MATTERS AND IN ALL OTHER FIELDS IN WHICH PHILIPS HA S KNOW-HOW AND EXPERIENCE. PHILIPS SHALL MAKE AVAILABLE TO THE CO MPANY SUCH KNOW-HOW, EXPERTISE AND EXPERIENCE IN THE AFORESAID AREAS AS PHILIPS NOW AND IN THE FUTURE MAY POSSESS AND MAY FREELY AND UNCONDITIONAL LY FURNISH TO THE COMPANY, AND RENDER ASSISTANCE IN THIS CONNECTION, ALL TO THE EXTENT REASONABLY REQUIRED TO IMPROVE THE COMPANYS BUSINE SS OPERATION . THE ASSISTANCE MAY RELATE TO : A. THE DISTRIBUTION AND TRADING OF PRODUCTS, PARTICULA RLY WITH RESPECT TO ADVERTISING, SALES PROMOTION, PUBLIC RELATIONS, MAR KET RESEARCH (IN PARTICULAR, INFORMATION AND TRENDS ON THE WORLD MA RKET), LABELING, PACKAGING, SHIPPING AND FORWARDING, LONG-TERM EXPOR T BUSINESS AND INTERNATIONAL PUBLIC TENDERING AND PURCHASING FROM THIRD PARTIES; B. ADVICE AND SUPPORT WITH RESPECT TO THE SUPPLY OF RE QUIREMENTS OF THE COMPANY FROM OTHER RESOURCES ; C. FINANCIAL, ACCOUNTING AND AUDITING MATTERS RELATING TO SUCH SUBJECTS AS: M/S PHILIPS INDIA LTD. (FORMERLY PHILIPS ELECTRONIC S INDIA LTD.) ITA NO.2600/KOL/2018 SA NO. 13/KOL/2019 (ARISING OUT OF I.T.A. NO. 2600/ KOL/2018) ASSESSMENT YEAR:2014-15 P PP PA AA AG GG GE EE E | || | 4 44 4 I. ACCOUNTING AND AUDITING PRINCIPLES AND METHODS; II. BUDGETING METHODS; III. CAPITAL STRUCTURE, LOANS, EXCHANGE RISKS, FINANCIAL RESEARCH, WARRANTIES AND GUARANTEES, CREDIT MANAGEMENT, THE E STABLISHMENT AND MANAGEMENT OF FINANCE AND LEASE COMPANIES AND A LL FURTHER BANKING ACTIVITIES, INCLUDING LONG-TERM FINANCE PLA NS; IV. DEVELOPMENT OF DATA PROCESSING D. FISCAL AND LEGAL MATTERS , INCLUDING PATENTS, TRADE MARKS AND CUSTOMS DUTIES, PARTICULARLY IN INTERNATIONAL TRANSACTIONS ; E. PERSONAL MATTERS PARTICULARLY WITH RESPECT TO : I. THE SELECTION AND TRAINING OF PERSONNEL ; II. AN ADEQUATE PERSONNEL POLICY; F. INSURANCES; G. ADMITTANCE AT THE COMPANYS SPECIFIC REQUEST AND AT MUTUALLY AGREED TERMS OF A REASONABLE NUMBER OF EMPLOYEES OF THE CO MPANY TO ITS PREMISE TO THE EXTENT TO WHICH PHILIPS HAS THE FREE RIGHT T O DO SO, SO THAT THEY CAN ACQUAINT THEMSELVES WITH COMMERCIAL AND OTHER KNOWL EDGE AS SPECIFIED ABOVE, FAMILIARIZE THEMSELVES WITH THE ORGANIZATION OF THE PHILIPS CONCERN AND WITH WORKING METHODS USED BY IT OR RECEIVE ADVI CE ON SPECIFIC MATTERS IN THE FIELDS DESCRIBED ABOVE; H. SENDING AT THE COMPANYS SPECIFIC REQUEST SUCH EXPE RTS FROM PHILIPS TO THE COMPANYS OFFICES AS MAY BE AGREED BETWEEN THE PART IES FOR SUCH PERIOD OR PERIODS AS MAY BE AGREED BETWEEN THEM TO ADVISE THE COMPANY ON MATTERS AS MENTIONED ABOVE; I. ANY OTHER SIMILAR MATTERS WHICH THE COMPANY MAY REA SONABLY REFER TO PHILIPS OR WHICH PHILIPS ITSELF MAY DEEM APPROPRIAT E. 4.1. THE LD AR ALSO BROUGHT TO OUR NOTICE PAGE 196 OF THE PAPER BOOK CONTAINING THE FUNCTIONS PERFORMED AS BELOW:- FUNCTIONS ARE DEFINED AS THE ACTIVITIES THAT EACH O F THE ENTITIES PARTICIPATING IN A PARTICULAR TRANSACTION PERFORMS AS A NORMAL PART OF THEIR OPERATIONS. FUNCTIONS CAN BE DIVIDED INTO BROAD CATEGORIES: - STRATEGIC MANAGEMENT FUNCTIONS ARE THOSE ACTIVITI ES THAT DETERMINE THE OVERALL STRATEGY AND ORGANIZATION OF THE FIRM ; -CORPORATE SERVICE FUNCTIONS ASSIST IN THE DAY-TO-D AY MANAGEMENT OF THE ORGANIZATION (E.G. FINANCE, HUMAN RESOURCES, INFORM ATION SYSTEMS, ETC.,); -PRODUCT AND PROCESS DEVELOPMENT FUNCTIONS RELATE T O DESIGN, RESEARCH AND DEVELOPMENT ACTIVITIES ; M/S PHILIPS INDIA LTD. (FORMERLY PHILIPS ELECTRONIC S INDIA LTD.) ITA NO.2600/KOL/2018 SA NO. 13/KOL/2019 (ARISING OUT OF I.T.A. NO. 2600/ KOL/2018) ASSESSMENT YEAR:2014-15 P PP PA AA AG GG GE EE E | || | 5 55 5 -PROCURE FUNCTIONS ARE THOSE ACTIVITIES RELATED TO THE SOURCING AND PURCHASE OF RAW MATERIALS AND OTHER INPUTS TO THE PRODUCTION PR OCESS; -MAKE FUNCTIONS ARE ACTIVITIES THAT IMPACT THE MANU FACTURE OF A COMPANYS PRODUCTS INCLUDING PRODUCTION PLANNING AND CONTROL AND PROCESS IMPROVEMENT; -MOVE FUNCTIONS FOCUS ON THE ORGANIZATION OF OUTBOU ND LOGISTICS TO DELIVER PRODUCTS TO THE CUSTOMER ; AND -SELL FUNCTIONS INCLUDE MARKETING, ADVERTISING , SA LES AND DISTRIBUTION ACTIVITIES. 4.2. WE FIND THAT NO ADJUSTMENT ON ACCOUNT OF MANAG EMENT SUPPORT SERVICE CHARGES WERE MADE IN THE PAST BY THE REVENUE FROM A SST YEARS 2005-06 TO 2008-09 THOUGH THE AGREEMENT IS EFFECTIVE FROM 22.1 0.2004 ONWARDS. WE ALSO FIND THAT ARTICLE 6 OF MSSA ENCLOSED IN PAGE 2 94 OF THE PAPER BOOK ON TAXES IS AS UNDER:- THE COSTS, TAXES, STAMP DUTIES AND SIMILAR CHARGES ARISING OUT OF THIS AGREEMENT SHALL BE BORNE BY THE COMPANY (ASSESSEE) IF SUCH AMOUNTS ARE DUE IN THE COUNTRY, AND BY PHILIPS IF SUCH AMOUNTS ARE DUE OUTSIDE THE COUNTRY WITH THE EXCEPTION OF : A. TAXES WHICH CAN BE CLAIMED BACK OR CREDITED AGAI NST TAX BY THE COMPANY IN ACCORDANCE WITH THE LEGAL PROVISIONS WH ICH SHALL BE CHARGEABLE TO THE COMPANY; AND B. TAXES WHICH CAN BE CLAIMED BACK OR CREDITED AGAI NST TAX BY PHILIPS IN ACCORDANCE WITH THE LEGAL PROVISIONS, WH ICH SHALL BE CHARGEABLE TO PHILIPS. THE LD AR ARGUED THAT THE ASSESSEE HAD COMPLIED WI TH THE TDS OBLIGATIONS ON THE SUBJECT MENTIONED PAYMENTS AND THE SAME HAS BEEN AC CEPTED BY THE DEPARTMENT. HE ALSO REFERRED TO THE SUMMARY OF EMAILS FROM PAGE S 333 TO 378 AND FURTHER EMAILS WHICH ARE ENCLOSED IN EXHIBIT II FROM PAGES 800 TO 854 OF PAPER BOOK. HE ALSO REFERRED TO THE EXCLUSION OF 12000000 EUROS TO WARDS THE SHAREHOLDER FUNCTION COSTS IN THE OVERALL COST ALLOCATION TO TH E ASSESSEE COMPANY WHICH IS ENCLOSED IN PAGE 795 OF THE PAPER BOOK. WE FIND T HAT THE ASSESSEE HAD ALSO FURNISHED BEFORE THE LOWER AUTHORITIES , THE DETAIL S OF SPECIFIC BENEFITS DERIVED BY IT ON EACH OF THE EMAILS CORRESPONDED BETWEEN THE ASSE SSEE AND KPENV COMPRISING OF VARIOUS SERVICES RENDERED BY KPENV PURSUANT TO T HE MSSA. IN FACT THE BENEFITS DERIVED FROM EACH OF THE SERVICES IS FURNI SHED IN THE SEPARATE COLUMN IN THE SAID REPLY DATED 11.1.2013 BEFORE THE LD TPO WH ICH IS ALSO ENCLOSED AS EXHIBIT II IN THE PAPER BOOK FILED BY US. THE LD TPO SIMPLY REPLIED IN HIS REMAND REPORT FILED BEFORE THE LD DRP TO THESE EMAILS AND THE REPLY OF THE ASSESSEE BY STATING THAT THE SERVICES RENDERED ARE ONLY IN THE NATURE OF CONTROL, SUPERVISORY