AI Insights
The case involves multiple appeals by both the assessee, Tata Consultancy Services Limited (TCS), and the revenue against the orders of the CIT(A)-58, Mumbai, concerning the assessment years 2016-17, 2017-18, and 2018-19. The appeals cover a range of issues including transfer pricing adjustments, tax credit for dividends received from a subsidiary in Singapore, and deductions for CSR expenditures. The Tribunal's decision addressed these issues by examining the legal provisions, previous judicial decisions, and the specific facts of the case, leading to a mix of allowances and dismissals of the appeals.
Appeal Details
Counselvise Citation
[2025] 140 COUNSELVISE.COM (IT) 824844 (ITAT-MUMBAI)
Assessee PAN
Bench
Appeal Number
CRN Number
Duration Of Justice
9 month(s) 27 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
30-12-2025
Appeal Filed By
Assessee
Order Result
Partly Allowed
Bench Allotted
H
Assessment Year
2016-2017
Appeal Filed On
03-03-2025
Judgement Text
"IN THE INCOME TAX APPELLATE TRIBUNAL “H” BENCH MUMBAI BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND SHRI GIRISH AGRAWAL, ACCOUNTANT MEMBER ITA Nos. 1516, 1517 and 1518/MUM/2025 Assessment Years: 2016-17, 2017-18 and 2018-19 Tata Consultancy Services Limited 9th Floor, Nirmal Building Nariman Point, Mumbai - 400021 (PAN: AAACR4849R) Vs. Deputy Commissioner of Income-tax 3(4), Mumbai (Appellant) (Respondent) ITA Nos. 2243, 2244 and 2245/MUM/2025 Assessment Years: 2018-19, 2017-18 and 2016-17 Deputy Commissioner of Income-tax 3(4), Mumbai Vs. Tata Consultancy Services Limited 9th Floor, Nirmal Building Nariman Point, Mumbai – 400021 (PAN: AAACR4849R) (Appellant) (Respondent) Present for: Assessee : Shri Porus Kaka, Sr. Advocate and Shri Manish Kumar Kanth, Advocate Revenue : Shri Ajay Chandra, CIT DR Date of Hearing : 14.10.2025 Date of Pronouncement : 30.12.2025 O R D E R PER GIRISH AGRAWAL, ACCOUNTANT MEMBER: All these six appeals filed by both, assessee (TCS) and revenue are against the orders of Ld. CIT(A)-58, Mumbai passed against the Printed from counselvise.com 2 ITA No. 1516/Mum/2025 and others Tata Consultancy Services Ltd. AY 2016-17, 2017-18 and 2018-19 assessment orders by ACIT, Mumbai/NFAC, Delhi. Consolidated details of these appeals are tabulated below: Sr. No. ITA No. Order of CIT(A) Assessment order Assess- ment year Appeal by No. Date Passed by Date Passed u/s. 1. 1516/Mum /2025 ITBA/APL/S/250/20 24- 25/1071981574(1) 08.01.20 25 ACIT LTU, Circle 1, Mumbai 19.02.2020 143(3) rws 144C 2016-17 Assessee 2. 1517/Mum /2025 ITBA/APL/S/250/20 24- 25/1071982367(1) 08.01.20 25 NFAC, Delhi 22.06.2021 143(3) rws 144C 2017-18 Assessee 3. 1518/Mum /2025 ITBA/APL/S/250/20 24- 25/1071989638(1) 08.01.20 25 ACIT LTU, Circle 1, Mumbai 03.11.2021 143(3) rws 144C 2018-19 Assessee 4. 2243/Mum /2025 ITBA/APL/S/250/20 24- 25/1071989638(1) 08.01.20 25 ACIT LTU Circle 1, Mumbai 03.11.2021 143(3) r.w.s.144C 2018-19 Department 5. 2244/Mum /2025 ITBA/APL/S/250/20 24- 25/1071982367(1) 08/01/20 25 NFAC, Delhi 22.06.2021 143(3) r.w.s.144C 2017-18 Department 6. 2245/Mum /2025 ITBA/APL/S/250/20 24- 25/1071981574(1) 08/01/20 25 ACIT LTU CIRCLE 1, Mumbai 19.02.2020 143(3)r.w. s144C 2016-17 Department 2. Grounds taken by the assessee are reproduced as under: ITA No. 1516/MUM/2025 1. Tax Credit u/s, 90 in respect of Dividend received from subsidiary in Singapore On facts and circumstances of the case and in law the Ld. AO erred in disallowing the Appellant's claim for tax credit of Rs 9,96,61,577 being the 'Singapore tax paid as defined under Article 25 (3) of the of the Double Tax Avoidance Agreement between India and Singapore. Grounds related to Transfer Pricing: 2 Transfer pricing adjustments/additions/variations, 2.1 The Id. CIT (A) erred in law, on facts and in circumstances of the case in not deleting the transfer pricing adjustments/additions/variations made by the ld. AO as being bad in law, illegal and unsustainable on the basis of the following grounds, taken singly or cumulatively: Printed from counselvise.com 3 ITA No. 1516/Mum/2025 and others Tata Consultancy Services Ltd. AY 2016-17, 2017-18 and 2018-19 2.1.1 a) The Id. AO has failed to comply with the mandatory conditions stipulated in section 92C(3) of the Act and has failed to record his satisfaction before making the reference to the Transfer Pricing Officer (TPO) b) The Id. TPO failed to prove that any of the conditions laid down in section 92C(3) of the Act had been satisfied which made out a case for tax evasion. 2.1.2 The Id. AO/TPO failed to arrive at a finding that the intention of the Appellant was to evade tax and shift profits outside of India which is a condition precedent for making the Transfer Pricing Adjustment. 2.1.3 On facts and circumstances of the case and in law, the id. CTT (A) erred in not holding the proceedings initiated by the Id. TPO as void ab initio since the Id. AO erred in making the references to the Id. TPO without proper application of mind to the facts on records, without recording reasons for any necessity or expediency and without a legal and valid approval of the Id. CTT and hence the same being not in accordance with the provisions of Section 92CA(1) of the Act. 2.1.4 The transfer pricing adjustments are contrary to the principles laid down by the Hon'ble Mumbai Tribunal in the Appellant's own case for the A.Y. 2005-06 (DCIT vs. Tata Consultancy Services Limited) and therefore are required to be quashed and deleted. 2.1.5 The Id. CTT(A) erred in law and on facts in not adjudicating the ground on rejection of the Transfer Pricing Documentation Report maintained by the appellant in good faith and with due diligence. 3. Provision of software & consultancy services 3.1 Re-characterization of international transaction The Id. CIT(A) erred in law and on facts of the case in not accepting the Appellant as the tested party even though the international transaction during the year under reference was provision of services by the Appellant to its AEs. 3.2 Disregarding the legally binding agreements between the Appellant and its AEs The Id. CIT(A) erred in law and on facts, in disregarding the contractual terms of the legally binding agreement's between the Appellant and the AE(s). 3.3 Rejection of the functional and economic analysis carried out by the Appellant The ld. CIT(A) erred in law and on facts, in rejecting the functional and economic analysis carried out by the Appellant and in considering the AEs as the least complex entity. 3.4 Disregarding the benchmarking analysis The Id. CIT (A) erred in law and on facts, in disregarding benchmarking analysis undertaken by the Appellant in Transfer Pricing Documentation report. 15 Selection of the comparable companies Without prejudice to the above, even if the Als are to be treated as the tested party and gross profit sales is selected as the appropriate PLI, the id. CIT(A) end in rejecting functionally similar companies. Printed from counselvise.com 4 ITA No. 1516/Mum/2025 and others Tata Consultancy Services Ltd. AY 2016-17, 2017-18 and 2018-19 4 Provision of guarantees to AFs 4.1 The Id. CIT(A) erred in law and on facts, in holding that the provision of various guarantees by the Appellant to third parties on behalf of its AEs were international transactions. 4.2 The Id. CIT(A) erred in law and on facts, in not appreciating the fact that provision of guarantee is a shareholder activity and no income is expected to be generated from the same. 4,3 Without prejudice to the above, the Id. CIT(A) has erred in law and on facts in disregarding the Appellant's contention that the guarantee fee should be charged based on the effective rate of insurance premium paid by the Appellant as a percentage of group revenue. 4.4 Without prejudice to the above, the Id. CIT(A) erred in law and on facts in not considering guarantee fees to be charged on actual rent, for which the lease guarantee was provided. 4.5 Without prejudice to the above, the Id. CIT(A) erred in law and on facts in not following the earlier years Hon. ITAT order, where guarantee fees of 0.5% was allowed. 5. The Appellant submits that each ground of appeal is without prejudice to one another. 6. The Appellant craves leave to add, alter, amend, substitute and/or modify in any manner whatsoever all or any of the foregoing grounds of appeal at or before the hearing of the appeal. ITA No.1517/MUM/2025 1. Tax Credit u/s, 90 in respect of Dividend received from subsidiary in Singapore On facts and circumstances of the case and in law the Ld. AO erred in disallowing the appellants claim for tax credit of Rs 2,23,31,347 being the Singapore Tas paid as defined under Article 25 (3) of the of the Double Tax Avoidance Agreement between India and Singapore. Grounds related to Transfer Pricing: Transfer pricing adjustments/additions/variations, 2 2.1 The Id. CTT (A) erred in law, on facts and in circumstances of the case in not deleting the transfer pricing adjustments/additions/variations made by the Id. AO, as being bad in law, illegal and unsustainable on the basis of the following grounds, taken singly or cumulatively: 2.1.1 a) The Id. DCIT has failed to comply with the mandatory conditions stipulated in section 92C(3) of the Act and has failed to record his satisfaction before making the reference to the Transfer Pricing Officer (TPO). b) The Id. TPO failed to prove that any of the conditions laid down in section 92C(3) of the Act had been satisfied which made out a case for tax evasion. 2.1.2 The Id. AO/TPO failed to arrive at a finding that the intention of the Appellant was to evade tax and shift profits outside of India which is a condition precedent for making the Transfer Pricing Adjustment Printed from counselvise.com 5 ITA No. 1516/Mum/2025 and others Tata Consultancy Services Ltd. AY 2016-17, 2017-18 and 2018-19 2.1.3 On facts and circumstances of the case and in law, the Id. CIT (A) erred in not holding the proceedings initiated by the Id. TPO as void ab initio since the Id. AO erred in making the reference to the Id. TPO without proper application of mind to the facts on records, without recording reasons for any necessity or expediency and without a legal and valid approval of the Id. CIT and hence the same being not in accordance with the provisions of Section 92CA(1) of the Act. 2.1.4 The transfer pricing adjustments are contrary to the principles laid down by the Hon'ble Mumbai Tribunal in the Appellant's own case for the A.Y. 2005-06 (DCIT vs. Tata Consultancy Services Limited) and therefore are required to be quashed and deleted. 2.1.5 The Id. CIT(A) erred in law and on facts in not adjudicating the ground on rejection of the Transfer Pricing Documentation Report maintained by the appellant in good faith and with due diligence. 3 Provision of software & consultancy services 3.1 Re-characterization of international transaction The id. CIT(A) erred in law and on facts of the case in not accepting the Appellant as the tested party even though the international transaction during the year under reference was provision of services by the Appellant to its AEs. 3.2 Disregarding the legally binding agreements between the Appellant and its AEs The Id. CIT(A) erred in law and on facts, in disregarding the contractual terms of the legally binding agreement's between the Appellant and the AE(s). 3.3 Rejection of the functional and economic analysis carried out by the Appellant The ld. CIT(A) erred in law and on facts, in rejecting the functional and economic analysis carried out by the Appellant and in considering the AEs as the least complex entity. 3.4 Disregarding the benchmarking analysis The Id. CIT (A) erred in law and on facts, in disregarding benchmarking analysis undertaken by the Appellant in Transfer Pricing Documentation report. 3.5 Selection of the comparable companies Without prejudice to the above, even if the AEs are to be treated as the tested party and gross profit / sales is selected as the appropriate PLI, the Id. CTT(A) erred in rejecting functionally similar companies. Provision of guarantees to AFs 4.1 The Id. CTT(A) erred in law and on facts, in holding that the provision of various guarantees by the Appellant to third parties on behalf of its Als were international transactions. 4.2 The Id. CIT(A) erred in law and on facts, in not appreciating the fact that provision of guarantee is a shareholder activity and no income is expected to be generated from the same. Printed from counselvise.com 6 ITA No. 1516/Mum/2025 and others Tata Consultancy Services Ltd. AY 2016-17, 2017-18 and 2018-19 4.3 Without prejudice to the above, the Id. CIT(A) has erred in law and on facts in disregarding the Appellant's contention that the guarantee fee should be charged based on the effective rate of insurance premium paid by the Appellant as a percentage of group revenue. 4.4 Without prejudice to the above, the Id. CIT(A) erred in law and on facts in not considering guarantee fees to be charged on actual rent, for which the lease guarantee was provided. 