AND MONITORING FUNCTIONS. THE ASSESSEE IN TURN FIL ED REJOINDER TO THIS REMAND REPORT BY SPECIFICALLY POINTING OUT THE BENEFITS DE RIVED FROM EACH OF THE SERVICES AND ALSO BY OBJECTING TO THE REMAND REPORT OF THE L D TPO BY STATING THAT THE LD M/S PHILIPS INDIA LTD. (FORMERLY PHILIPS ELECTRONIC S INDIA LTD.) ITA NO.2600/KOL/2018 SA NO. 13/KOL/2019 (ARISING OUT OF I.T.A. NO. 2600/ KOL/2018) ASSESSMENT YEAR:2014-15 P PP PA AA AG GG GE EE E | || | 6 66 6 TPO HAD NOT ASSIGNED ANY REASON FOR CONCLUDING THAT THE SERVICES ARE IN THE NATURE OF CONTROL, SUPERVISORY AND MONITORING FUNCT IONS. WE FIND THAT THE ASSESSEE HAD SPECIFICALLY REPLIED THAT IT WAS BENEF ITTED BY SUBSTANTIAL COST REDUCTION ON AN OVERALL BASIS BY UTILIZING THE SERV ICES RENDERED BY KPENV PURSUANT TO MSSA. THE DETAILS OF THESE BENEFITS DE RIVED ARE ENCLOSED IN PAGES 965 TO 981 OF THE PAPER BOOK. THE LD AR ALSO DREW OUR ATTENTION TO THE ORDER OF THE LD DRP DATED 23.12.2013 PASSED IN THE HANDS OF KPENV FOR THE ASST. YEAR 2009-10 (ENCLOSED IN PAGE 1018 TO 1043 OF PAPER BOO K) , WHEREIN THE LD DRP AGREED THAT KPENV HAD RENDERED SERVICES WHICH ARE I N THE NATURE OF FEE FOR TECHNICAL SERVICES ON GOING THROUGH EACH AND EVERY CLAUSE OF THE MSSA AND MANAGEMENT SUPPORT CHARGES WERE PAID BY PHILIPS IND IA LTD (ASSESSEE HEREIN) TO KPENV FOR RECEIVING SUCH SERVICES. WE FIND THAT IN PARA 38 OF THE SAID ORDER OF LD DRP IN THE HANDS OF KPENV, IT WAS HELD AS BELOW: - 38. IN VIEW OF THE ABOVE, IT IS EVIDENT THAT IN ORD ER TO ENSURE THE SURVIVAL AND SUCCESS OF PIL (I.E. PHILIPS INDIA LTD) , THE A SSESSEE HAS BEEN INVOLVED IN THE SELECTION AND TRAINING OF PILS PERSONNEL AN D IN THE PROCESS, MADE AVAILABLE TECHNICAL KNOWLEDGE, EXPERIENCE, SKILL TO THE PERSONNEL , WHICH WILL ENABLE THE PERSONNEL TO FULFILL SUCH SPECIALIZ ED TASKS ON THEIR OWN. THEREFORE THE ASSESSEES CLAIM OF NOT FULFILLING TH E MAKE AVAILABLE CONDITION IS REJECTED. THE LD DRP IN IN PARA 39 OF THE SAID ORDER (ENCLOSE D IN PAGE 1040 OF PAPER BOOK) HAD FURTHER HELD THAT THE CONSIDERATION OF ALL THES E FACTS LEADS TO THE CONCLUSION THAT THE DELIVERABLES UNDER THE MSSA ARE PREDOMINAN TLY IN THE FORM OF COMMERCIAL KNOWHOW AND NOT COMMERCIAL SERVICES AN D THEREFORE COVERED BY THE DEFINITION OF THE TERM ROYALTY UNDER ARTICLE 12 O F THE DTAA. 4.3.3.4. FROM THE ABOVE IT WOULD BE CLEAR THAT THE RECEIPTS IN RESPECT OF MSSA WOULD BE TAXABLE EITHER AS FTS (TO THE EXTENT THEY ARE SERVICES RENDERED) OR ROYALTY (TO THE EXTENT IT IS PROVIDING COMMERCIAL K NOW-HOW OR COMMERCIAL EXPERIENCE). AS BOTH FTS AND ROYALTY ARE TAXABLE A T THE SAME RATE UNDER THE DTAA, IT DOES NOT MATTER THAT THERE IS NO CLEAR CUT SEPARATION OR QUANTIFICATION IN THE MSSA OF THE SERVICE AND THE KNOW-HOW PORTIONS. THE ENTIRE RECEIPTS WOULD BE CHARGEABLE TO TAX IN INDIA UNDER THE DTAA AS WELL A S THE I.T. ACT. 4.2.1. HENCE BASED ON THE AFORESAID ORDER OF LD DRP IN THE HANDS OF KPENV FOR THE ASST YEAR 2009-10, WE FIND THAT THE LD DRP HAD TREATED THE RECEIPTS OF MANAGEMENT SUPPORT SERVICES CHARGES FROM ASSESSEE H EREIN (I.E. PHILIPS INDIA LTD) IN THE HANDS OF KPENV AS FTS OR ROYALTY AND MA DE IT TAXABLE IN INDIA. SO ONCE THE SAME IS ACCEPTED AS FTS OR ROYALTY IN THE HANDS OF KPENV, THE NATURE OF PAYMENT CANNOT BE DIFFERENT IN THE HANDS OF THE ASSESSEE HEREIN BY SIMPLY PLACING RELIANCE ON THE BENEFIT TEST, EVEN THOUGH T HE BENEFITS DERIVED BY THE ASSESSEE PURSUANT TO MSSA HAS BEEN ELABORATED IN DE TAIL BY THE ASSESSEE BY WAY OF SUBSTANTIAL COST REDUCTION. WE ALSO FIND THAT TH E ASSESSEE HAD PAID SERVICE TAX OF RS 14,87,24,134/- ON PAYMENT OF MANAGEMENT SUPPO RT SERVICE CHARGES OF RS. 125,27,30,863/-. M/S PHILIPS INDIA LTD. (FORMERLY PHILIPS ELECTRONIC S INDIA LTD.) ITA NO.2600/KOL/2018 SA NO. 13/KOL/2019 (ARISING OUT OF I.T.A. NO. 2600/ KOL/2018) ASSESSMENT YEAR:2014-15 P PP PA AA AG GG GE EE E | || | 7 77 7 4.3. WE FIND THAT THE LD DR ARGUED THAT ASSESSEE HA D NOT PROVED THAT SERVICES WERE RECEIVED BY THE ASSESSEE AND HAD DERIVED COMMERCIAL AND ECONOMIC BENEFITS OUT OF THE MSSA. HE ARGUED THAT ONLY GENERAL REPLY WA S GIVEN BY THE ASSESSEE WITH REGARD TO THE BENEFITS DERIVED. HE ARGUED THAT THE SE SERVICES WERE RENDERED BY KPENV TO OTHER GROUP COMPANIES ALSO AND QUANTUM OF BENEFIT VIS A VIS THE SERVICE IS NOT PROVED BY THE ASSESSEE. 4.4. WE FIND THAT THE ASSESSEE HAD ALSO PROVED THE BENEFITS DERIVED BY WAY OF INCREASE IN TURNOVER FROM THE YEARS ENDED 31.3.2005 ONWARDS PURSUANT TO THE MSSA. IT IS REITERATED THAT MSSA WAS ENTERED INTO ON 22.10.2004 AND THE FOLLOWING TABLE WOULD PROVE THE BENEFIT DERIVED BY WAY OF INCREASE IN TURNOVER IN FIGURES AS WELL AS IN PERCENTAGE PRIOR TO RENDERING OF MANAGEMENT SUPPORT SERVICES AND THEREAFTER :- SR. NO. YEAR ENDED SALES (RS. CRORES) % INCREASE (TAKING YEAR 200-01) AS THE BASE YEAR REMARKS 1 MARCH 2001 15313 - NO MANAGEMENT SUPPORT SERVICES RECEIVED DURING THIS PERIOD 2 MARCH 2002 15709 3% 3 MARCH 2003 16379 7% 4 MARCH 2004 16293 6% 5 MARCH 2005 21484 40% MANAGEMENT SUPPORT SERVICES WERE RECEIVED FROM FY 2004- 05 ONWARDS (I.E., FIRST YEAR OF RECEIPT OF MANAGEMENT SUPPORT SERVICES) 6 MARCH 2006 23829 56% SUBSEQUENT YEARS IN WHICH MANAGEMENT SUPPORT SERVICES CONTINUED TO BE RECEIVED BY THE ASSESSEE 7 MARCH 2007 22790 49% 8 MARCH 2008 27621 80% 9 MARCH 2009 28645 87% 10 MARCH 2010 31162 104% 11 MARCH 2011 34867 128% 4.5. IN THE INSTANT CASE, WE ARE CONVINCED THAT THE ASSESSEE HAD INDEED RECEIVED THE SERVICES FROM KPENV WHICH FACT IS ALSO ACKNOWLE DGED BY THE LD DRP IN THE HANDS OF KPENV AS STATED SUPRA. THE BENEFITS DERIV ED BY THE ASSESSEE OUT OF THESE SERVICES BY WAY OF SUBSTANTIAL COST REDUCTION AND INCREASE IN TURNOVER SUBSTANTIALLY CANNOT BE SWEPT UNDER THE CARPET. WE FIND THAT NO ADJUSTMENTS TO ALP WAS MADE IN THE ASST YEARS 2005-06 TO 2008-09 I N RESPECT OF THE VERY SAME MSSA BY THE LD TPO FOR THE ASSESSEE. WE FIND THAT T HE PRINCIPLES OF CONSISTENCY NEED TO BE FOLLOWED AND CANNOT BE GIVEN A GO BY WHE N THERE IS NO CHANGE IN THE M/S PHILIPS INDIA LTD. (FORMERLY PHILIPS ELECTRONIC S INDIA LTD.) ITA NO.2600/KOL/2018 SA NO. 13/KOL/2019 (ARISING OUT OF I.T.A. NO. 2600/ KOL/2018) ASSESSMENT YEAR:2014-15 P PP PA AA AG GG GE EE E | || | 8 88 8 FACTS AND CIRCUMSTANCES OF THE CASE FROM THE EARLIE R YEARS. RELIANCE IN THIS REGARD IS PLACED ON THE DECISION OF THE HONBLE SUPREME CO URT IN THE CASE OF RADHASAOMI SATSANG VS CIT REPORTED IN (1992) 193 IT R 321 (SC) . 4.6. WE FIND THAT THE DECISION RELIED UPON BY THE L D AR ON THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS CUSHMAN AND WAKEFIELD ( INDIA) (P) LTD REPORTED IN (2014) 367 ITR 730 (DEL) IS WELL FOUNDED WHEREIN IT WAS HELD THAT :- '35. THE TRANSFER PRICING OFFICER'S REPORT IS, SUBS EQUENT TO THE FINANCE ACT, 2007, BINDING ON THE ASSESSING OFFICER. THUS, IT BECOMES ALL THE MORE IMPORTANT TO CLARIFY THE EXTENT OF THE TRANSFER PRICING OFFICER' S AUTHORITY IN THIS CASE, WHICH IS TO DETERMINING THE ARM'S LENGTH PRICE FOR INTERNATI ONAL TRANSACTIONS REFERRED TO HIM OR HER BY THE ASSESSING OFFICER, RATHER THAN DE TERMINING WHETHER [SUCH SERVICES EXIST OR BENEFITS HAVE ACCRUED. THAT EXERC ISE - OF FACTUAL VERIFICATION IS RETAINED BY THE ASSESSING OFFICER UNDER SECTION 37 IN THIS CASE.] INDEED, THIS IS NOT TO SAY THAT THE TRANSFER PRICING OFFICER CANNOT -AF TER A CONSIDERATION OF THE FACTS - STATE THAT THE ARM'S LENGTH PRICE IS 'NIL' GIVEN TH AT AN INDEPENDENT ENTITY IN A COMPARABLE TRANSACTION WOULD NOT PAY ANY AMOUNT. HO WEVER, THIS IS DIFFERENT FROM THE TRANSFER PRICING OFFICER STATING THAT THE ASSESSEE DID NOT BENEFIT FROM THESE SERVICES, WHICH AMOUNTS TO DISALLOWING EXPEND ITURE. THAT DECISION IS OUTSIDE THE AUTHORITY OF THE TRANSFER PRICING OFFICER. 36. IN THIS CASE, THE ISSUE IS WHETHER AN INDEPENDE NT ENTITY WOULD HAVE PAID FOR SUCH SERVICES. IMPORTANTLY, IN REACHING THIS CONCLU SION, NEITHER THE REVENUE, NOR THIS COURT, MUST QUESTION THE COMMERCIAL WISDOM OF THE ASSESSEE, OR REPLACE ITS OWN ASSESSMENT OF THE COMMERCIAL VIABILITY OF THE T RANSACTION. THE SERVICES RENDERED BY CWS AND CWHK IN THIS CASE CONCERN LIAIS ING AND CLIENT INTERACTION WITH IBM ON BEHALF OF THE ASSESSEE-ACTIVITIES FOR W HICH, ACCORDING TO THE ASSESSEE'S CLAIM-INTERACTION WITH IBM'S REGIONAL OF FICES IN SINGAPORE AND THE UNITED STATES WAS NECESSARY. THESE SERVICES CANNOT - AS THE INCOME-TAX APPELLATE TRIBUNAL CORRECTLY SURMISED-BE DUPLICATED IN INDIA INSOFAR AS THEY REQUIRE INTERACTION ABROAD. WHETHER IT IS COMMERCIALLY PRUD ENT OR NOT TO EMPLOY OUTSIDERS TO CONDUCT THIS ACTIVITY IS A MATTER THAT LIES WITH IN THE ASSESSEE'S EXCLUSIVE DOMAIN, AND CANNOT BE SECOND- GUESSED BY THE REVENUE.' [BRA CKETS PROVIDED BY US] 4.7. WE ALSO FIND THAT THE DECISION RELIED UPON BY THE LD AR ON THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF DCIT VS BATA INDIA LTD REPORTED IN (2016) 69 TAXMANN.COM 120 (KOLKATA TRIB) DATED 6.4.2016 HAD C ONSIDERED THE DECISIONS OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS EKL APPLIANCES LTD (2012) 345 ITR 241 (DEL) ; CIT VS CUSHMAN & WAKEFIELD (INDIA) (P) LTD (2014) 367 ITR 730 (DEL) AND CO-ORDINATE BENCH OF MUMBAI TRIBUNAL IN T HE CASE OF DRESSER RAND INDIA (P) LTD VSADDL CIT (2011) 47 SOT 423 (MUM) AN D APPLIED THE PRINCIPLES EMANATING OUT OF THOSE JUDGEMENTS AND APPLIED THE S AME TO THE FACTS OF THE CASE IN BATA INDIA LTD. IN THE SAID CASE (I.E BATA INDIA L TD SUPRA) IT WAS OBSERVED AS UNDER:- 27. THE HON'BLE HIGH COURT OF DELHI IN THE CASE OF CIT V. EKL APPLIANCES LTD. [2012] 345 ITR 241/24 TAXMANN.COM 199/209 TAXMAN 200 AS WELL AS CIT V. CUSHMAN & WAKEFIELD (INDIA) (P.) LTD. [2014] 367 ITR 730/46 TAXMANN.COM 317 (DELHI) , RENDERED SIMILAR RULING AS WAS RENDERED IN THE CASE OF DRESSER-RAND INDIA (P.) LTD. (SUPRA) . IN THE CASE M/S PHILIPS INDIA LTD. (FORMERLY PHILIPS ELECTRONIC S INDIA LTD.) ITA NO.2600/KOL/2018 SA NO. 13/KOL/2019 (ARISING OUT OF I.T.A. NO. 2600/ KOL/2018) ASSESSMENT YEAR:2014-15 P PP PA AA AG GG GE EE E | || | 9 99 9 OF CUSHMAN & WAKEFIELD INDIA (P.) LTD. (SUPRA), THE HON'BLE DELHI HIGH COURT OBSERVED THAT WHETHER A THIRD PARTY - IN AN U NCONTROLLED TRANSACTION WITH THE TAXPAYER WOULD HAVE CHARGED AMOUNTS LOWER, EQUAL TO OR GREATER THAN THE AMOUNTS CLAIMED BY THE AES, HAS TO PERFORC E BE TESTED UNDER THE VARIOUS METHODS PRESCRIBED UNDER THE INDIAN TP PROV ISIONS. IN THE CONTEXT OF COST SHARING ARRANGEMENT, THE HON'BLE HIGH COURT OPINED THAT CONCEPT OF BASE EROSION IS NOT A LOGICAL INFERENCE FROM THE FACT THAT THE AES HAVE ONLY ASKED FOR REIMBURSEMENT OF COST. THIS BEING A TRANSACTION BETWEEN RELATED PARTIES, WHETHER THAT COST ITSELF IS INFLAT ED OR NOT ONLY IS A MATTER TO BE TESTED UNDER A COMPREHENSIVE TRANSFER PRICING AN ALYSIS. THE BASIS FOR THE COSTS INCURRED, THE ACTIVITIES FOR WHICH THEY W ERE INCURRED, AND THE BENEFIT ACCRUING TO THE TAXPAYER FROM THOSE ACTIVIT IES MUST ALL BE PROVED TO DETERMINE FIRST, WHETHER, AND HOW MUCH, OF SUCH EXPENDITURE WAS FOR THE PURPOSE OF BENEFIT OF THE TAXPAYER, AND SECONDLY, W HETHER THAT AMOUNT MEETS ALP CRITERION. IN THE PRESENT CASE HOWEVER, T HE ARRANGEMENT BETWEEN THE AE AND THE ASSESSEE IS NOT A COST SHARI NG ARRANGEMENT BUT A PAYMENT FOR SPECIFIC SERVICES RENDERED. TO THIS EXT ENT THE ABOVE OBSERVATIONS OF THE HON'BLE HIGH COURT MAY NOT BE R ELEVANT TO THE PRESENT CASE. 28. THE FOLLOWING ASPECTS WOULD REQUIRE CONSIDERATION IN ORDER TO IDENTIFY INTRAGROUP SERVICES REQUIRING ARM'S LENGTH REMUNERA TION: - WHETHER SERVICES WERE RECEIVED FROM RELATED PARTY . - NATURE OF SERVICES INCLUDING QUANTUM OF SERVICES RECEIVED BY THE RELATED PARTY. - SERVICES WERE PROVIDED IN ORDER TO MEET SPECIFIC NEED OF RECIPIENT OF THE SERVICES. - THE ECONOMIC AND COMMERCIAL BENEFITS DERIVED BY T HE RECIPIENT OF INTRAGROUP SERVICES. - IN COMPARABLE CIRCUMSTANCES AN INDEPENDENT ENTERP RISE WOULD BE WILLING TO PAY THE PRICE FOR SUCH SERVICES? - AN INDEPENDENT THIRD PARTY WOULD BE WILLING AND A BLE TO PROVIDE SUCH SERVICES? WHETHER PAYMENT MADE TO AE MEETS ALP CRITERION WILL BE DETERMINED, KEEPING IN MIND ALL THE ABOVE FACTORS, AS WELL. 29. KEEPING IN MIND THE PRINCIPLES EMANATING FROM THE AFORESAID DECISIONS, WE SHALL NOW PROCEED TO EXAMINE THE MATE RIAL ON RECORD TO SEE THE NATURE OF SERVICES RECEIVED BY THE ASSESSEE AND AS TO WHETHER THE SAME WERE AT ARM'S LENGTH. 