4.5 Without prejudice to the above, the Id. CIT(A) erred in law and on facts in not following the earlier years Hon. ITAT order, where guarantee fees of 0.5% were allowed. 3. The Appellant submits that each ground of appeal is without prejudice to one another. 4. The Appellant craves leave to add, alter, amend, substitute and/or modify in any manner whatsoever all or any of the foregoing grounds of appeal at or before the hearing of the appeal. ITA No.1518/MUM/2025 1. Tax Credit u/s.. 90 in respect of Dividend received from subsidiary in Singapore On facts and circumstances of the case and in law the Ed. AD erred in disallowing the appellant’s claim for tax credit of its 6.91,76,192 being the Singapore Tax paid as defined under Article 2501 of the of the Double Tax Avoidance Agreement between India and Singapore. Grounds related to Transfer Pricing: 2. Transfer pricing adjustments/additions/variations, 2.1 The Id. CTT (A) erred in law, on facts and in circumstances of the case in not deleting the transfer pricing adjustments/additions/variations made by the ld. AO as being bad in law, illegal and unsustainable on the basis of the following grounds, taken singly or cumulatively: 2.1.1 a) The Id. DCIT has failed to comply with the mandatory conditions stipulated in section 920(3) of the Act and has failed to record his satisfaction before making the reference to the Transfer Pricing Officer (TPO). b) The Id. TPO failed to prove that any of the conditions laid down in section 92C(3) of the Act had been satisfied which made out a case for tax evasion, 2.1.2 The Id. AO/TPO failed to arrive at a finding that the intention of the Appellant was to evade tax and shift profits outside of India which is a condition precedent for making the Transfer Pricing Adjustment. 2.1.3 On facts and circumstances of the case and in law, the id. CIT (A) erred in not holding the proceedings initiated by the Id. TPO as void ab initio since the Id. AO erred in making the reference to the Id. TPO without proper application of mind to the facts on records, without recording reasons for any necessity or expediency and without a legal and valid approval of the Id. CIT and hence the same being not in accordance with the provisions of Section 92CA(1) of the Act. Printed from counselvise.com 7 ITA No. 1516/Mum/2025 and others Tata Consultancy Services Ltd. AY 2016-17, 2017-18 and 2018-19 2.1.4 The transfer pricing adjustments are contrary to the principles laid down by the Hon'ble Mumbai Tribunal in the Appellant's own case for the A.Y. 2005-06 (DCIT vs. Tata Consultancy Services Limited) and therefore are required to be quashed and deleted. 2.1.5 The Id. CIT(A) erred in law and on facts in not adjudicating the ground on rejection of the Transfer Pricing Documentation Report maintained by the appellant in good faith and with due diligence Provision of software & consultancy services 3.1 Re-characterization of international transaction The Id. CIT(A) erred in law and on facts of the case in not accepting the Appellant as the tested party even though the international transaction during the year under reference was provision of services by the Appellant to its AEs 3.2 Disregarding the legally binding agreements between the Appellant and its AFs The Id. CIT(A) erred in law and on facts, in disregarding the contractual terms of the legally binding agreement/s between the Appellant and the AE(s) 3.3 Rejection of the functional and economic analysis carried out by the Appellant The Id. CIT(A) erred in law and on facts, in rejecting the functional and economic analysis carried out by the Appellant and in considering the AEs as the least complex entity. 3.4 Disregarding the benchmarking analysis The Id. CIT (A) erred in law and on facts, in disregarding benchmarking analysis undertaken by the Appellant in Transfer Pricing Documentation report. 3.5 Selection of the comparable companies Without prejudice to the above, even if the AEs are to be treated as the tested party and gross profit /sales is selected as the appropriate PL.1, the Id. CIT(A) erred in rejecting functionally similar companies. 4. Provision of guarantees to AFs 4.1 The Id. CIT(A) erred in law and on facts, in holding that the provision of various guarantees by the Appellant to third parties on behalf of its Als were international transactions. 4.2 The Id. CIT(A) erred in law and on facts, in not appreciating the fact that provision of guarantee is a shareholder activity and no income is expected to be generated from the same. 4.3 Without prejudice to the above, the id. CIT(A) has erred in law and on facts in disregarding the Appellant's contention that the guarantee fee should be charged based on the effective rate of insurance premium paid by the Appellant as a percentage of group revenue. 4.4 Without prejudice to the above, the Id. CIT(A) erred in law and on facts in not considering guarantee fees to be charged on actual rent, for which the lease guarantee was provided. Printed from counselvise.com 8 ITA No. 1516/Mum/2025 and others Tata Consultancy Services Ltd. AY 2016-17, 2017-18 and 2018-19 45 Without prejudice to the above, the Id. CIT(A) erred in law and on facts in not following the earlier years Hon. ITAT order, where guarantee fees of 0.5% were allowed. 5 The Appellant submits that each ground of appeal is without prejudice to one another. 6 The Appellant craves leave to add, alter, amend, substitute and/or modify in any manner whatsoever all or any of the foregoing grounds of appeal at or before the hearing of the appeal. 21. Grounds taken by Revenue are reproduced as under: ITA No. 2243/MUM/2025 Grounds no. 1 to 3 are related to Transfer Pricing On the issue of Provision of Software, Technical and Consultancy Services: 1.1 Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is correct in directing the AO/TPO to restrict the adjustment made on account of Provision of Software & Consultancy Services by relying on the decision of CIT(A) in assessee's own case for AY 2009-10. 1.2 Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is correct in deciding the grounds raised by assessee following the decision given in AY 2009-10 without deciding the issue on merits for the year under consideration? 1.3 Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is correct in holding that for the purposes of TNMM by treating AEs as the tested party, OP/OC is the appropriate PLI as against OP/VAE adopted by TPO and thereby not treating the cost passed on back-to-back by the AES to the assessee as a pass-through cost? 1.4 that OP/OC is the appropriate PLI and not OP/VAE, ignoring the fact that the AEs did not perform any function or own any asset or bear any risk pertaining to the software development for which the subcontract payment has been made to the assessee and therefore, the same should be excluded as pass-through cost from the PLI computation? 1.5 Whether on the facts and circumstances of the case and in law, the Ld CIT(A) is right in giving direction to work out margin (OP/OC) of AEs including cost incurred on (offshore) transaction assigned to TCS as against the decision of TPO of adding margin only on cost incurred by the AE though it was held by CIT(A) himself in para 19.5 of the order for A.Y 2009-10 that AEs are engaged in marketing and distribution liable to be compensated for limited function? 1.6 Whether on the facts and circumstances of the case and in law, the Ld CIT(A) is right in holding that since OP/OC has been considered as PLI for the comparables, the same should considered for the tested party AEs, Ignoring the fact that there is no back-to-back sub-contract payment in the cases of comparables? 1.7 Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is correct in allowing the objection on erroneous application of TNMM in favor of the assessee? Printed from counselvise.com 9 ITA No. 1516/Mum/2025 and others Tata Consultancy Services Ltd. AY 2016-17, 2017-18 and 2018-19 1.8 Whether on the facts and circumstances of the case and in law, the Ld CIT(A) is right in in rejecting the FAR and economic analysis carried out by the appellant by partly allowing it in favor of appellant? 1.9 Whether on the facts and circumstances of the case and in law, the Ld CIT(A) is right about the objection on disregarding the benchmarking analysis carried out in favor of the appellant? 1.10 Whether on the facts and circumstances of the case and in law, the Ld CIT(A) is right in rejecting the comparable AVNET INC as the company has been accepted as a comparable in previous AYS? On the issue of Financial Guarantee: 2.1 Whether on the facts and circumstances of the case and in law, the Ld CIT(A) is right in relying on the decision of CIT(A) in assessee's own case for A.Y 2009- 10 in giving direction to charge guarantee commission @ 0.77% on financial guarantee in place of 1.50% charged by TPO? 2.2 Whether on the facts and circumstances of the case and in law, the Ld CIT(A) is right in reducing the rate of financial guarantee fee from 1.5% to 0.77% by relying on the decisions of his predecessors, as the facts and circumstances differ from year to year? 2.3 Whether, on the facts and circumstances of the case and in law, the Ld. CIT(A) was justified in arbitrarily determining the rate of financial guarantee at 0.77%? On the issue of Receipt of Brand Royalty: 3.1 Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is correct in directing the AD/TPO to delete the adjustment of Rs.2500,76,39,532/- made on account of Receipt of Brand Royalty from its AEs for use of the Brand \"Tota Consultancy Services & TCS\"? 3.2 Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is correct in solely relying upon the Agreements between the assessee and the Tata Sons Ltd dated 19.04.2004 and 24.12.2009 and the three Trademark Certificates issued on 25.03.2005, 16.08.2005 and 19.01.2006 for arriving at his decision that Tata Sons Ltd. is the legal owner of the brand \"TCS\" and \"TATA CONSULTANCY SERVICES\" and that if at all the brand royalty is assessable, it is to be considered in the hands of Tata Sons Ltd. and not in the hands of the assessee, ignoring the following vital facts: (i) As per the scheme of arrangement the TCS division of M/s Tata Sons Limited was corporatized into M/s Tata Consultancy Services Limited (the assessee) under the approval of Hon'ble High Court of Bombay sanctioned vide its Order dated 09.05.2003 w.e.f 01.04.2003 and all the Assets and liabilities including all tangible and intangible assets/registrations and certificates pertaining to the IT services division of M/s Tata Sons Limited stood transferred to the assessee for a consideration of Rs.2300 Crores inclusive of all trademarks related to the IT business division which is very clear from Clause 1(K)() of page 4 of the said Scheme approved by Hon'ble High Court, thereby the assessee is the legal owner of all trademarks without any limitation and thus, Tata Sons Ltd. claiming any legal ownership on the trademarks is violative of the Court Order and that the CIT(A) relying on the Agreements entered into and Certificates Issued much later to this Court Sanction is patently wrong. Printed from counselvise.com 10 ITA No. 1516/Mum/2025 and others Tata Consultancy Services Ltd. AY 2016-17, 2017-18 and 2018-19 (ii) After the above Court Order, If at all there could be any claim by Tata Sons Ltd. on trademark, it could only be construed for \"TATA\" appearing in \"TATA CONSULTANCY SERVICES\" and that has been duly remunerated by the assessee to Tata Sons Ltd. @ 0.25% of the Annual Net Income of each subsidiary. (iii) The BEPS Action Plan 8 to 10 emphasizes substance over form, economic reality over legal form and conduct of parties over contracts for evaluating a transaction from transfer pricing angle which has been ignored by CIT(A) which is more so when the Agreements and the Certificates issued relied on by the CIT(A) belong to the period much later to the Court Sanction Order. (iv) Even if it is assumed without admitting that there is some lack of clarity on the legal ownership of the trademarks, the CIT(A) completely the ignored the economic ownership of the brand \"TCS\" and \"TATA CONSULTANCY SERVICES\" when the assessee itself claimed in its annual report of the very same FY 2013- 14 that \"TCS brand value up by USS 3.04 billion in 2014; Overall brand value in 2014 US$ 8.2 billion; A 3X increase in the growth of our brand value; Consolidated our 'Big 4' position in the IT services category, 58% growth in brand value; 'TCS\" the Fastest Growing IT services brand in 2013 worldwide; Strongest brand rating in industry: Brand strength rated at AA+\", strongly proving that the assessee is the economic owner of the brand and the 'value creation' for the said intangible asset of brand has been carried out only by the assessee and not by Tata Sons Ltd, leaving absolutely no iota of doubt or ambiguity on the economic ownership of the brand and so, Tata Sons Ltd. having been remunerated 0.25% by the assessee for \"TATA\", it is the assessee that should be remunerated for the economic ownership and value creation towards the brand \"TCS\" and \"TATA CONSULTANCY SERVICES\". (v) No prudent businessman would let his intangible asset being brand valued at $ 9.047 billion (as admitted by the assessee itself in its Annual Report) be used by others without compensation and as such value creation for the brand happened in the hands of the assessee, which deserves ALP compensation in terms of section 92F(ii). 