47. IN THE LIGHT OF THE DISCUSSION IN PARAGRAPHS 30 TO 46, WE HOLD THAT THE ASSESSEE HAS ESTABLISHED THE NATURE OF SERVICES INC LUDING QUANTUM OF SERVICES RECEIVED BY THE RELATED PARTY, THAT SERVIC ES WERE PROVIDED IN ORDER TO MEET SPECIFIC NEED OF THE ASSESSEE FOR SUCH SERV ICES, THE ECONOMIC AND COMMERCIAL BENEFITS DERIVED BY THE ASSESSEE OF INTR AGROUP SERVICES. M/S PHILIPS INDIA LTD. (FORMERLY PHILIPS ELECTRONIC S INDIA LTD.) ITA NO.2600/KOL/2018 SA NO. 13/KOL/2019 (ARISING OUT OF I.T.A. NO. 2600/ KOL/2018) ASSESSMENT YEAR:2014-15 P PP PA AA AG GG GE EE E | || | 1 11 10 00 0 4.8. WE ALSO FIND THAT IN THE RECENT DECISION OF TH E HONBLE DELHI HIGH COURT IN THE CASE OF KNORR-BREMSE INDIA (P) LTD VS ACIT REPORTED IN (2016) 380 ITR 307 (DEL) WHEREIN THE RELEVANT HEAD NOTES IS REPRODUCED HEREIN BELOW :- SECTION 92C OF THE INCOME-TAX ACT, 1961 - TRANSFER PRICING - COMPUTATION OF ARMS LENGTH PRICE (COMPARABLES AND ADJUSTMENTS/ ADJUSTMENTS - GENERAL) - ASSESSMENT YEAR 2007-08 - WHETHER ANSWER TO ISSUE WHETHER A TRANSACTION IS AT AN ARM'S LENGTH PRICE OR NOT IS N OT DEPENDENT ON WHETHER TRANSACTION RESULTS IN AN INCREASE IN ASSESSEE'S PR OFIT; MERE FAILURE TO ESTABLISH THAT TRANSACTIONS RESULTED IN A PROFIT DO ES NOT INDICATE THAT THEY WERE NOT AT AN ARM'S LENGTH PRICE AND EVEN IF PROFI T IS ESTABLISHED, IT DOES NOT NECESSARILY FOLLOW THAT TRANSACTION WAS AT AN A RM'S LENGTH PRICE - HELD, YES [PARA 21] WE FIND THAT THIS JUDGEMENT HAD APPROVED THE EARLIE R DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CUSHMAN AND WAKEFIE LD (INDIA) (P) LTD SUPRA AND ALSO THE DECISION OF EKL APPLIANCES SUPRA . 4.9. IN VIEW OF THE AFORESAID FINDINGS AND RESPECT FULLY FOLLOWING THE JUDICIAL PRECEDENT RELIED UPON HEREINABOVE, WE HOLD THAT THE DETERMINATION OF ALP FOR MANAGEMENT SUPPORT SERVICES AT RS NIL IS UNWARR ANTED AND ACCORDINGLY THE UPWARD ADJUSTMENT MADE BY THE LD TP O IN THE SUM OF RS. 125,27,30,863/- IS DELETED. ACCORDINGLY, THE GROUN D NOS 2 & 3 RAISED BY THE ASSESSEE ARE ALLOWED. WE FIND THAT THERE IS NO CHANGE IN THE FACTS AND CI RCUMSTANCES DURING THE YEAR UNDER APPEAL WITH REGARD TO MSSA WHEN COMPARED TO T HAT IN THE EARLIER YEARS AND HENCE RESPECTFULLY FOLLOWING THE JUDICIAL PRECE DENTS RELIED UPON HEREINABOVE, WE HOLD THAT THE DETERMINATION OF ALP FOR MANAGEMEN T SUPPORT SERVICES AT RS NIL IS UNWARRANTED AND ACCORDINGLY THE UPWARD ADJUS TMENT MADE BY THE LD TPO IN THE SUM OF RS 300,40,09,360/- IS DELETED. ACCORD INGLY, THE GROUND NOS. 2, 4.1. AND 4.3. RAISED BY THE ASSESSEE ARE ALLOWED. 8. AS THE ISSUE IS SQUARELY COVERED IN FAVOUR OF TH E ASSESSEE BY THE DECISION OF CO- ORDINATE BENCH IN ASSESSEES OWN CASE (SUPRA) IN I. T.A. NO. 2489/KOL/2017 FORA.Y 2013-14, AND THERE IS NO CHANGE IN FACTS AND LAW AND THE REVENUE IS UNABLE TO PRODUCE ANY MATERIAL TO CONTROVERT THE ABOVE SAI D FINDINGS OF THE CO-ORDINATE BENCH. THEREFORE, RESPECTFULLY FOLLOWING THE DECISI ON OF CO-ORDINATE BENCH WE ALLOW GROUND NO. 2 RAISED BY THE ASSESSEE. 9. GROUND NO. 3 RAISED BY THE ASSESSEE RELATES TO D ETERMINATION OF ARMS LENGTH PRICE FOR ADVERTISING , MARKETING AND PROMOTION (AM P) EXPENSES. M/S PHILIPS INDIA LTD. (FORMERLY PHILIPS ELECTRONIC S INDIA LTD.) ITA NO.2600/KOL/2018 SA NO. 13/KOL/2019 (ARISING OUT OF I.T.A. NO. 2600/ KOL/2018) ASSESSMENT YEAR:2014-15 P PP PA AA AG GG GE EE E | || | 1 11 11 11 1 10. WHEN THIS ISSUE WAS CALLED OUT FOR HEARING THE LD. COUNSEL FOR THE ASSESSEE INVITED OUR ATTENTION TO THE ORDER DATED 04.04.2018 , PASSED BY THE TRIBUNAL IN ASSESSEES OWN CASE IN I.T.A. NO. 2489/KOL/2017, FO R ASSESSMENT YEAR 2013-14, WHEREBY THE ISSUE OF ARMS LENGTH PRICE FOR ADVERTI SING , MARKETING AND PROMOTION EXPENSES (AMP) HAVE BEEN DISCUSSED AND ADJUDICATED IN FAVOUR OF THE ASSESSEE. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE PRESENT ISSUE IS SQUARELY COVERED BY THE ABOVE SAID ORDER OF THE TRIBUNAL, A COPY OF WHICH IS ALSO PLACED BEFORE THE BENCH. 11. THE LD. DR RELIED UPON THE ORDERS OF THE AUTHOR ITIES BELOW. 12. WE SEE NO REASON TO TAKE ANY OTHER VIEW OF THE MATTER THEN THE VIEW SO TAKEN BY THE DIVISION BENCH OF THIS TRIBUNAL IN ASSESSEE S OWN CASE VIDE ORDER DATED 04.04.2018. IN THIS ORDER, THE TRIBUNAL HAS INTER A LIA OBSERVED AS UNDER: 11. WE HAVE HEARD THE RIVAL SUBMISSIONS. AT THE OU TSET, WE FIND THAT THE LD TPO, LD AO AND THE LD DRP HAD CATEGORICALLY ACCEPTED THE BASIC FACT THAT THE ASSESSEE IS A MANUFACTURER AND ALSO ENGAGED IN DISTRIBUTION OF PRODUCTS. WHILE THIS IS SO, WE ARE NOT ABLE TO COMPREHEND THE ARGUMENT ADVANCED BY THE LD DR THAT ASSESSEE IS ONLY A DISTRIBUTOR AND THEREBY THE DECISION OF S ONY ERICSSON WOULD APPLY TO THE CASE. WE FIND THAT SINCE THE ASSESSEE IS A MANUFAC TURER CUM DISTRIBUTOR AS ACCEPTED BY THE LOWER AUTHORITIES, THE DECISION REN DERED IN MARUTI SUZUKI SUPRA WOULD BE APPLICABLE TO THE ASSESSEES CASE, SINCE T HE CONTENTION OF THE LD DR THAT ASSESSEE IS ONLY DISTRIBUTOR, IS NOT EMANATING FROM THE RECORDS OF THE LOWER AUTHORITIES. WE FIND THAT THE ISSUE UNDER DISPUTE BEFORE US IS SQUARELY ADDRESSED BY THIS TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASS T YEAR 2011-12 SUPRA WHEREIN IT WAS HELD :- 43. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE MATERIALS AVAILABLE ON RECORD. THE PRELIMINARY ISSUE HERE ARI SES WHETHER THE AMP EXPENSES CONSTITUTE THE INTERNATIONAL TRANSACTIONS SO AS TO ATTRACT THE PROVISIONS OF TRANSFER PRICING OF THE INCOME TAX AC T, 1961. THE CLAIM OF THE LD. AR IS THAT THE AMP TRANSACTION DOES NOT REP RESENT THE INTERNATIONAL TRANSACTION BETWEEN THE AES THEREFOR E NO QUESTION OF DETERMINING THE ALP OF AMP TRANSACTIONS. WE FIND FO RCE IN THE ARGUMENT OF THE LD. AR IN THE GIVEN FACTS AND CIRCUMSTANCES. THEREFORE, IN OUR CONSIDERED VIEW THE AMP CANNOT BE REGARDED AS INTER NATIONAL TRANSACTION. IN HOLDING SO WE FIND THE SUPPORT & GUIDANCE FROM T HE JUDGMENT OF HONBLE DELHI HIGH COURT IN THE CASE OF MARUTI SUZU KI INDIA LIMITED VS. CIT REPORTED IN 381 ITR 117 WHEREIN IT WAS HELD AS UNDER: M/S PHILIPS INDIA LTD. (FORMERLY PHILIPS ELECTRONIC S INDIA LTD.) ITA NO.2600/KOL/2018 SA NO. 13/KOL/2019 (ARISING OUT OF I.T.A. NO. 2600/ KOL/2018) ASSESSMENT