3.3 Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is correct on relying upon the draft red herring prospectus which has not been produced before the TPO and more so it is only a draft and that Tata Sons Ltd cannot be the legal owner after the Court Order dated 09.05.2003 and that the assessee being the economic owner of the brand? 3.4 Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is correct in observing that 'payment of royalty by assessee to Tata Sons Ltd. @ 0.25% has been accepted by the AO and so there is no case that the brand ownership lies with the assessee', by ignoring the following facts: (i) After the said Court Order dated 09.05.2003, the payment of royalty by the assen tenderer Tata Sons Ltd. @ 0.25% could be construed only towards \"TATA\" owned by Tata Sons L and not towards \"TCS\" and \"TATA CONSULTANCY SERVICES\". (ii) \"TCS\" and \"TATA CONSULTANCY SERVICES\" if at all appearing in any Agreements between the assessee and Tata Sons Ltd, entered into after the date of the Court Order (09.05.2003) needs to be ignored giving credence to Printed from counselvise.com 11 ITA No. 1516/Mum/2025 and others Tata Consultancy Services Ltd. AY 2016-17, 2017-18 and 2018-19 substance over form, economic reality over legal form and conduct of parties over contracts for evaluating the transaction from transfer pricing angle. (iii) The brand royalty charged Rs.2500.75 crores is for the exclusive use and exploitation of the brand 'TCS' and 'TATA CONSULTANCY SERVICES' (for which assessee is undoubtedly the economic owner) by the AEs of the assessee for augmenting their business revenues and for the brand \"TATA\" of which the Tata Sons Ltd is the legal owner for which it has been separately remunerated @ 0.25% by each of the AEs of the assessee. (iv) Economic ownership and the value creation on brand as admitted by the assessee itself in its Annual Report has been completely ignored by the CIT(A) 3.5 Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is correct in completely ignoring and not adjudicating on the detailed analysis and facts mentioned by the TPO in points 1 to 8 in page Nos.42 to 60 of TPO's order and instead tangentially relied on some Agreements entered into and Certificates Issued that too after the legal transfer of all assets and liabilities as per Court Order dated 09.05.2003? 4. \"Whether, on the facts and in the circumstances of the case and in law, Ld. CIT(A) erred in allowing deduction of Rs.37,33,11,947/-being \"State Taxes\" paid overseas on the ground that since state taxes paid in USA is not eligible for relief under section 90/91, deduction under section 40(a)(1) is permissible, when the said provision in fact pertains to amounts not deductible?\" 5. \"Whether, on the facts and in the circumstances of the case and in law, Ld. CIT(A) erred in allowing expenses Incurred an import of Software packages amounting to Rs. 48,67,99,137/- which were disallowed by the assessing officer under section 40(a)(i), on account of non-deduction of tax u/s 195 of the Act?\" 6. \"Whether, on the facts and in the circumstances of the case and in law, Ld. CIT(A) erred in not treating the expenses incurred on import of Software packages amounting to Rs. 48,67,99,137/-'royalty' within the meaning of section 9(1)(vi) of the Act.? 7. \"Whether, on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the disallowance of Rs. 45,87,900/- made under section 14A of the Act, despite the fact that the Assessing Officer had explicitly recorded dissatisfaction regarding the correctness of the assessee's claim before invoking Rule BD, following the provisions of Section 14A of the Act.\" 8. \"Whether, on the facts and in the circumstances of the case, the Ld. CIT(A) erred in treating expenditure of Rs.191,82,35,504/- incurred for brand building as revenue expenditure disregarding the fact that the same has long term benefit to the assessee and is enduring in nature?\" 9. \"Whether, on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in allowing the payment to M/s. Tate Sons Ltd. towards Brand Equity Subscription as revenue in nature disregarding the fact that the same has long term benefit to the assessee and is enduring in nature?\" 10. \"Whether, on the facts & in the circumstances of the case and in law, the Ld. CIT(A) erred in holding that the commission paid to non-resident agents operating outside India was not liable to tax in India and hence assessee was not liable to deduct tax under section 195 of the Act, despite it being clearly held by the Printed from counselvise.com 12 ITA No. 1516/Mum/2025 and others Tata Consultancy Services Ltd. AY 2016-17, 2017-18 and 2018-19 Assessing Officer that the commissions are in connection with soles/revenue of the Indian Company and are thus chargeable under sections 5 & 9 of the income- tax Act, 1961, thus establishing that the liability to deduct tax ot source under section 195 arose which the assessee failed to discharge?\" 11. \"Whether on facts and in circumstances of the case and in law, the Ld. CIT(A) erred in allowing the deduction, holding that the year-end provision represents a known liability for services already availed and not an ad-hoc or contingent provision whereas The AO maintains that the year-end provision is not an allowable deduction under Section 37, as the liability was not crystallized within the relevant financial year.\" 12. \"Whether, on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in granting relief u/s 90/91 for foreign taxes paid on income which is not taxable in India u/s 10AA of the Income-tax Act, 1961? 13. \"Whether, on facts and in circumstances of the case and in law, the Ld CIT(A) erred in deleting the disallowance of expenses incurred on payment of subscription fees u/s 40a(IA) Rs. 3,17,32,153/- 14. \"Whether on facts and in circumstances of the case and in law, the Ld. CIT(A) erred in deleting the disallowance of claim of deduction under section 10AA in respect of interest income which was claimed during the course of assessment proceedings, without filing revised return of income?\" 15. \"Whether on facts and in circumstances of the case and in law, the Ld. CIT(A) erred in allowing deduction under Section 80G for CSR expenditure and the same needs to be set aside, and the disallowance made by the Assessing Officer during the course of assessment proceedings be upheld.\" 16. \"Whether on facts and in circumstances of the case and in law, the Ld. CIT(A) erred by allowing the claim of gratuity expenses amounting to 200.41 crores. The additional claim of 200.41 crores made during assessment proceedings was not part of the original return of income, and as per the decision of the Hon'ble Supreme Court in the case of Goetze (India) Ltd. vs. CIT (284 ITR 323), such fresh claims cannot be entertained by the Assessing Officer without a revised return.\" ITA No. 2244/MUM/2025 On the Issue of Provision of Software, Technical and Consultancy Services: 1.1 Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is correct in directing the AO/TPO to restrict the adjustment made on account of Provision of Software & Consultancy Services by relying on the decision of CIT(A) in assessee's own case for AY 2009-10. 1.2 Whether on the facts and circumstances of the case and in law, the td. CIT(A) is correct in deciding the grounds raised by assessee following the decision given in AY 2009-10 without deciding the issue on merits for the year under consideration? 1.3 Whether on the facts and circumstances of the case and in low, the Ld. CIT(A) is correct in holding that for the purposes of TNMM by treating AEs as the tested porty, OP/OC is the appropriate PLI as against OP/VAE adopted by TPO and Printed from counselvise.com 13 ITA No. 1516/Mum/2025 and others Tata Consultancy Services Ltd. AY 2016-17, 2017-18 and 2018-19 thereby not treating the cost passed an back-to-back by the AEs to the assessee as a pass-through cost? 1.4 Whether on the facts and circumstances of the case and in low, the Ld CIT(A) is right in holding that OP/OC is the appropriate PLI and not OP/VAE, ignoring the fact that the AEs did not perform any function or own any asset or bear any risk pertaining to the software development for which the subcontract payment has been made to the assessee and therefore, the same should be excluded as pass-through cost from the PLI computation? 1.5 Whether on the facts and circumstances of the case and in law, the Ld CIT(A) is right in giving direction to work out margin (OP/OC) of AEs including cost incurred on (offshore) transaction assigned to TCS as against the decision of TPO of adding margin only on cost incurred by the AE though it was held by CIT(A) himself in para 19.5 of the order for AY 2009-10 that AEs are engaged in marketing and distribution liable to be compensated for limited function? 1.6 Whether on the facts and circumstances of the case and in law, the Ld CITA) is right that since OP/OC has been considered as PU for the comparables, the same should be considered for the tested party AFs, Ignoring the fact that there is no back-to-back payment in the cases of comparables? 1.7 Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is correct in allowing the objection on erroneous application of TNMM in favor of the assessee? 1.8 Whether on the facts and circumstances of the case and in low, the Id CIT(A) is right in rejecting the FAR and economic analysis carried out by the appellant by partly allowing it in favor of appellant? 1.9 Whether on the facts and circumstances of the case and in low, the Ed CIT(A) is right about the objection on disregarding the benchmarking analysis carried out in favor of the appellant? 1.10 Whether on the facts and circumstances of the case and in law, the Ld CIT(A) is right in rejecting the comparable AVNET INC as the company has been accepted as a comparable lo previous AYs? On the issue of Performance Guarantee: 2.1 Whether on the facts and circumstances of the case and in law, the Led CIT(A) is right in relying on his predecessor's order for AY 2009-10 and in holding that the performance guarantee fee payable by the AEs to the assessee is to be computed by excluding the 69.88% of the contract value attributing it as executed by assessee, ignoring the fact that the liability underlying the guarantee is for the contract as a whole? Printed from counselvise.com 14 ITA No. 1516/Mum/2025 and others Tata Consultancy Services Ltd. AY 2016-17, 2017-18 and 2018-19 2.2 Whether on the facts and circumstances of the case and in low, the Ld CIT(A) is right in reducing the rate of performance guarantee fee from 1.5% to 1.45% ignoring the Appropriate CUP with mark-up as applied by the TPO? 2.3 Whether on the facts and circumstances of the case and in low, the Ld CIT(A) is right in reducing the rate of performance guarantee fee from 1.5% to 1.45% by relying on the decisions of his predecessors, as the facts and circumstances differ from year to year? 2.4 Whether, on the facts and circumstances of the case and in law, the Ld. CIT(A) was justified in arbitrarily determining the rate of performance guarantee at 1.45%7 On the issue Lease Guarantee 3.1 Whether on the facts and circumstances of the case and in low, the Ld CIT(A) is right in relying on the decision of CIT(A) in assessee's own case for AY 2009- 10 in giving direction to charge guarantee commission @1.45% on lease financial guarantee in place of 1.50% charged by TPO? 3.2. Whether on the facts and circumstances of the case and in low, the Ld CITTA) is right in reducing the rate of lease guarantee fee from 1.5% to 1.39% by relying on the decisions of his predecessors, as the facts and circumstances differ from year to year? 3.3 Whether, on the facts and circumstances of the case and in law, the Ld. CIT(A) was justified in arbitrarily determining the rate of lease guarantee at 1.39%? On the issue of Financial Guarantee: 4.1 Whether on the facts and circumstances of the case and in low, the Ld CIT(A) is right in relying on the decision of CIT(A) in assessee's own case for A.Y 2009- 10 in giving direction to charge guarantee commission @ 0.77% on financial guarantee in place of 1.50% charged by TPO? 4.2 Whether on the facts and circumstances of the case and in law, the Ld CIT(A) is right in reducing the rate of financial guarantee fee from 1.5% to 0.77% by relying on the decisions of his predecessors, as the facts and circumstances differ from year to year? 4.3 Whether, on the facts and circumstances of the case and in law, the Ld. CIT(A) was justified in arbitrarily determining the rate of financial guarantee at 0.77%7 On the issue of Receipt of Brand Royalty: 5.1 Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is correct in directing the AO/TPO to delete the adjustment of Rs. 2488,00,00,000/- made on account of Receipt of Brand Royalty from its AEs for use of the Brand \"Tata Consultancy Services & TCS\"? 5.2 whether on the facts and circumstances of the case and in low, the Ld. CIT(A) is correct in solely relying upon the Agreements between the assessee and the Printed from counselvise.com 15 ITA No. 1516/Mum/2025 and others Tata Consultancy Services Ltd. AY 2016-17, 2017-18 and 2018-19 Tata Sons Ltd dated 19.04.2004 and 24.12.2009 and the three Trademark Certificates issued on 25.03.2005, 16.08.2005 and 19.01.2006 for arriving at his decision that Tata Sons Ltd. is the legal owner of the brand \"TCS\" and \"TATA CONSULTANCY SERVICES\" and that if at all the brand royalty is assessable, it is to be considered in the hands of Tata Sons Ltd. and not in the hands of the assessee, ignoring the following vital facts: i. As per the scheme of arrangement the TCS division of M/s Tata Sons Limited was corporatized Into M/s Tata Consultancy Services Limited (the assessee) under the approval of Hon'ble High Court of Bombay sanctioned vide Its Order dated 09.05.2003 w.e.f. 01.04.2003 and all the Assets and liabilities including all tangible and intangible assets/registrations and certificates pertaining to the IT services division of M/s Tata Sans Limited stood transferred to the assessee for a consideration of Rs.2300 Crores inclusive of all trademarks related to the IT business division which is very clear from Clause 1(K)() of page 4 of the sold Scheme approved by Hon'ble High Court, thereby the assessee is the legal owner of all trademarks without any limitation and thus, Toto Sons Ltd. claiming any legal ownership on the trademarks is violative of the Court Order and that the CIT(A) relying on the Agreements entered into and Certificates issued much later to this Court Sanction is patently wrong. ii. After the above Court Order, if at all there could be any claim by Toto Sons Ltd. on trademark, it could only be construed for \"TATA\" appearing in \"TATA CONSULTANCY SERVICES\" and that has been duly remunerated by the assessee to Tato Sons Ltd. @ 0.25% of the Annual Net Income of each subsidiary. iii. The BEPS Action Plan 8 to 10 emphasizes substance over form, economic reality over legal form and conduct of parties over contracts for evaluating a transaction from transfer pricing angle which has been ignored by CIT(A) which is more so when the Agreements and the Certificates issued relied on by the CIT(A) belong to the period much Court Sanction Order. (iv) Even if it is assumed without admitting that there is some lack of clarity on the legal ownership of the trademarks, the CITIA) completely the ignored the economic ownership of the brand \"TCS\" and \"TATA CONSULTANCY SERVICES\" when the assessee itself claimed in its annual report of the very same FY 2013-14 that \"TCS brand value up by USS 3.04 billion in 2014; Overall brand value in 2014 USS 8.2 billion, A 3X increase in the growth of our brand value; Consolidated our \"Big &' position in the IT services category; 50% growth In brand value; \"TCS\" the Fastest Growing IT services brand in 2013 worldwide, Strangest brand rating in industry. Brand strength rated at AA+\", strongly proving that the assessee is the economic owner of the brand and the 'value creation' for the said intangible asset of brand has been carried out only by the assessee and not by Toto Sons Ltd, leaving absolutely no lota of doubt or ambiguity on the economic ownership of the brand and so, Toto Sons Ltd. having been remunerated @ 0.25% by the assessee for \"TATA\", it is the assessee that should be remunerated for the economic ownership and value creation towards the brand \"TCS\" and \"TATA CONSULTANCY SERVICES\" Printed from counselvise.com 16 ITA No. 1516/Mum/2025 and others Tata Consultancy Services Ltd. AY 2016-17, 2017-18 and 2018-19 (v) No prudent businessman would let his Intangible asset being brand valued at $9.081 billion (as admitted by the assessee itself in its Annual Report) be used by others without compensation and as such value creation for the brand happened in the hands of the assessee, which deserves ALP compensation in terms of section 92F() 5.3 Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is correct on relying upon the draft red herring prospectus and more so it is only a craft and that Tata Sons Ltd cannot be the legal owner ofter the Court Order dated 09.05.2003 and that the assessee being the economic owner of the brand? 5.4 Whether on the facts and circumstances of the case and in low, the Ld. CIT(A) is correct in observing that 'payment of royalty by assessee to Tata Sons Ltd. @ 0.25% has been accepted by the AD and so there is no case that the brand ownership lies with the assessee\", by ignoring the following facts: (i) After the said Court Order dated 09.05.2003, the payment of royalty by the assessee to Tata Sons Ltd. 0.25% could be construed only towards \"TATA\" owned by Tata Sons Ltd and not towards \"TCS\" and \"TATA CONSULTANCY SERVICES\" (ii) TCS\" and \"TATA CONSULTANCY SERVICES\" if at all appearing in any Agreements between the assessee and Tata Sons Ltd. entered into after the date of the Court Order (09.05.2003) needs to be ignored giving credence to substance over form, economic realty over legal form and conduct of parties over contracts for evaluating the transaction from transfer pricing angle. (iii) The brand royalty charged Rs. 2488,00,00,000/- is for the exclusive use and exploitation of the brand \"TCS\" and \"TATA CONSULTANCY SERVICES' (for which assessee is undoubtedly the economic owner) by the AEs of the assessee for augmenting their business revenues and for the brand \"TATA\" of which the Tato Sons Ltd is the legal owner for which it has been separately remunerated @ 0.25% by each of the Afs of the assessee. (iv) Economic ownership and the value creation on brand as admitted by the assessee itself in Its Annual Report has been completely ignored by the CIT(A) 5.5 Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is correct in completely ignoring and not adjudicating on the detailed analysis and facts mentioned by the TPO in para 7.1 to 7.10 in page Nos.36 to 88 of TPO's order and instead tangentially relied on some Agreements entered into and Certificates issued thot too after the legal transfer of al assets and liabilities as per Court Order dated 09.05.2003? 6. \"Whether, on the facts and in the circumstances of the case and in law, Ld. CITTA) erred in allowing deduction of Rs.26,48,96,494/-being \"State Taxes\" paid overseas on the ground that since state taxes paid in USA is not eligible for relief under section 90/91, deduction under section 40(a)(ii) is permissible, when the said provision in fact pertains to amounts not deductible?\" 7. \"Whether, on the facts and in the circumstances of the case and in law, Ld. CIT(A) erred in allowing expenses incurred on import of Software packages amounting to Rs. 16,61,59,534 which were disallowed by the assessing officer under section 40(a)(i), on account of non-deduction of tax /s. 195 of the Act?\" Printed from counselvise.com 17 ITA No. 1516/Mum/2025 and others Tata Consultancy Services Ltd. AY 2016-17, 2017-18 and 2018-19 8. \"Whether, on the facts and in the circumstances of the case and in law, Ld. CITA) erred in not treating the expenses incurred on import of Software packages amounting to Rs. 16,61,59,534/'royalty within the meaning of section 9(1)(vi) of the Act.?\" 9. \"Whether, on the facts and in the circumstances of the case and in low, the Ld. CITIA) has erred in deleting the disallowance of Rs. 11,99,000/- made under section 144 of the Act, despite the fact that the Assessing Officer had explicitly recorded dissatisfaction regarding the correctness of the assessee's claim before invoking Rule 80, following the provisions of Section 144 of the Act.\" 10. \"Whether, on the facts and in the circumstances of the case, the Ld. CIT(A) erred in treating expenditure of Rs. 192,88,87,323/- incurred for brand building as revenue expenditure disregarding the fact that the same has long term benefit to the assessee and is enduring in nature?\" 11. \"Whether, on the facts and in the circumstances of the case and in low, the Ld. CIT(A) erred in allowing the payment to M/s. Tato Sons Ltd. towards Brand Equity Subscription as revenue in nature disregarding the fact that the same has long term benefit to the assessee and is enduring in nature?\" 12. \"Whether, on the facts & in the circumstances of the case and in law, the Ld. CIT(A) erred in holding that the commission paid to non-resident agents operating outside India was not liable to tax in India and hence assessee was not liable to deduct tax under section 195 of the Act, despite it being clearly held by the Assessing Officer that the commissions are in connection with sales/revenue of the Indian Company and are thus chargeable under sections 5 & 9 of the income- tax Act, 1961, thus establishing that the liability to deduct tax at source under section 195 arase which the assessee failed to discharge?\" 13. \"Whether on facts and in circumstances of the case and in law, the Ld. CITIA) erred in deleting the disallowance of claim of deduction under section 10AA in respect of interest income which was claimed during the course of assessment proceedings, without filing revived return of income?\" 14. \"Whether on facts and in circumstances of the case and in low, the Ld. CITIA) erred in allowing the deduction, holding that the year-end provision represents a known liability for services already availed and not an ad hoc or contingent provision whereas The AD maintains that the your end provision is not an allowable deduction under Section 37, as the liability was not crystalized with the relevant financial year.\" 15. \"Whether, on the facts and in the circumstances of the case and in low, the L. CITIA) erred in granting relief u/s 90/91 for foreign taxes paid on income which is not taxable in India u/s 1044 of the Income-tax Act, 19617 16. \"Whether, on facts and in circumstances of the case and in low, the Ld CITIA) erred in deleting the disallowance of expenses incurred on payment of subscription fees u/s 400(LA) Rs. 3,31,08,006/ 17. \"Whether on facts and in circumstances of the case and in low, the Ld. CIT(A) erred in deleting the disallowance of claim of deduction under section 10AA in respect of interest income which was claimed during the course of assessment proceedings, without filing revised return of income?\" Printed from counselvise.com 18 ITA No. 1516/Mum/2025 and others Tata Consultancy Services Ltd. AY 2016-17, 2017-18 and 2018-19 18. \"Whether on facts and in circumstances of the case and in low, the (d. CIT(A) erred in allowing deduction under Section 80G for CSR expenditure and the same needs to be set aside, and the disallowance made by the Assessing Officer during the course of assessment proceedings be upheld.\" 19. \"Whether on facts and in circumstances of the case and in law, the Ld. CIT(A) erred by allowing the claim of gratuity expenses amounting to 200 41 crores. The additional claim of 200.41 crores mode during assessment proceedings was not port of the original return of income, and as per the decision of the Hon’ble Supreme Court in the case of Goetze (India) Ltd. vs. CIT (284 ITR 323), such fresh claims cannot be entertained by the Assessing Officer without a revised return.\" ITA No. 2245/MUM/2025 On the issue of Provision of Software, Technical and Consultancy Services: 1.1 Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is correct in directing the AO/TPO to restrict the adjustment made on account of Provision of Software & Consultancy Services by relying on the decision of CIT(A) in assessee's own case for A.Y 2009-107 1.2 Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is correct in deciding the grounds raised by assessee following the decision given in AY 2009-10 without deciding the issue on merits for the year under consideration? 1.3 Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is correct in allowing the objection on erroneous application of TNMM in favor of the assessee? 1.4 Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is correct in holding that for the purposes of TNMM by treating AEs as the tested party, OP/OC is the appropriate PLU as against OP/VAE adopted by TPO and thereby not treating the cost passed on back-to-back by the AEs to the assessee as a pass-through cost? 1.5 Whether on the facts and circumstances of the case and in law, the Ld CIT(A) is right in holding that OP/OC is the appropriate PLI and not OP/VAE, ignoring the fact that the AEs did not perform any function or own any asset or bear any risk pertaining to the software development for which the subcontract payment has been made to the assessee and therefore, the same should be excluded as pass-through cost from the PLI computation? 