YEAR:2014-15 P PP PA AA AG GG GE EE E | || | 1 11 12 22 2 51. THE RESULT OF THE ABOVE DISCUSSION IS THAT IN THE CONSIDERED VIEW OF THE COURT THE REVENUE HAS FAILED TO DEMONSTRATE THE EXISTENCE OF AN INTERNATIONAL TRANSACTION ONLY ON ACCOUNT OF THE QUANTUM OF AMP E XPENDITURE BY MSIL. SECONDLY, THE COURT IS OF THE VIEW THAT THE DECISIO N IN SONY ERICSSON MOBILE COMMUNICATIONS INDIA (P) LTD. CASE (SUPRA) HOLDING THAT THERE IS AN INTERNATIONAL TRANSACTION AS A RESULT OF THE AMP EX PENSES CANNOT BE HELD TO HAVE ANSWERED THE ISSUE AS FAR AS THE PRESENT ASSESSEE M SIL IS CONCERNED SINCE FINDING IN SONY ERICSSON TO THE ABOVE EFFECT IS IN THE CONTEXT OF THOSE ASSESSEES WHOSE CASES HAVE BEEN DISPOSED OF BY THAT JUDGMENT AND WHO DID NOT DISPUTE THE EXISTENCE OF AN INTERNATIONAL TRANSACTION REGARDING AMP EXPENSES. IN VIEW OF WE NOTE THAT THE FACTS OF THE ABOVE CASE S ARE IDENTICAL TO THE PRESENT ISSUE, THUS, THE PRINCIPLE LAID DOWN BY THE HONBLE DELHI HIGH COURT IN THE CASE OF MARUTI SUZUKI INDIA LIMITED (S UPRA) ARE APPLICABLE TO THE INSTANT CASE. RESPECTFULLY FOLLOWING THE SAME W E DISMISS THE GROUND OF APPEAL FILED BY THE REVENUE. RESPECTFULLY FOLLOWING THE SAME, THE UPWARD ADJUSTM ENT MADE BY THE LD TPO AND UPHELD BY THE LD DRP IS HEREBY DIRECTED TO BE DELE TED. ACCORDINGLY, THE GROUNDS 3 , 4.2 & 4.3. RAISED BY THE ASSESSEE ARE ALLOWED. 13. AS THE ISSUE IS SQUARELY COVERED IN FAVOUR OF T HE ASSESSEE BY THE DECISION OF CO-ORDINATE BENCH IN ASSESSEES OWN CASE (SUPRA) IN I.T.A. NO. 2489/KOL/2017 FOR ASSESSMENT YEAR 2013-14, AND THERE IS NO CHANGE IN FACTS AND LAW AND THE REVENUE IS UNABLE TO PRODUCE ANY MATERIAL TO CONTROVERT THE ABOVE SAID FINDINGS OF THE CO- ORDINATE BENCH. WE FIND NO REASON TO INTERFERE IN T HE SAID ORDER OF THE CO-ORDINATE BENCH AND THE SAME IS HEREBY UPHELD. THEREFORE, RES PECTFULLY FOLLOWING THE DECISION OF CO-ORDINATE BENCH WE ALLOW GROUND NO. 3 RAISED BY THE ASSESSEE. 14. GROUND NO. 4 RAISED BY THE ASSESSEE RELATES TO RULE OF CONSISTENCY. THE LD. COUNSEL FOR THE ASSESSEE DOES NOT WANT TO PRESS THE GROUND NO. 4 RAISED BY THE ASSESSEE THEREFORE, IT IS DISMISSED AS NOT PRESSED. 15. GROUND NO. 5 RAISED BY THE ASSESSEE RELATES TO DETERMINATION OF ARMS LENGTH PRICE FOR INFORMATION TECHNOLOGY (IT SERVICES). 16. WHEN THIS ISSUE WAS CALLED OUT FOR HEARING, THE LD. COUNSEL FOR THE ASSESSEE INVITED OUR ATTENTION TO THE ORDER DATED 15.12.2017 , PASSED BY THE TRIBUNAL IN ASSESSEES OWN CASE IN I.T.A. NOS. 863 & 539/KOL/20 16, FOR ASSESSMENT YEAR M/S PHILIPS INDIA LTD. (FORMERLY PHILIPS ELECTRONIC S INDIA LTD.) ITA NO.2600/KOL/2018 SA NO. 13/KOL/2019 (ARISING OUT OF I.T.A. NO. 2600/ KOL/2018) ASSESSMENT YEAR:2014-15 P PP PA AA AG GG GE EE E | || | 1 11 13 33 3 2011-12, WHEREBY THE ISSUE OF DETERMINATION OF ARM S LENGTH PRICE FOR INFORMATION TECHNOLOGY SERVICES (IT SERVICES) HAVE BEEN DISCUS SED AND ADJUDICATED IN FAVOUR OF THE ASSESSEE. THE LD. COUNSEL FOR THE ASSESSEE S UBMITTED THAT THE PRESENT ISSUE IS SQUARELY COVERED BY THE ABOVE SAID ORDER OF THE TRI BUNAL, A COPY OF WHICH IS ALSO PLACED BEFORE THE BENCH. 17. THE LD. DR RELIED UPON THE ORDERS OF THE AUTHOR ITIES BELOW. 18. WE SEE NO REASON TO TAKE ANY OTHER VIEW OF THE MATTER THEN THE VIEW SO TAKEN BY THE DIVISION BENCH OF THIS TRIBUNAL IN ASSESSEE S OWN CASE VIDE ORDER DATED 15.12.2017. IN THIS ORDER, THE TRIBUNAL HAS INTER A LIA OBSERVED AS UNDER: 15. WE HAVE HEARD THE RIVAL CONTENTIONS & PERUSED T HE MATERIALS AVAILABLE ON RECORD. IN THIS REGARD WE FIND THAT THE LD. DRP HAS DELETED THE ADDITION MADE BY THE TPO IN OWN CASES OF THE ASSESSEE PERTAINING TO OTHER ASSESSMENT YEARS AS DISCUSSED ABOVE. THUS, THE ASSESSEE HAS BEEN CLAIMI NG THE IT EXPENSES FOR THE LAST SEVERAL YEARS AND THE SAME WAS NOT DENIED AND THERE FORE IN OUR VIEW PRINCIPLE OF CONSISTENCY SHOULD BE APPLIED IN THE INSTANT CASE. IN THIS CONNECTION WE ARE RELYING ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF RADHASOAMI SATSANG VS. COMMISSIONER OF INCOME TAX (1992) 193 I TR 0321 (SC) WE ARE AWARE OF THE FACT THAT, STRICTLY SPEAKING, RES JUDICATA DOES NOT APPLY TO IT PROCEEDINGS. AGAIN, EACH ASSESSMENT YEAR BEING A UNIT, WHAT IS DECIDED IN ONE YEAR MAY NOT APPLY IN THE FOLLOWING YEAR BUT WHERE A FUNDAMENTAL ASPECT PERMEATING THROUGH T HE DIFFERENT ASSESSMENT YEARS HAS BEEN FOUND AS A FACT ONE WAY O R THE OTHER AND PARTIES HAVE ALLOWED THAT POSITION TO BE SUSTAINED BY NOT CHALLENGING THE ORDER, IT WOULD NOT BE AT ALL APPROPRIATE TO AL LOW THE POSITION TO BE CHANGED IN A SUBSEQUENT YEAR. ONE THESE REASONING, IN THE ABSENCE OF ANY MATERIAL CHANGE JUSTIFYING THE REVENUE TO TAKE A DIFFERENT VIEW OF THE MATTER-AND, IF THERE WAS NO CHANGE, IT WAS IN SUPPORT OF THE ASSES SEE-WE DO NOT THINK THE QUESTION SHOULD HAVE BEEN REOPENED AND CO NTRARY TO WHAT HAD BEEN DECIDED BY THE CIT IN THE EARLIER PROCEEDI NGS, A DIFFERENT AND CONTRADICTORY STAND SHOULD HAVE BEEN TAKEN. WE ARE, THEREFORE, OF THE VIEW THAT THESE APPEALS SHOULD BE ALLOWED AN D THE QUESTION SHOULD BE ANSWERED IN THE AFFIRMATIVE, NAMELY, THAT THE TRIBUNAL WAS JUSTIFIED IN HOLDING THAT THE INCOME DERIVED WAS EN TITLED TO EXEMPTION UNDER SS. 11 AND 12 OF THE IT ACT OF 1961. M/S PHILIPS INDIA LTD. (FORMERLY PHILIPS ELECTRONIC S INDIA LTD.) ITA NO.2600/KOL/2018 SA NO. 13/KOL/2019 (ARISING OUT OF I.T.A. NO. 2600/ KOL/2018) ASSESSMENT YEAR:2014-15 P PP PA AA AG GG GE EE E | || | 1 11 14 44 4 15.1 WE OBSERVE THAT THERE IS NO CHANGE IN THE FACT S & CIRCUMSTANCES OF THE CASE, THEREFORE IN OUR CONSIDERED VIEW THE ORDER OF THE LD. DRP NEEDS TO BE REVERSED. BESIDES THE ABOVE WE ALSO NOTE THAT FOR THE AY 2009 -10 & 2010-11 THE HONBLE ITAT IN THE OWN CASE OF THE ASSESSEE IN ITA NO. 114 1/KOL/2016 & 2408/KOL/2016 SET ASIDE THE MATTER TO THE LD. DRP FOR FRESH ADJUD ICATION AND SUBSEQUENTLY THE LD. DRP WAS PLEASED TO DELETE THE ADDITION AS MADE BY T HE TPO. THE SUBSEQUENT ORDER OF THE LD. DRP ARE PLACED ON PAGES 727 & 766 OF THE PAPER BOOK. SIMILARLY WE ALSO NOTE THAT THERE WAS NO ADDITION MADE BY THE LD. DRP FOR THE AY 2012-13 & 2013-14 ON ACCOUNT OF IT SERVICES EXPENSES INCURR ED BY THE ASSESSEE. THE COPIES OF THE ORDERS ARE PLACED ON PAGES 795 & 879 OF THE PAPER BOOK. IN VIEW OF ABOVE, WE ARE INCLINED TO REVERSE THE ORDER OF AUTH ORITIES BELOW. THUS THE GROUND RAISED BY ASSESSEE ARE ALLOWED. 