1.6 Whether on the facts and circumstances of the case and in law, the Ld CIT(A) is right in giving direction to work out margin (OP/OC) of AEs including cost incurred on (offshore) transaction assigned to TCS as against the decision of TPO of adding margin only on cost incurred by the Al though it was held by CIT(A) himself in para 19.5 of the order for A.Y 2009-10 that Als are engaged in marketing and distribution liable to be compensated for limited function? 1.7 Whether on the facts and circumstances of the case and in law, the Ld CIT(A) is right in holding that since OP/OC has been considered as PLI for the comparables, the same should be considered for the tested party AEs, ignoring the fact that there is no back-to-back subcontract payment in the cases of comparables? Printed from counselvise.com 19 ITA No. 1516/Mum/2025 and others Tata Consultancy Services Ltd. AY 2016-17, 2017-18 and 2018-19 1.8 Whether on the facts and circumstances of the case and in law, the Ld CIT(A) is right in rejecting the comparable AVNET INC as the company has been accepted as a comparable in previous AYs? 1.9 Whether on the facts and circumstances of the case and in law, the Ld CIT(A) is right in in rejecting the FAR and economic analysis carried out by the appellant by partly allowing it in favor of appellant? 1.10 Whether on the facts and circumstances of the case and in law, the Ld CIT(A) is right about the objection on disregarding the benchmarking analysis carried out in favor of the appellant? On the issue of Performance Guarantee: 2.1 Whether on the facts and circumstances of the case and in law, the Ld CIT(A) is right in relying on his predecessor's order for AY 2009-10 and in holding that the performance guarantee fee payable by the AEs to the assessee is to be computed by excluding the 70.06% of the contract value attributing it as executed by assessee, ignoring the fact that the liability underlying the guarantee is for the contract as a whole? 2.2 Whether on the facts and circumstances of the case and in law, the Ld CIT(A) is right in reducing the rate of performance guarantee fee from 1.5% to 1.39% ignoring the Appropriate CUP with mark-up as applied by the TPO? 2.3 Whether on the facts and circumstances of the case and in law, the Ld CIT(A) is right in reducing the rate of performance guarantee fee from 1.5% to 1.39% by relying on the decisions of his predecessors, as the facts and circumstances differ from year to year? 2.4 Whether, on the facts and circumstances of the case and in law, the Ld. CIT(A) was justified in arbitrarily determining the rate of performance guarantee at 1.39%? On the issue Lease Guarantee a. Whether on the facts and circumstances of the case and in law, the Ld CIT(A) is right in relying on the decision of CIT(A) in assessee's own case for A.Y 2009- 10 in giving direction to charge guarantee commission 1.39% on lease financial guarantee in place of 1.50% charged by TPO? b. Whether on the facts and circumstances of the case and in law, the Ld CIT(A) Is right in reducing the rate of lease guarantee fee from 1.5% to 1.39% by relying on the decisions of his predecessors, as the facts and circumstances differ from year to year? Whether, on the facts and circumstances of the case and in law, the Ld. CIT(A) was justified in arbitrarily determining the rate of lease guarantee at 1.39%7 On the issue of Financial Guarantee: 4.1 Whether on the facts and circumstances of the case and in law, the Ld CIT(A) is right in relying on the decision of CIT(A) in assessee's own case for A.Y 2009- 10 in giving direction to charge guarantee commission @ 0.77% on financial guarantee in place of 1.50% charged by TPO? Printed from counselvise.com 20 ITA No. 1516/Mum/2025 and others Tata Consultancy Services Ltd. AY 2016-17, 2017-18 and 2018-19 4.2 Whether on the facts and circumstances of the case and in law, the Ld CIT(A) is right in reducing the rate of financial guarantee fee from 1.5% to 0.77% by relying on the decisions of his predecessors, as the facts and circumstances differ from year to year? 4.3 Whether, on the facts and circumstances of the case and in law, the Ld. CIT(A) was justified in arbitrarily determining the rate of financial guarantee at 0.77%7 On the issue of Receipt of Brand Royalty: 5.1. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is correct in directing the AO/TPO to delete the adjustment of Rs. 1779,23,55,479/- made on account of Receipt of Brand Royalty from its AEs for use of the Brand \"Tete Consultancy Services & TCS\"? 5.2 Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is correct in solely relying upon the Agreements between the assessee and the Tata Sons Ltd dated 19.04.2004 and 24.12.2009 and the three Trademark Certificates issued on 25.03.2005, 16.08.2005 and 19.01.2006 for arriving at his decision that Tata Sons Ltd. is the legal owner of the brand \"TCS\" and \"TATA CONSULTANCY SERVICES\" and that if at all the brand royalty is assessable, it is to be considered in the hands of Tata Sons Ltd. and not in the hands of the assessee, ignoring the following vital facts: (i) As per the scheme of arrangement the TCS division of M/s Tata Sons Limited was corporatized into M/s Tata Consultancy Services Limited (the assessee) under the approval of Hon'ble High Court of Bombay sanctioned vide its Order dated 09.05.2003 w.e f 01.04.2003 and all the Assets and liabilities including all tangible and intangible assets/registrations and certificates pertaining to the IT services division of M/s Tata Sons Limited stood transferred to the assessee for a consideration of Rs.2300 Crores inclusive of all trademarks related to the IT business division which is very clear from Clause 1(K)( of page 4 of the said Scheme approved by Hon'ble High Court, thereby the assessee is the legal owner of all trademarks without any limitation and thus, Tata Sons Ltd. claiming any legal ownership on the trademarks is violative of the Court Order and that the CIT(A) relying on the Agreements entered into and Certificates issued much later to this Court Sanction is patently wrong. (ii) After the above Court Order, if at all there could be any claim by Tata Sons Ltd. on trademark, it could only be construed for \"TATA\" appearing in \"TATA CONSULTANCY SERVICES\" and that has been duly remunerated by the assessee to Tata Sons Ltd. 0.25% of the Annual Net Income of each subsidiary. (iii) The BEPS Action Plan 8 to 10 emphasizes substance over form, economic reality over legal form and conduct of parties over contracts for evaluating a transaction from trans pricing angle which has been ignored by CIT(A) which is more so when the Agreements and the Certificates issued relied on by the CIT(A) belong to the period much later to the Court Sanction Order. (iv) Even if it is assumed without admitting that there is some lack of clarity on the legal ownership of the trademarks, the CIT(A) completely the ignored the economic ownership of the brand \"TCS\" and \"TATA CONSULTANCY SERVICES\" when the assessee itself claimed In its annual report of the very same FY 2013-14 that \"TCS brand value up by US$ 3.04 billion in 2014; Overall brand value in 2014 US$ 8.2 billion; A 3X increase in the growth of our brand value; Printed from counselvise.com 21 ITA No. 1516/Mum/2025 and others Tata Consultancy Services Ltd. AY 2016-17, 2017-18 and 2018-19 Consolidated our 'Big 4' position in the IT services category, 58% growth in brand value; \"TCS' the Fastest Growing IT services brand in 2013 worldwide; Strongest brand rating in industry. Brand strength rated at AA+\", strongly proving that the assessee is the economic owner of the brand and the 'value creation' for the said intangible asset of brand has been carried out only by the assessee and not by Tata Sons Ltd, leaving absolutely no iota of doubt or ambiguity on the economic ownership of the brand and so, Tata Sons Ltd. having been remunerated @ 0.25% by the assessee for \"TATA\", it is the assessee that should be remunerated for the economic ownership and value creation towards the brand \"TCS\" and \"TATA CONSULTANCY SERVICES\". (v) No prudent businessman would let his intangible asset being brand valued at $ 9.047 billion (as admitted by the assessee itself in its Annual Report) be used by others without compensation and as such value creation for the brand happened in the hands of the assessee, which deserves ALP compensation in terms of section 92F(ii). 5.3 Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is correct on relying upon the draft red herring prospectus and more so it is only a draft and that Tata Sons Ltd cannot be the legal owner after the Court Order dated 09.05.2003 and that the assessee being the economic owner of the brand? 5.4 Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is correct in observing that 'payment of royalty by assessee to Tata Sons Ltd. @ 0.25% has been accepted by the AO and so there is no case that the brand ownership lies with the assessee\", by ignoring the following facts (i) After the said Court Order dated 09.05.2003, the payment of royalty by the assessee to Tata Sons Ltd. @ 0.25% could be construed only towards \"TATA\" owned by Tata Sons Ltd and not towards \"TCS\" and \"TATA CONSULTANCY SERVICES\". (ii) \"TCS\" and \"TATA CONSULTANCY SERVICES\" if at all appearing in any Agreements between the assessee and Tata Sons Ltd. entered into after the date of the Court Order (09.05.2003) needs to be ignored giving credence to substance over form, economic reality over legal form and conduct of parties over contracts for evaluating the transaction from transfer pricing angle. (iii) The brand royalty charged Rs.1779.24 crores is for the exclusive use and exploitation of the brand 'TCS' and 'TATA CONSULTANCY SERVICES' (for which assessee is undoubtedly the economic owner) by the AEs of the assessee for augmenting their business revenues and for the brand \"TATA\" of which the Tata Sons Ltd is the legal owner for which it has been separately remunerated 0.29% by each of the AEs of the assessee. (iv) Economic ownership and the value creation on brand as admitted by the assessee itself in its Annual Report has been completely ignored by the CIT(A) 5.5 Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is correct in completely ignoring and not adjudicating on the detalled analysis Printed from counselvise.com 22 ITA No. 1516/Mum/2025 and others Tata Consultancy Services Ltd. AY 2016-17, 2017-18 and 2018-19 and facts mentioned by the TPO in TPO's order and instead tangentially relied on some Agreements entered into and Certificates issued that too after the legal transfer of all assets and liabilities as per Court Order dated 09.05.20037 6. \"Whether, on the facts and in the circumstances of the case and in law, Ld. CIT(A) erred in allowing deduction of Rs.28,20,48,554/-being \"State Taxes\" paid overseas on the ground that since state taxes paid in USA is not eligible for relief under section 90/91, deduction under section 40(a)(i) is permissible, when the said provision in fact pertains to amounts not deductible?\" 7. \"Whether, on the facts and in the circumstances of the case and in law, Ld. CIT(A) erred in allowing expenses incurred on import of Software packages amounting to Rs. 57,53,56,445/- which were disallowed by the assessing officer under section 40(a)(1), on account of non-deduction of tax u/s 195 of the Act?\" 8. \"Whether, on the facts and in the circumstances of the case and in law, Ld. CIT(A) erred in not treating the expenses incurred on import of Software packages amounting to Rs. 57,53,56,445/- as \"royalty' within the meaning of section 9(1)(vi) of the Act.?\" 9. \"Whether, on the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in deleting the disallowance of Rs. 93,20,819/-made under section 14A of the Act, despite the fact that the Assessing Officer had explicitly recorded dissatisfaction regarding the correctness of the assessee's claim before invoking Rule 80, following the provisions of Section 144 of the Act.\" 10. \"Whether, on the facts and in the circumstances of the case, the Ld. CIT(A) erred in treating expenditure of Rs. 185,44,31,079/- Incurred for brand building as revenue expenditure disregarding the fact that the same has long term benefit to the assessee and is enduring in nature?\" 11. \"Whether, on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in allowing the payment to M/s. Tata Sons Ltd, towards Brand Equity Subscription as revenue in nature disregarding the fact that the same has long term benefit to the assessee and is enduring in nature?