19. AS THE ISSUE IS SQUARELY COVERED IN FAVOUR OF T HE ASSESSEE BY THE DECISION OF CO-ORDINATE BENCH IN ASSESSEES OWN CASE (SUPRA) IN I.T.A. NO. 863 & 539/ KOL/2016, FORA.Y.2011-12, AND THERE IS NO CHANGE I N FACTS AND LAW AND THE REVENUE IS UNABLE TO PRODUCE ANY MATERIAL TO CONTRO VERT THE ABOVE SAID FINDINGS OF THE CO-ORDINATE BENCH. WE FIND NO REASON TO INTERFE RE IN THE ORDER OF THE DIVISION BENCH AND THE SAME IS HEREBY UPHELD. THEREFORE, RES PECTFULLY FOLLOWING THE DECISION OF CO-ORDINATE BENCH WE ALLOW GROUND NO. 5 RAISED BY THE ASSESSEE. 20. GROUND NO. 6 RAISED BY THE ASSESSEE RELATES TO VARIATION OF 3% FROM THE ARITHMETIC MEAN. 21. THE LD. COUNSEL FOR THE ASSESSEE INFORMS THE BE NCH THAT THE ASSESSEE DOES NOT WISH TO PRESS THIS GROUND THEREFORE WE DISMISS THE GROUND NO. 6 RAISED BY THE ASSESSEE, AS NOT PRESSED. 22. GROUND NO. 7 RAISED BY THE ASSESSEE RELATES TO OBJECTIONSPERTAINING TO ADJUSTMENTS MADE BY THE TPO ON A WITHOUT PREJUDICE BASIS IN RESPECT OF THE OTHER SEGMENTS NAMELY CONSUMER LIFESTYLE DISTRIBUTION, HE ALTHCARE DISTRIBUTION AND HEALTHCARE CONTRACT MANUFACTURING DIVISION. 23. WHEN THIS THIS WAS CALLED OUT FOR HEARING THE L D. COUNSEL FOR THE ASSESSEE INVITED OUR ATTENTION TO THE ORDER DATED 07.02.2018 , PASSED BY THE TRIBUNAL IN M/S PHILIPS INDIA LTD. (FORMERLY PHILIPS ELECTRONIC S INDIA LTD.) ITA NO.2600/KOL/2018 SA NO. 13/KOL/2019 (ARISING OUT OF I.T.A. NO. 2600/ KOL/2018) ASSESSMENT YEAR:2014-15 P PP PA AA AG GG GE EE E | || | 1 11 15 55 5 ASSESSEES OWN CASE IN I.T.A. NO. 612/KOL/2017 FOR ASSESSMENT YEAR 2012-13, WHEREBY THE ISSUE OF OBJECTION PERTAINING TO ADJUST MENTS MADE BY THE TPO ON A WITHOUT PREJUDICE BASIS IN RESPECT OF THE OTHER SEG MENTS NAMELY CONSUMER LIFESTYLE DISTRIBUTION, HEALTHCARE DISTRIBUTION, HE ALTHCARE CONTRACT MANUFACTURING DIVISION ETC, HAVE BEEN DISCUSSED AND ADJUDICATED I N FAVOUR OF THE ASSESSEE. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE PRESENT ISSUE IS SQUARELY COVERED BY THE ABOVE SAID ORDER OF THE TRIBUNAL, A COPY OF WHICH I S ALSO PLACED BEFORE THE BENCH. 24. THE LD. DR RELIED UPON THE ORDERS OF THE AUTHOR ITIES BELOW. 25. WE SEE NO REASON TO TAKE ANY OTHER VIEW OF THE MATTER THEN THE VIEW SO TAKEN BY THE DIVISION BENCH OF THIS TRIBUNAL IN ASSESSEE S OWN CASE VIDE ORDER DATED 07.02.2018. IN THIS ORDER, THE TRIBUNAL HAS INTER A LIA OBSERVED AS UNDER: 13. THE GROUND NO. 13 RAISED BY THE ASSESSEE IS WI THOUT PREJUDICE TO THE GROUNDS RAISED BY IT IN GROUNDS 2 TO 5, WHEREIN THE LD TPO CONCLUDED THAT AN ADJUSTMENT MAY BE REQUIRED TO BE MADE TO THE INTERN ATIONAL TRANSACTIONS OF THE ASSESSEE IN RELATION TO ITS OTHER SEGMENTS, IF IT I S HELD LATER IN JUDICIAL PROCEEDINGS THAT INTRA-GROUP SERVICE CHARGES IS ACTUALLY REQUIR ED TO BE PAID. IN THIS REGARD, THE OBSERVATIONS OF THE LD TPO IN PARA 61.5 PAGE 16 4 OF HIS ORDER WOULD BE RELEVANT AND THE SAME ARE REPRODUCED HEREUNDER FOR THE SAKE OF CONVENIENCE:- 61.5. WITHOUT PREJUDICE TO THE ABOVE DISCUSSION, I T IS PROPOSED THAT THE OPERATING PROFIT OF THE TESTED PARTY I.E ASSESSEE I S TAKEN AS 12.41% AND 14.17% RESPECTIVELY FOR THE DISTRIBUTION SEGMENT AN D CONTRACT MANUFACTURING DIVISION. CONSEQUENTLY, EVEN IF IT I S HELD IN LATER JUDICIAL PROCEEDINGS THAT THE INTRAGROUP SERVICES IS ACTUALL Y REQUIRED TO BE PAID THEN THE OPERATING PROFIT MARGIN OF THE COMPANY IS TO BE TAKEN AS GIVEN IN THE TABLE ABOVE AT 4.66% AND 4.88% FOR DISTRIBUTION SEGMENT AND CONTRACT MANUFACTURING DIVISION RESPECTIVELY. THIS OBSERVATION OF THE LD TPO HAD TRIGGERED THE RA ISING OF GROUND NO. 6 BEFORE US BY THE ASSESSEE. BUT WE FIND THAT THIS PASSIVE OBSERVATION OF THE LD TPO WAS NOT AT ALL CONSIDERED IN THE FOLLOWING ORDERS PASSE D BY THE LOWER AUTHORITIES :- A) ORDER OF THE LD DRP DATED 19.12.2016 U/S 144C(5) OF THE ACT B) ORDER PASSED BY THE LD TPO U/S 92CA(3) R.W.S. 92 CA(5) & 144C(5) OF THE ACT DATED 25.1.2017 C) FINAL ASSESSMENT ORDER PASSED BY THE LD AO U/S 1 43(3) R.W.S. 144C OF THE ACT DATED 27.2.2017. HENCE WE HOLD THAT THE PASSIVE OBSERVATIONS MADE BY THE LD TPO HAD BEEN COMPLETELY IGNORED BY THE LD DRP AND IN THE GIVING EFFECT ORDER TO DRP DIRECTIONS M/S PHILIPS INDIA LTD. (FORMERLY PHILIPS ELECTRONIC S INDIA LTD.) ITA NO.2600/KOL/2018 SA NO. 13/KOL/2019 (ARISING OUT OF I.T.A. NO. 2600/ KOL/2018) ASSESSMENT YEAR:2014-15 P PP PA AA AG GG GE EE E | || | 1 11 16 66 6 AND IN THE FINAL ASSESSMENT ORDER. ACCORDINGLY, TH E SAID OBSERVATIONS WOULD HAVE NO RELEVANCE IN THE PROCEEDINGS FOR THE ASSESSEE AN D THERE IS NO GRIEVANCE THAT COULD BE CAUSED TO THE ASSESSEE IN THAT REGARD. THE RE IS NO IMPACT FOR THE ASSESSEE PURSUANT TO THE AFORESAID PASSIVE OBSERVATIONS OF T HE LD TPO. THE VARIOUS CONTENTIONS RAISED BY THE ASSESSEE ARE LEFT OPEN IN VIEW OF GIVING EFFECT ORDER TO DRP PASSED BY THE LD TPO AND FINAL ASSESSMENT ORDER PASSED BY THE LD AO. HENCE WE ARE OF CONSIDERED OPINION THAT ADJUDICATIO N OF GROUND NO. 6 RAISED BY THE ASSESSEE WOULD BE SUPERFLUOUS. 26. THE SAID ISSUE IS ALSO COVERED BY THE ASSESSEE S OWN CASE IN I.T.A. NO. 2489/KOL/2017, FOR ASSESSMENT YEAR 2013-14, ORDER D ATED 04.04.2018, WHEREIN THE TRIBUNAL HAS INTER ALIA OBSERVED AS UNDER: 14. THE GROUND NO. 7 RAISED BY THE ASSESSEE DOES N OT REQUIRE ANY SPECIFIC ADJUDICATION IN VIEW OF OUR DECISIONS RENDERED FOR THE OTHER GROUNDS ON THE ISSUE OF TRANSFER PRICING. 27. AS THE ISSUE IS SQUARELY COVERED IN FAVOUR OF T HE ASSESSEE BY THE DECISION OF CO-ORDINATE BENCH IN ASSESSEES OWN CASE (SUPRA) IN I.T.A. NO. 612/KOL/2017 FOR AY 2012-13, AND THERE IS NO CHANGE IN FACTS AND LAW AND THE REVENUE IS UNABLE TO PRODUCE ANY MATERIAL TO CONTROVERT THE ABOVE SAID F INDINGS OF THE CO-ORDINATE BENCH. WE FIND NO REASON TO INTERFERE IN THE SAID O RDER OF THE CO-ORDINATE BENCH AND THE SAME IS HEREBY UPHELD. 28. GROUND NO. 8 RAISED BY THE ASSESSEE RELATES TO USE OF NON-CONTEMPORANEOUS DATA BY THE TPO. AT THE OUTSET ITSELF, THE LD. COUNSEL FOR THE ASSES SEE INFORMS THE BENCH THAT THE ASSESSEE DOES NOT WANT TO PRESS THIS GROUND, THEREF ORE WE DISMISS THE GROUND AS NOT PRESSED. 29. GROUND NO. 9 RAISED BY THE ASSESSEE RELATES TO DISALLOWANCE OF RS. 15,52,53,987/- BEING LEASE RENT PAID IN RESPECT OF MOTOR CARS TREATING THE SAME AS CAPITAL EXPENDITURE. 30. WHEN THIS ISSUE WAS CALLED OUT FOR HEARING, THE LD. COUNSEL FOR THE ASSESSEE INVITED OUR ATTENTION TO THE ORDER DATED 04.04.2018 , PASSED BY THE TRIBUNAL IN ASSESSEES OWN CASE IN I.T.A. NO. 2489/KOL/2017, FO R ASSESSMENT YEAR 2013-14, M/S PHILIPS INDIA LTD. (FORMERLY PHILIPS ELECTRONIC S INDIA LTD.) ITA NO.2600/KOL/2018 SA NO. 13/KOL/2019 (ARISING OUT OF I.T.A. NO. 2600/ KOL/2018) ASSESSMENT YEAR:2014-15 P PP PA AA AG GG GE EE E | || | 1 11 17 77 7 WHEREBY THE ISSUE OF LEASE RENTAL PAID IN RESPECT O F MOTOR CARS TREATING THE SAME AS CAPITAL EXPENDITURE HAS BEEN DISCUSSED AND ADJUDICA TED IN FAVOUR OF THE ASSESSEE. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE PRESENT ISSUE IS SQUARELY COVERED BY THE ABOVE SAID ORDER OF THE TRIBUNAL, A COPY OF WHICH IS ALSO PLACED BEFORE THE BENCH. 31. THE LD. DR RELIED UPON THE ORDERS OF THE AUTHOR ITIES BELOW. 32. WE SEE NO REASON TO TAKE ANY OTHER VIEW OF THE MATTER THEN THE VIEW SO TAKEN BY THE DIVISION BENCH OF THIS TRIBUNAL IN ASSESSEE S OWN CASE VIDE ORDER DATED 04.04.2018. IN THIS ORDER, THE TRIBUNAL HAS INTER A LIA OBSERVED AS UNDER: 15. DISALLOWANCE OF LEASE RENTALS RS 6,86,60,107/- GROUND NOS. 8.1 TO 8.3 THE BRIEF FACTS OF THIS ISSUE IS THAT THE ASSESSEE CLAIMED LEASE RENTAL PAID FOR MOTOR CAR TAKEN ON FINANCE LEASE FROM CITI CORP AMOUNTING TO RS.8,38,64,111/-. THE SAME WAS TREATED AS CAPITAL EXPENDITURE BY THE LD A O BASED ON THE RELIANCE PLACED IN ASSESSEES OWN CASE FOR THE ASST YEAR 200 3-04 WHICH GOT CONFIRMED BY THIS TRIBUNAL. THE LD DRP OBSERVED AS UNDER:- THE LEASE RENTALS PAID BY THE ASSESSEE FOR THE YEAR 2003-04 WERE DISALLOWED AND THE ACTION WAS UPHELD BY THE ITAT. SUBSEQUENT MATTERS HAVE BEEN PENDING. THOUGH THIS ADJUSTMENT H AS BEEN ALLOWED IN 2011-12 , THE PANEL UPON CONSIDERATION O F THE FACTS IS NOT INCLINED TO ALLOW RELIEF TO THE ASSESSEE. THE PROPO SED ADJUSTMENT IS UPHELD IN VIEW OF THE AVAILABLE ADVERSE JURISPRUDEN CE ON IDENTICAL FACTS. THE OBJECTION IS THUS DIPOSED OFF. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US ON T HE FOLLOWING GROUNDS :- 8. LEASE RENTAL 8.1. THE LEARNED AO AND DRP ERRED IN LAW AND ON FAC TS IN DISALLOWING RS. 8,38,64,111 BEING THE LEASE RENT PAID IN RESPEC T OF CARS TREATING THE SAME AS CAPITAL EXPENDITURE. 8.2. THE LEARNED AO AND DRP ERRED IN LAW AND ON FAC TS IN DISALLOWING THE LEASE RENT PAID WITHOUT TAKING COGNIZANCE OF TH E DECISION OF THE SUPREME COURT IN THE CASE OF ICDS LTD. VS. CIT (201 3) 350 ITR 527 (SC). 8.3. STRICTLY WITHOUT PREJUDICE TO THE ABOVE, THE L EARNED AO AND DRP ERRED IN LAW AND ON FACTS IN NOT ALLOWING DEPRECIAT ION ON TOTAL PAYMENT TOWARDS LEASE TRANSACTIONS INCLUDING INTEREST. M/S PHILIPS INDIA LTD. (FORMERLY PHILIPS ELECTRONIC S INDIA LTD.) ITA NO.2600/KOL/2018 SA NO. 13/KOL/2019 (ARISING OUT OF I.T.A. NO. 2600/ KOL/2018) ASSESSMENT YEAR:2014-15 P PP PA AA AG GG GE EE E | || | 1 11 18 88 8 15.1. THE LD AR ARGUED THAT THIS ISSUE IS COVERED BY THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF ICDS LTD VS CIT REPORT ED IN (2013) 350 ITR 527 (SC) WHEREIN IT WAS HELD THAT :- THE LESSOR I.E THE ASSESSEE IS THE OWNER OF THE VEH ICLES. AS THE OWNER, IT USED THE ASSETS IN THE COURSE OF ITS BUSINESS, SATISFYING BO TH REQUIREMENTS OF SECTION 32 OF THE ACT AND HENCE, IS ENTITLED TO CLAIM DEPRECIATIO N IN RESPECT OF ADDITIONS MADE TO THE TRUCKS, WHICH WERE LEASED OUT. THE LD AR STATED THAT THE ASSESSEE HEREIN IS A LES SEE AND IS ENTITLED FOR DEDUCTION TOWARDS LEASE RENTALS PAID TOWARDS CARS TAKEN ON FI NANCE LEASE. HE ALSO STATED THAT THE LESSOR HAD CONFIRMED THAT IT HAD CLAIMED D EPRECIATION IN THE RELEVANT ASST YEAR ON THE SAID CARS WHICH WERE LEASED OUT TO THE ASSESSEE. HE FURTHER PLACED RELIANCE ON THE DECISION OF THE HONBLE RAJASTHAN H IGH COURT IN THE CASE OF RAJSHREE ROADWAYS VS UOI REPORTED IN 263 ITR 206 (R AJ) WHEREIN IT WAS HELD THAT THE LESSEE WOULD BE ENTITLED TO THE DEDUCTION OF RENT PAID BY HIM AND THE BENEFIT OF THE DEPRECIATION SHALL BE AVAILABLE TO O WNER OF THE ASSET. FURTHER THE SPECIAL LEAVE PETITION (SLP) FILED BY THE DEPARTMEN T AGAINST THE SAID DECISION BEFORE THE HONBLE SUPREME COURT HAS BEEN DISMISSED . HE FURTHER PLACED RELIANCE ON THE CO-ORDINATE BENCH DECISION OF THIS TRIBUNAL IN THE CASE OF THE ROYAL BANK OF SCOTLAND N.V. VS DDIT IN ITA NO. 1738 /KOL/2009, 1926/KOL/2010 , 519/KOL/2011 AND 1805/KOL/2012) DATED 13.4.2016 WHE REIN ON IDENTICAL MATTER, THE ISSUE WAS DECIDED IN FAVOUR OF THE ASSESSEE. I N RESPONSE TO THIS, THE LD DR FAIRLY CONCEDED THAT THE ISSUE IS COVERED BY THE DE CISION OF THE HONBLE SUPREME COURT IN THE CASE OF ICDS LTD SUPRA. 15.2. WE HAVE HEARD THE RIVAL SUBMISSIONS. WE FIND THAT THE ISSUE UNDER DISPUTE IS COVERED BY THE DECISION OF THE HONBLE SUPREME COUR T IN THE CASE OF ICDS LTD SUPRA IN FAVOUR OF THE ASSESSEE. HENCE RESPECTFULL Y FOLLOWING THE SAME, WE ALLOW THE GROUND NO. 8 RAISED BY THE ASSESSEE. 33. AS THE ISSUE IS SQUARELY COVERED IN FAVOUR OF T HE ASSESSEE BY THE DECISION OF CO-ORDINATE BENCH IN ASSESSEES OWN CASE (SUPRA) IN I.T.A. NO. 2489/KOL/2017, FOR A.Y2013-14, AND THERE IS NO CHANGE IN FACTS AND LAW AND THE REVENUE IS UNABLE TO PRODUCE ANY MATERIAL TO CONTROVERT THE ABOVE SAI D FINDINGS OF THE CO-ORDINATE BENCH. WE FIND NO REASON TO INTERFERE IN THE SAID O RDER OF THE CO-ORDINATE BENCH AND THE SAME IS HEREBY UPHELD. THEREFORE, RESPECTF ULLY FOLLOWING THE DECISION OF CO-ORDINATE BENCH WE ALLOW GROUND NO. 9 RAISED BY T HE ASSESSEE. 