\" 12. \"Whether, on the facts & in the circumstances of the case and in low, the Ld. CITIA) erred in holding that the commission paid to non-resident agents operating outside India was not liable to tax in India and hence assessee was not liable to deduct tax under section 195 of the Act, despite it being clearly held by the Assessing Officer that the commissions are in connection with sales/revenue of the Indian Company and are thus chargeable under sections 5 & 9 of the income- tax Act, 1961, thus establishing that the liability to deduct tax et source under section 195 arose which the assessee foiled to discharge?\" 13. \"Whether, on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in granting relief u/s 90/91 for foreign taxes paid on income which is not taxable in India u/s 10AA of Income-tax Act, 1961? 14. \"On the facts and in the circumstances of the case and in Law, the Ld. CIT(A) erred in not upholding the order of Assessing Officer, wherein it is held that provision of the Section 194C(2) shall apply in this case?\" 15. \"Whether on facts and in circumstances of the case and in law, the Ld. CIT(A) erred in deleting the disallowance of claim of deduction under section 10AA in Printed from counselvise.com 23 ITA No. 1516/Mum/2025 and others Tata Consultancy Services Ltd. AY 2016-17, 2017-18 and 2018-19 respect of interest Income which was claimed during the course of assessment proceedings, without filing revised return of income?\" 16. \"Whether, on facts and in circumstances of the case and in law, the Ld CIT(A) erred in deleting the disallowance of expenses incurred on payment of subscription fees u/s 400(IA) Rs.974,46,988/\" 17. \"Whether, on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in granting relief u/s 90/91 for foreign taxes paid on income which is not taxable in India u/s 10AA of the Income-tax Act, 1961? 18. \"Whether, on facts and in circumstances of the case and in law, the Ld. CIT(A) erred in deleting the disallowance as the warranty income was correctly taxed in AY 2015-16, and allowing its deduction in AY 2016-17 results in an undue benefit to the assessee. The department should also emphasize that tax assessments should be aligned with the principle of accrual accounting to ensure consistency and prevent manipulation of taxable income.\" 3. Summary of grounds of appeal raised by both, assessee and Revenue is tabulated below to highlight the issues to be dealt vide the respective grounds and how they are common in the three years which are to be adjudicated in the present appeals. We will take up appeal of the Revenue for Assessment Year 2016-17 in ITA No.2245/Mum/2025 and assessee’s appeal in the same Assessment Year in ITA No.1516/Mum/2025 as lead cases, to draw the facts and deal with the issues raised by both the parties. Our observations and findings in these two appeals for Assessment Year 2016-17 shall apply mutatis mutandis to the appeals of the other two years by both the parties. It may be noted that numbering of respective grounds of appeal may be different in the two other years which is taken care of while tabulating the issues arising out of the grounds of appeal below. We take up grounds of appeal seriatim. Printed from counselvise.com 24 ITA No. 1516/Mum/2025 and others Tata Consultancy Services Ltd. AY 2016-17, 2017-18 and 2018-19 Sr. No. Issues Department’s Appeal Assessee’s Appeals ITA No. ITA No. ITA No. ITA No. ITA No. ITA No. 2245/M/ 2025 2244/M/ 2025 2243/M/ 2025 1516/M/ 2025 1517/M/ 2025 1518/M/ 2025 AY 2016- 17 AY 2017- 18 AY 2018- 19 AY 2016- 17 AY 2017- 18 AY 2018- 19 Ground Nos. 1. Provision of software, technical and consultancy Services 01 01 01 02 and 03 02 and 03 02 and 03 2. Performance Guarantee 02 02 -- 04 04 04 3. Lease Guarantee 03 03 -- -- -- -- 4. Financial Guarantee 04 04 02 -- -- -- 5. Brand Royalty 05 05 03 -- -- -- 6. State Taxed paid overseas 06 06 04 -- -- -- 7. No TDS on imported software and software for internal use 07 and 08 07 and 08 05 and 06 -- -- -- 8. 14A with respect to recording dissatisfaction r.w.s. 115JB 09 09 7 -- -- -- 9. Brand building expenditure (AMP) 10 10 8 -- -- -- 10. Brand Equity subscription to Tata Sons 11 11 9 -- -- -- 11. Non TDS on commission to non-resident 12 12 10 -- -- -- 12. Foreign Tax Credit for income u/s.10A/AA 13 and 17 15 and 17 12 -- -- -- 13. General on section 194C(2) 14 -- -- -- -- -- 14. Deduction u/s.10AA on interest income during assessment 15 13 14 -- -- -- 15. Subscription fees u/s. 40(a)(ia) 16 16 13 -- -- -- 16. Warranty income of CMC already offered 18 -- -- -- -- -- 17. Year end provisions u/s. 37(1) -- 14 11 -- -- -- 18. 80G vis-a-vis CSR expenses -- 18 15 -- -- -- 19. Gratuity expenses debited to OCI in profit and loss -- 19 16 -- -- -- 20. Tax sparing credit u/s.90 on dividend received -- -- -- 01 01 01 Printed from counselvise.com 25 ITA No. 1516/Mum/2025 and others Tata Consultancy Services Ltd. AY 2016-17, 2017-18 and 2018-19 3.1. Common and basic facts relating to the assessee are that it is a leading global information technology consulting services and outsourcing company, having worldwide presence for more than 20 years. Assessee provides consultancy services, develops and implements products for customers covering on all matters pertaining to implementation of computer software and hardware system, management of data processing and information systems and data communication systems. It carries out its overseas operations through a web of foreign subsidiaries which act as its marketing and sales support companies. These subsidiaries serve as a hub for realization of international projects. Client service is carried out by its division in India. Also, TCS was earlier held by Tata Sons Ltd. which is the principal investment holding company of Tata group. On 09.08.2004, the TCS division of Tata Sons Ltd. was converted into a separate company pursuant to order of Hon'ble High Court of Bombay approving a scheme of amalgamation. Under this scheme, the TCS division was demerged w.e.f. 01.04.2004. 4. We take up appeals for AY 2016-17 for which assessee filed its return of income on 18.11.2016, reporting total income at Rs.16364,82,10,680/- with book profit u/s.115JB at Rs.29099,98,07,210/-. Assessee claimed deduction of Rs.13298,22,42,113/- as exempt income u/s.10AA and dividend income of Rs.56,48,80,329/-. During the year under consideration, assessee reported, among others, the following international transactions with its Associated Enterprises (AEs): Printed from counselvise.com 26 ITA No. 1516/Mum/2025 and others Tata Consultancy Services Ltd. AY 2016-17, 2017-18 and 2018-19 Sr. No. Nature of transaction Transaction amount (Rs.) Method 1. Provision of software and consultancy services 53301,48,41,659 TNMM 2. Availing of Services 1514,04,98,922 TNMM 3. Interest received on amount of loan outstanding 5,65,486 Other method 4. Guarantee fees 30,42,30,780 Other method 4.1. Reference u/s. 92CA(1) was made to ld. Transfer Pricing Officer (TPO) for computing the Arm’s Length Price (ALP) in respect of international transactions. We now take up the above tabulated issues, seriatim: I. Provision of software, technical and consultancy Services 5. Ground No.1 is in respect of adjustment made of Rs.642.45 crores by ld. Assessing Officer/TPO on account of software and consultancy services to its AEs which has been held to be not at ALP. It is a recurring issue for which the factual position is noted as under: a. Assessee considers itself as Tested Party b. Ld. TPO holds AEs as Tested Party c. Ld. TPO considers US comparables. The comparables considered for this AY remains same as for AY 2005-06 and subsequent AYs. However, the margins are updated d. Ld. TPO takes NCP as the criterion for Transfer Pricing adjustment. He also excludes payments made by AEs to assessee as pass-through cost. Printed from counselvise.com 27 ITA No. 1516/Mum/2025 and others Tata Consultancy Services Ltd. AY 2016-17, 2017-18 and 2018-19 e. Ld. CIT(A) in AYs 2007-08, 2008-09, 2009-10, 2010-11, 2012-13, 2013-14, 2014-15 and 2015-16 has been holding that the method adopted by AO is incorrect f. Appropriate Profit Level Indicator (PLI) decided by ld. CIT(A) is GP/Sales subject to AEs being Tested Party g. Subject to elimination of cases in +/-3% margin, ld. CIT(A) determined ALP corresponding to comparables 5.1. As observed in para-5.3 of the order of ld. TPO passed u/s.92CA(3), it is undisputed that the facts for this Assessment Year are identical to the preceding year, i.e. Assessment Year 2015-16. Accordingly, owing to these facts, assessee claims that there is no change in functions of the assessee as compared to the earlier years. Also ld. TPO, in para 5.6.3 noted that comparable which have been considered in earlier years are functionally in the same field and have been considered consistently, for the last several years. He also notes that there is no change in the functions of the assessee as compared to the earlier years and the same is also applicable for the comparable. According to him, reliability of data is not an issue, considering that the finances are available and there is no specific reason considering them as non-comparable. In this respect, functions performed and risk assumed by the AEs is tabulated below for ready reference.: Particulars Important information/documents Functions performed by employees of AE Key selling and marketing functions performed by AEs Profile of AE Key Employees - Postgraduates in Business Administration, Bachelors and Printed from counselvise.com 28 ITA No. 1516/Mum/2025 and others Tata Consultancy Services Ltd. AY 2016-17, 2017-18 and 2018-19 Masters in various technical fields Significant decision of AE business AEs board of directors undertaking significant decisions for AE's business High level selling function Incentive policy of AE employees (corroborates the high-level selling functions) Contractual relation with customer AEs enter into contract with customers Principal to principal relation Assessee and AEs have principal to principal relation Market Risk Some of AEs making losses signifies that they are subject to market risk Credit Risk Provision for bad and doubtful debts signifies AEs are subject to risk associated with deferment of payment by clients Risk for deficiency in service AEs bear cost of settlement with a customer, Cataligent Inc Fact that performance guarantee fee is charged to AE proves that onus of performance of projects is on AEs and not on assessee Risk coverage AE has undertaken insurance policy 6. Ld. CIT(A) while arriving at his decision on this issue referred to his order for Assessment Year 2009-10. He also took into account similar findings upheld in Assessment Years 2007-08, 2008-09, 2010- 11, 2012-13, 2013-14, 2014-15 and 2015-16, He also referred to the decision of Coordinate Bench of ITAT, Mumbai in assessee’s own case for Assessment Year 2014-15 which decided the issue based on the findings for Assessment Year 2009-10. From these decisions of the preceding years, following conclusions were drawn: Printed from counselvise.com 29 ITA No. 1516/Mum/2025 and others Tata Consultancy Services Ltd. AY 2016-17, 2017-18 and 2018-19 A. Objection regarding re-characterizing of International Transaction is dismissed B. Rejection of FAR and economic analysis carried out by the appellant is partly allowed in favour of assessee C. Objection about disregarding the benchmarking analysis carried out is partly allowed in favour of assessee D. Objection on erroneous selection of tested party is rejected, and E. Objection on erroneous application of TNMM is allowed 6.1. On the adoption of PLI of gross profit by sales, he relied on the decision of Coordinate Bench of ITAT in assessee’s own case for Assessment Year 2009-10 in ITA No.5713/Mum/2016, dated 30.10.2019 for which specific reference was made to para – 20. The same is reproduced whereby it was held that ld. CIT(A) was justified in directing the ld. TPO to adopt PLI of gross margin on sales: “20. We have considered rival submissions and perused the material on record. We have also applied our mind to the decisions relied upon. From the grounds raised by the Revenue, the following three issues arise for consideration (i) what should be the appropriate PLI; (ii) whether cost of outsourcing / sub-contracting to the TCS should be considered for computing the margin; and (iii) whether the alternative Benchmarking furnished by the assessee by treating the AEs as tested party with comparables in the same geographical locations is acceptable. On a careful perusal of the facts on record as well as submissions of the learned Counsel for the parties in the course of hearing as well as in the written note, we are of the view that the decision of learned Commissioner (Appeals) on the aforesaid issues are unassailable. As regards the issue of appropriate PLI, we are of the view that considering the nature of activity performed by the assessee as well as the AEs, it cannot be said that the A.Es are not bearing any risk. Rather the facts on record reveal that the AEs performed the role of risk bearing distributors. It is well brought out by learned Commissioner (Appeals) in his order that the AEs are bearing credit risk and risk of default by client. In fact, the assessee through proper evidences has demonstrated instances where the credit risk with reference to part cancellation of contract has been borne by the AES without compensation from the assessee. The documentary evidences in this regard furnished by the assessee were thoroughly examined not only by learned Commissioner (Appeals) but they were also produced before us. Thus, from the aforesaid facts, it becomes clear that significant marketing functions are being performed and distribution and marketing risk are being taken by the AEs. On examination of the financials of Printed from counselvise.com 30 ITA No. 1516/Mum/2025 and others Tata Consultancy Services Ltd. AY 2016-17, 2017-18 and 2018-19 the subsidiaries it is revealed that some subsidiaries are still making loss at net level which signifies that some risk is being borne by the AEs. It has further been brought on record that the manpower base of AEs performed various functions relating to marketing as well as client co-ordination. The AEs have developed sufficient competency to handle the marketing work independently. The entire contract related work is performed by the AEs, though, in cooperation with the assessee. Thus, it is quite natural that for being a sufficiently motivated work force, the AEs are compensated at return on sales and not merely on value added costs. Therefore, learned Commissioner (Appeals) was justified in directing the Transfer Pricing Officer to adopt the PLI of gross margin on sales. As regards consideration by the Transfer Pricing Officer, the outsourcing / sub-contracting cost to assessee as a pass through cost, learned Commissioner (Appeals) was absolutely correct in observing that the decision of the Transfer Pricing Officer to exclude such costs while computing the margin of the AEs is incorrect. When similar cost incurred by the comparables were not excluded while computing their margin, a different treatment cannot be given to such costs in case of the AEs. Certainly, the aforesaid approach of the Transfer Pricing Officer has resulted in distorting the correct PLI of the AEs. In the aforesaid context, the observations of learned Commissioner (Appeals) are appreciable, wherein, he has observed that the PLI of the AEs and Transfer Pricing Officer, hence, comparability condition fails. It is further relevant to observe, the alternative benchmarking furnished by the assessee before the Transfer Pricing Officer by considering the AEs in different geographic locations as tested parties with the comparables selected on the basis of the respective geographic locations furnished before the Transfer Pricing Officer were not properly considered. However, in course of appeal proceedings, the learned Commissioner (Appeals) examined them in detail and after a detailed analysis approved some comparables selected by the assessee and also added some new comparables. Whereas, the comparable selected by the Transfer Pricing Officer were not on the basis of any detailed search process. At least, no such analysis is either forthcoming from the order of the Transfer Pricing Officer or could be brought to our notice by learned Departmental Representative. On the contrary, on a thorough and careful reading of the impugned order of learned Commissioner (Appeals), we are of the view that learned Commissioner (Appeals) has taken pains to examine in detail the alternative benchmarking done by the assessee with foreign comparables and after detailed analysis has shortlisted the final comparables to be considered for comparability analysis. No Convincing argument or evidence has been brought on record by the ed Departmental Representative to persuade us to disturb the finding of learned Commissioner (Appeals) on these issues. In view of the aforesaid, we do not find any merit in the grounds raised by the Revenue on the issues. Accordingly, grounds are dismissed.” 6.2. From the above extraction, it is also noted that Coordinate Bench observed the pains taken by ld. CIT(A) to examine in detail the alternative benchmarking done by the assessee with foreign comparables and after detailed analysis has shortlisted final comparables to be considered for comparability analysis. He did not find Printed from counselvise.com 31 ITA No. 1516/Mum/2025 and others Tata Consultancy Services Ltd. AY 2016-17, 2017-18 and 2018-19 any merit in the grounds raised by the Revenue on the said issue. The Coordinate Bench observed about the examination who after detailed analysis, approved some comparables selected by the assessee and also added some new comparables. While applying the PLI of GP by sales, ld. CIT(A) tabulated his examination and decision on the comparables whereafter he arrived at median of 16.28%. He also referred to Form No.10A made available in respect of comparables of North America. He thus, concluded by stating that ld. Assessing Officer/ TPO can call for necessary particulars for the purpose of computation of average gross margin in respect of accepted companies of North America and Europe to compare with GP percentage for sub-contract of services to assessee. Thus, ld. TPO was provided an opportunity to verify the comparables selected by ld. CIT(A) while passing the order giving effect to the first appellate order for earlier Assessment Years. It was brought to the knowledge of the Bench that the order giving effect to order of ld. CIT(A) is yet to be passed. In this respect, observation of the Coordinate Bench in the decision in Assessment Year 2009-10, as noted in para – 20, extracted above is worth noting whereby it is stated that “No convincing arguments or evidence have been brought on record by the ld. DR to persuade us to disturb the findings of ld. CIT(A) on these issues”. 7. We have perused the order for Assessment Year 2009-10 by the Coordinate Bench which had dealt with this identical issue, including one raised by the assessee. Para-13 onwards of this order deals with the issue by narrations of submissions made by both the parties. In para – 15, it is observed that grounds raised by the Revenue are basically against the decision of ld. CIT(A) on the appropriate PLI to be applied, consideration of the cost including alternative bench marking, considering the AEs in different geographical locations as tested parties Printed from counselvise.com 32 ITA No. 1516/Mum/2025 and others Tata Consultancy Services Ltd. AY 2016-17, 2017-18 and 2018-19 along with comparables situated in those geographical locations. However, grounds raised by the assessee are on selection of tested parties and other peripheral issues. Coordinate Bench observed that decisions on the grounds raised by the Revenue once held against, it would render the appeals by the assessee academic. Similar is the case in appeal before us for Assessment Year 2016-17 whereby ground No.2 and 3 raised by the assessee in its appeal for all the three Assessment Years would have similar outcome, once we decide on the appeal of the Revenue. The Coordinate Bench drew its conclusion in para-20 which has already been extracted above dismissing the grounds raised by the Revenue. Having held the grounds raised by the Revenue against it, it also held that the appeal filed by the assessee was rendered academic and therefore no separate adjudication was done. As already noted, this is a recurring issue, with history of past several Assessment Years and there being no change in the fact pattern in respect of functions of the assessee performed by it when compared with the earlier years, which ld. TPO himself has accepted and acknowledged in his order more particularly in para 5.3 and 5.6.3, the findings of the Coordinate Bench in the order for Assessment Year 2009-10, in assessee’s own case (supra) squarely applies in the appeals before us for Assessment Year 2016-17, both by the Revenue as well as the assessee. Respectfully, following the same, grounds raised by the Revenue are dismissed. Also, the grounds raised by the assessee in view of the outcome of grounds raised by the Revenue becomes academic, hence do not require adjudication. II. Performance Guarantee, III. Lease Guarantee, and IV. Financial Guarantee (all three issues taken together) Printed from counselvise.com 33 ITA No. 1516/Mum/2025 and others Tata Consultancy Services Ltd. AY 2016-17, 2017-18 and 2018-19 8. Now, we take ground nos. 2, 3 and 4 together which all relate to guarantees. These are in the nature of performance guarantee, lease guarantee and financial guarantee. Assessee during the year had guarantees in the nature of performance, lease and financial for or on behalf of its various AEs. At the outset, it was submitted by the ld. Counsel of the assessee that if these guarantees are treated as chargeable services, guarantee commission at the rate of 0.5% per annum as held by Coordinate Bench in assessee’s own case for Assessment Year 2009-10 (supra), be charged. While considering this issue, ld. CIT(A) referred to the first appellate order for Assessment Year 2009-10 and made certain observations. He also noted that the quotes obtained by ld. TPO from Allahabad Bank were found to be correct. According to him guarantee fee depends on variety of facts and may be a subject of negotiation between the two parties. Ld. TPO had not brought out any actual instances of such guarantees and therefor CUP cited by the assessee is to be accepted. He directed to adopt the guarantee fee rate of 1.93% on the computed value of performance guarantee for computing the adjustment. He directed the ld. Assessing Officer/TPO to verify the portion of revenue which is onsite for applying the guarantee fee rate. In respect of finance guarantee, he upheld the percentage of 0.77%, i.e., 0.74 + mark up of 0.02%. In respect of lease guarantee, he held for applying the same rate of 1.93% as in the case of performance guarantee and restricted its application on the area occupied by AEs which is 65%. 8.1. Coordinate Bench has dealt with this issue in assessee’s own case for Assessment Year 2009-10 (supra) and directed to charge guarantee commission at the rate of 0.5% per annum on performance, lease as Printed from counselvise.com 34 ITA No. 1516/Mum/2025 and others Tata Consultancy Services Ltd. AY 2016-17, 2017-18 and 2018-19 well as finance guarantee. Relevant para in this respect is extracted below: “43. We have considered rival submissions and perused the material on record. We have also applied our mind to the decisions relied upon. Insofar as the contention of learned Sr. Counsel for the assessee that provision of guarantee is not an international transaction as per section 92B of the Act, we are unable to accept such contention. In our considered opinion, after introduction of Explanation-(i)(c) to section 92B of the Act, with retrospective effect from 1\" April 2002, provision of guarantee to AEs has to be considered as an international transaction. Different Benches of the Tribunal have also expressed similar view on the issue. Therefore, we hold that the provision of guarantee to the AEs is an international transaction. In fact, the aforesaid view has been expressed by the Co-ordinate Bench in WNS Global Services Pvt. Ltd. (supra). Therefore, following the aforesaid decision of the Co-ordinate Bench and the decision of the Hon'ble Jurisdictional High Court in Everest Canto Cylinders Ltd. (supra), we direct the Assessing Officer to charge guarantee commission @ 0.5% per annum both on performance / lease guarantee as well as financial guarantee.” 9. Respectfully following the above decision, facts remaining same, grounds raised by the Revenue in respect of performance, lease and financial guarantee vide ground nos. 2, 3 and 4 are dismissed. 