34. GROUND NO. 10 RAISED BY THE ASSESSEE RELATES TO DISALLOWANCE OF RS. 3,48,91,184/-, BEING EXCESS DEPRECIATION TO THE TUN E OF 15% CLAIMED BY THE COMPANY ON MOULDS. M/S PHILIPS INDIA LTD. (FORMERLY PHILIPS ELECTRONIC S INDIA LTD.) ITA NO.2600/KOL/2018 SA NO. 13/KOL/2019 (ARISING OUT OF I.T.A. NO. 2600/ KOL/2018) ASSESSMENT YEAR:2014-15 P PP PA AA AG GG GE EE E | || | 1 11 19 99 9 35. WHEN THIS ISSUE WAS CALLED OUT FOR HEARING, THE LD. COUNSEL FOR THE ASSESSEE INVITED OUR ATTENTION TO THE ORDER DATED 04.04.2018 , PASSED BY THE TRIBUNAL IN ASSESSEES OWN CASE IN I.T.A. NO. 2489/KOL/2017, FO R ASSESSMENT YEAR 2013-14, WHEREBY THE ISSUE OF DEPRECIATION ON MOULDS WAS DIS CUSSED AND ADJUDICATED IN FAVOUR OF THE ASSESSEE. THE LD. COUNSEL FOR THE ASS ESSEE SUBMITTED THAT THE PRESENT ISSUE IS SQUARELY COVERED BY THE ABOVE SAID ORDER O F THE TRIBUNAL, A COPY OF WHICH IS ALSO PLACED BEFORE THE BENCH. 36. THE LD. DR RELIED UPON THE ORDERS OF THE AUTHOR ITIES BELOW. 37. WE SEE NO REASON TO TAKE ANY OTHER VIEW OF THE MATTER THEN THE VIEW SO TAKEN BY THE DIVISION BENCH OF THIS TRIBUNAL IN ASSESSEE S OWN CASE VIDE ORDER DATED 04.04.2018. IN THIS ORDER, THE TRIBUNAL HAS INTER A LIA OBSERVED AS UNDER: 16.2. WE HAVE HEARD THE RIVAL SUBMISSIONS. THE LD AR STATED THAT THE MOULDS WERE OWNED BY THE ASSESSEE AND USED FOR THE PURPOSE OF ITS BUSINESS. FURTHER, THE MOULDS WERE EXCLUSIVELY USED IN THE PLASTIC FACTORY BY THE JOB WORKERS / CO-MAKERS TO WHOM MOULDS WERE GIVEN BY THE ASSESSEE TO BE USE D IN THE PLASTIC FACTORY, UNDER ITS CONTROL AND SUPERVISION AND PRAYED THAT D EPRECIATION @ 30% WOULD BE ELIGIBLE ON THE SAID MOULDS. WE FIND THAT THIS ISSU E HAS BEEN CONSIDERED BY THIS TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASST YEAR 2 011-12 IN ITA NOS. 863 & 539/KOL/2016, DATED 15.12.2017 WHEREIN IT WAS HELD AS UNDER:- 27. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSE D THE MATERIAL AVAILABLE ON RECORD. IN THE INSTANT CASE, ISSUE REL ATES TO DEPRECIATION CLAIMED BY THE ASSESSEE @ 30% ON MOULDS ON THE GRO UND THAT THESE ARE USED IN PLASTIC FACTORIES. HOWEVER, THE AMOUNT OF D EPRECIATION CLAIMED BY THE ASSESSEE ON MOULDS WAS DISALLOWED BY THE ASSES SEE ON THE GROUND THAT HIGHER RATE OF DEPRECIATION ON MOULDS IS AVAILABLE ONLY IF THESE ARE USED IN THE PLASTIC FACTORY. THE VIEW TAKEN BY THE AO WAS S UBSEQUENTLY CONFIRMED BY THE LD. DRP. NOW THE ISSUE BEFORE US AROSE WHETH ER ASSESSEE IS ELIGIBLE FOR DEPRECIATION ON MOULDS AT HIGHER RATE IN THE GI VEN FACTS AND CIRCUMSTANCES. IT IS UNDISPUTED FACT THAT ASSESSEE HAS BEEN CLAIMING DEPRECIATION ON MOULDS @ 30% IN ALL THE EARLIER YEA RS WHICH WAS GRANTED BY THE REVENUE AND NO DISPUTE WITH REGARD TO RATE O F DEPRECIATION AROSE IN THE EARLIER YEARS DESPITE THE FACT THAT THE ASSESSM ENTS FOR EARLIER YEARS WERE FRAMED U/S 143(3) OF THE ACT. IN THIS REGARD, WE OBSERVE THAT THE ASSESSEE WAS ALLOWED DEPRECIATION AT HIGHER RATE IN ALL THE EARLIER YEARS AND NO DISALLOWANCE WAS MADE ON ACCOUNT OF THIS. HO WEVER, WE NOTE THAT SIMILAR DISALLOWANCE WAS ALSO MADE BY THE LD. DRP FOR THE A.Y. 2012-13 & 2013-14. THE LD. AR BEFORE US HAS ALSO NOT BROUGH T ANYTHING ON RECORD EVIDENCING THAT THE ASSESSEE HAD PLASTIC FACTORY. T HE LD. AR HAS JUST M/S PHILIPS INDIA LTD. (FORMERLY PHILIPS ELECTRONIC S INDIA LTD.) ITA NO.2600/KOL/2018 SA NO. 13/KOL/2019 (ARISING OUT OF I.T.A. NO. 2600/ KOL/2018) ASSESSMENT YEAR:2014-15 P PP PA AA AG GG GE EE E | || | 2 22 20 00 0 VERBALLY SUBMITTED THAT IN MOST OF THE PRODUCTS WHI CH APPEARS TO BE TRUE. BUT AS SUCH NO DOCUMENTARY EVIDENCE WAS FILED IN SU PPORT OF THE ASSESSEES CLAIM. HOWEVER IN THE INTEREST OF JUSTIC E AND FAIR PLAY, WE ARE INCLINED TO RESTORE THIS MATTER TO THE FILE OF AO F OR FRESH ADJUDICATION IN ACCORDANCE WITH THE LAW. THE LD. AR IS DIRECTED TO PRODUCE NECESSARY DOCUMENTS IN SUPPORT OF HIS CLAIM. HENCE, THE GROUN D OF APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. RESPECTFULLY FOLLOWING THE AFORESAID JUDICIAL PRECE DENT, WE RESTORE THIS MATTER TO THE FILE OF THE LD AO FOR FRESH ADJUDICATION IN ACC ORDANCE WITH LAW. THE ASSESSEE IS AT LIBERTY TO ADDUCE FRESH EVIDENCES BEFORE THE LD AO IN SUPPORT OF ITS CONTENTIONS. ACCORDINGLY, THE GROUND NOS. 9.1 TO 9 .4 RAISED BY THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. 38. AS THE ISSUE IS SQUARELY COVERED IN FAVOUR OF T HE ASSESSEE BY THE DECISION OF CO-ORDINATE BENCH IN ASSESSEES OWN CASE (SUPRA) IN I.T.A. NO. 2489/KOL/2017, FOR A.Y 2013-14, ( WHERE THE ITAT RESTORED THIS MAT TER BACK TO THE FILE OF AO FOR FRESH ADJUDICATION AND THE ASSESSEE IS AT LIBERTY TO ADDUCE FRESH EVIDENCE S BEFORE THE LD AO IN SUPPORT OF ITS CONTENTIONS ) AND THERE IS NO CHANGE IN FACTS AND LAW AND THE REVENUE IS UNABLE TO PRODUCE ANY MATERIAL TO CONTRO VERT THE ABOVE SAID FINDINGS OF THE CO-ORDINATE BENCH. WE FIND NO REASON TO INTERFE RE IN THE SAID ORDER OF THE CO- ORDINATE BENCH AND THE SAME IS HEREBY UPHELD. THER EFORE, RESPECTFULLY FOLLOWING THE DECISION OF CO-ORDINATE BENCH WE ALLOW GROUND N O. 9 RAISED BY THE ASSESSEE FOR STATISTICAL PURPOSES. 39. GROUND NO. 11 RAISED BY THE ASSESSEE RELATES TO SHORT GRANT OF TAX DEDUCTED AT SOURCE / TAX COLLECTED AT SOURCE. WE DIRECT THE ASSESSING OFFICER TO VERIFY THE TDS C ERTIFICATE AND GRANT CREDIT TO THE ASSESSEE IN ACCORDANCE WITH LAW. 40. GROUND NOS. 12 AND 13 RAISED BY THE ASSESSEE RE LATE TO INTEREST U/S 234A AND B. WE NOTE THAT THESE GROUNDS ARE CONSEQUENTIAL IN NAT URE AND DO NOT REQUIRE ANY ADJUDICATION. 41. GROUND NO. 14 RAISED BY THE ASSESSEE RELATES TO LEVY OF ADDITIONAL TAX AND INTEREST ON DISTRIBUTABLE PROFITS. M/S PHILIPS INDIA LTD. (FORMERLY PHILIPS ELECTRONIC S INDIA LTD.) ITA NO.2600/KOL/2018 SA NO. 13/KOL/2019 (ARISING OUT OF I.T.A. NO. 2600/ KOL/2018) ASSESSMENT YEAR:2014-15 P PP PA AA AG GG GE EE E | || | 2 22 21 11 1 WE DIRECT THE LD. ASSESSING OFFICER TO COMPUTE CORR ECTLY DDT AND GRANT CREDIT FOR THE AMOUNT OF DDT PAID BY THE ASSESSEE AFTER APPROP RIATE VERIFICATION AND EXAMINATION OF THE FACTS. 42. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED AS PER THE DISCUSSION MADE (SUPRA). ORDER PRONOUNCED IN THE COURT ON 15.05.2019 SD/- ( S.S. GODARA ) SD/- (A.L.SAINI) / JUDICIAL MEMBER / ACCOUNTANT MEMBER /KOLKATA; / DATE: 15/05/2019 ( SB, SR.PS ) COPY OF THE ORDER FORWARDED TO: 1. M/S PHILIPS INDIA LTD. (FORMERLY PHILIPS ELECTRO NICS INDIA LTD. ) 2. ACIT, CIRCLE-12(2), KOLKATA 3. C.I.T(A)- 4. C.I.T.- KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. 6. GUARD FILE. TRUE COPY BY ORDER ASSIST ANT REGISTRAR ITAT, KOLKA TA BENCHES