10. In view of our above stated decision on the grounds raised by the Revenue on this issue, no separate adjudication for ground no.4 in the appeal by the assessee is required. V. Brand Royalty 11. Ground no.5 is on the issue relating to receipt of brand royalty of Rs.1779,23,55,479/- from its AEs for use of brand “Tata Consultancy Services and TCS”. It is noted that ld. CIT(A) had relied upon the agreements between assessee and Tata Sons Ltd. dated 19.04.2024 and 24.12.2009 as well as three trade mark certificates issued on 25.03.2005, 16.08.2005 and 19.01.2006 for arriving at his decision that Tata Sons Ltd. is the legal owner of the brand “TCS” and “Tata Consultancy Services”. In this respect, in order to substantiate that Tata Sons Pvt. Ltd. (earlier named as Tata Sons Ltd.) is the legal owner of Printed from counselvise.com 35 ITA No. 1516/Mum/2025 and others Tata Consultancy Services Ltd. AY 2016-17, 2017-18 and 2018-19 trademarks and service marks containing “TATA” including “Tata Consultancy Services” and “TCS”, used in relation to the assessee’s business, it made the following factual submission: i. The name \"Tata\" is owned and used by Tata Sons since year 1868 ii. \"Tata Consultancy Services\" and \"TCS\" trademark / Marks are registered in India under Trademarks Act, 1999, owner being Tata Sons iii. \"Tata Consultancy Services\" trademark / Mark is registered in overseas countries like Japan, Canada, United States, etc., the owner being Tata Sons Limited for which certificates publicly available iv. The Draft Red Herring Prospectus filed with Securities and Exchange Board of India (SEBI) on 09.06.2004 clearly states Tata Sons is the proprietor of the trademark and service mark \"TATA\" and other trademarks and service marks containing \"TATA\" including \"Tata Consultancy Services\" and \"TCS\", used in relation to the business of assessee v. Various clauses like clause 3.1, 3.2, 10.1, 11, 12 of TATA BRAND EQUITY & BUSINESS PROMOTION AGREEMENT (BEBP agreement) dated 19.04.2004 and clauses 1.1, 3.1, 4.2, 9.1, 10, 13.3 of BEBP agreement dated 24.12.2009 between TCS and Tata Sons clearly provides right to TCS and its subsidiaries to use the TATA name and TATA marks for its internal and external business communications. Further, it is also mentioned in the agreement that any misuse or abuse by anybody of the rights granted to Tata Sons, the violator will invite penal consequences including imprisonment for such violations as prescribed in the provisions of the Trademarks Act, 1999 Printed from counselvise.com 36 ITA No. 1516/Mum/2025 and others Tata Consultancy Services Ltd. AY 2016-17, 2017-18 and 2018-19 vi. In case assessee charges brand subscription fees to its AEs, it would be a direct contravention of the BEBP agreement, which specifically restricts any sub-licensing and thereby, may lead to termination of the BEBP agreement by Tata Sons apart from violating the provisions of the Trademarks Act, 1999 and will attract all the penal consequences as prescribed by the Trademarks Act, 1999 vii. Further, it will be both legally and commercially inappropriate for any affiliates of the assessee to pay brand subscription fees to it for use of “TCS/Tata Consultancy Services” marks when these marks are owned by Tata Sons. Affiliates of assessee also pay subscription fees for their use, directly to Tata Sons viii. TPO has no power to change the legal ownership of an asset that has existed for more than 150 years 11.1. It was further submitted that this issue is squarely covered by the decision of Coordinate Bench in assessee’s own case in Assessment Year 2014-15 in ITA No.5199/Mum/2019, dated 15.09.2023. In this decision, the Coordinate Bench referred to another decision in assessee’s own case for AY 2012-13 to hold that nature of payment made by the assessee is identical to the one made in the earlier year and thus, following the decision of the Coordinate Bench, it did not interfere with the decision of the ld. CIT(A) and thus, dismissed the ground raised by the Revenue. The factual position noted by the Coordinate Bench in the Assessment Year 2014-15 as contended in para 84-86 below: “84. The TPO was of the view that the assessee has been recognized as one of the big 4 in the information technology for A.Y. 2013-14 and is a very powerful brand and the value of brand has been quantified at 8.2 billion USD as per the annual report. The assessee submitted before the TPO that the brand legally owned by the Tata Sons Limited and so the assessee has no right to charge for fees for the brand. Printed from counselvise.com 37 ITA No. 1516/Mum/2025 and others Tata Consultancy Services Ltd. AY 2016-17, 2017-18 and 2018-19 85. The assessee also submitted that the revenue sharing model it follows with the AE also includes the brand royalty remuneration and no additional fees or royalty is needed. The TPO did not accept the submissions of the assessee. The TPO held that the assessee is the actual value contributor and maintains, practices and evidences the value of the brand through its service delivery credentials. Accordingly, the TPO was of the view that it is the assessee, who is entitled for appropriate return for the brand value. The TPO applied 2.9% royalty on the revenue earned by AEs using TCS services to arrive at an adjustment of Rs.1187.06 crores. On further appeal, the CIT(A) deleted the TP adjustments made towards the provision for software an consultancy and adjustment made towards brand royalty fees. 86. The Id AR submitted that the coordinate bench in assessee's own case for AY 2012-13 (supra) has allowed the fees paid by the assessee to Tata and Sons Ltd as deduction under section 37(1), thereby accepting the submission that the brand is not owned by the assessee. The Id AR further presented same line of arguments to submit that the TPO is not correct in making any TP adjustment towards the notional fees on the brand that is not owned by the assessee, which the TPO held as to be received by the assessee.” 12. Thus, Coordinate Bench held that the fee paid by the assessee towards brand to Tata Sons Ltd. is not capital in nature as the brand is not owned by the assessee. Accordingly, no transfer price adjustment could have been made in respect of brand royalty. Accordingly, findings of ld. CIT(A) were upheld and ground raised by the Revenue was dismissed. 13. On this issue, ld. CIT DR placed on record the written submission dated 14.10.2025 which has been perused. It is submitted that brand of “Tata Consultancy Service” is different and distinct from the brand of “TATA”. Brand value “Tata Consultancy Service” is largely self- generated which can be attributed to the name “TATA” to a small extent only. For this limited extent, assessee pays Rs.75 crores annually to Tata Sons Ltd. He further, submitted that assessee had commissioned a concern “Brand Finance” to value its brand, i.e., Tata Consultancy Services, for which copy of brand valuation report as on 01.01.2016 issued by Brand Finance was submitted during the course of hearing. It was pointed out that brand of “Tata Consultancy Services” is the Printed from counselvise.com 38 ITA No. 1516/Mum/2025 and others Tata Consultancy Services Ltd. AY 2016-17, 2017-18 and 2018-19 fourth most valuation brand within the IT services sector worldwide and is amongst top 10 companies in the world in the IT services sector. According to this report, the brand “TCS” was valued at USD 9047 million as on 01.01.2016. By referring to this valuation report, contention of the ld. CIT DR is that there is more to the brand value of the “Tata Consultancy Services” within the name “TATA” which has been generated by the assessee on account of its domain competence in the IT services sector, its continued growth, excellence in service and delivery, customer satisfaction, etc. He further pointed out that brand “TATA” was valued at USD 13608 million to show that brand of “Tata Consultancy Services” is different and distinct from the brand of “TATA”. 13.1. Ld. CIT DR pointed out to certain factors emanating from the scheme of arrangement approved by the Hon'ble High Court of Bombay between Tata Sons Ltd. and Tata Consultancy Services, dated 07.04.2004 to submit that assessee became the owner of all assets and liabilities which included intangible, trade mark, brand, etc., when a consideration Rs.2300 crores was paid by the assessee to the transferred company, i.e., Tata Sons Ltd. He also pointed out to the difference in logo and trade mark as noted by ld. TPO in his order. It was thus, contended that brand of “Tata Consultancy Services” is owned by the assessee and not by Tata Sons Ltd. Thus, assessee has got its own brand value and has incorporated its valuation in its annual report. Based on this, it was contended that decisions of the preceding years in assessee’s own case on this very issue would not apply. 14. Per contra, ld. Counsel for the assessee at the outset referred to page – 55 of the Brand Finance Global 500 League Table Report, 2014, Printed from counselvise.com 39 ITA No. 1516/Mum/2025 and others Tata Consultancy Services Ltd. AY 2016-17, 2017-18 and 2018-19 prepared for the assessee based on which ld. CIT DR had pointed out certain observations to contend that owner of the trade mark and copyright is the assessee and not Tata Sons Ltd. On this, from page-55 of the valuation report in the third bullet, it is noted that the owner of the trade mark is Tata Sons. For this the contents of the third bullet are extracted below for ready reference: “In conjunction with the trademark owner, Tata Sons, the Tata Consultancy Services brand team needs to formalise a global strategy which takes into consideration the needs of the Group brand and those of daughter companies and allows them to grow and meet new communications challenges in the face of phenomenally successful international growth.” [emphasis supplied by us by bold and underline] 14.1. He also referred to certificates forming part of the paper book to demonstrate that Tata Sons Ltd. is the owner of the trade mark. Further, Tata Consultancy Services trade mark/mark is registered in overseas countries like Japan, Canada, US with the owner being Tata Sons Ltd. as per the certificates. Also, in the prospectus filed with SEBI on 09.06.2004 by the assessee, it was categorically mentioned that Tata Sons Ltd. is a proprietor of trademark and service mark “TATA”. 14.2. On the aforesaid issue, we have considered the submissions made by both the parties and perused the material on record. We have also gone through the order of the Coordinate Bench for the preceding years dealing with the same issue. Ld. CIT DR in his submission pointed to certain facts to distinguish the applicability of the judicial precedents in assessee’s own case. We note that there is no change in the factual position which the Coordinate Benches have dealt in the preceding years in assessee’s own case, on this issue. The facts dealt in the earlier years and the facts narrated in this year are identical. Also, the Brand Valuation Report issued by Brand Finance relied upon by ld. CIT DR for distinguishing the preceding years decisions, categorically mentions Printed from counselvise.com 40 ITA No. 1516/Mum/2025 and others Tata Consultancy Services Ltd. AY 2016-17, 2017-18 and 2018-19 Tata Sons as the owner of the trade mark. There being no change in the factual position vis-à-vis brand ownership, we hold that the judicial precedents of the preceding years in assessee’s own case squarely applies in this year also. 14.3. For the above, relevant findings of the Coordinate Bench in appeal for Assessment Year 2014-15 (supra) reads as under: \"84. The TPO was of the view that the assessee has been recognized as one of the big 4 in the information technology for A.Y. 2013-14 and is a very powerful brand and the value of brand has been quantified at 8.2 billion USD as per the annual report. The assessee submitted before the TPO that the brand legally owned by the Tata Sons Limited and so the assessee has no right to charge for fees for the brand. 85. The assessee also submitted that the revenue sharing model it follows with the AE also includes the brand royalty remuneration and no additional fees or royalty is needed. The TPO did not accept the submissions of the assessee. The TPO held that the assessee is the actual value contributor and maintains, practices and evidences the value of the brand through its service delivery credentials. Accordingly, the TPO was of the view that it is the assessee, who is entitled for appropriate return for the brand value. The TPO applied 2.9% royalty on the revenue earned by AEs using TCS services to arrive at an adjustment of Rs. 1187.06 crores. On further appeal, the CIT(A) deleted the TP adjustments made towards the provision for software an consultancy and adjustment made towards brand royalty fees. 86. The Id AR submitted that the coordinate bench in assessee's own case for AY 2012-13 (supra) has allowed the fees paid by the assessee to Tata and Sons Lid as deduction under section 37(1), thereby accepting the submission that the brand is not owned by the assessee. The Id AR further presented same line of arguments to submit that the TPO is not correct in making any TP adjustment towards the notional fees on the brand that is not owned by the assessee, which the TPO held as to be received by the assessee. 87. The Id DR relied on the order of TPO 88. We heard the parties and perused the material on record. We have in the earlier part of this order already held that the fee paid by the assessee towards the brand to Tata and Sons Ltd. is not capital in nature for the reason that the brand is not owned by the assessee. Accordingly there cannot be any royalty that needs to be charged on the brand since assessee is not the owner of the brand and there cannot be any TP adjustment towards the amount that ought to have been received by the assessee towards brand royalty. We therefore see no infirmity in the order of the CIT(A). This ground of the revenue is dismissed.\" 24. Similarly, in A.Y. 2013-2014 in ITA No.1769/Mum/2018 and for A.Y. 2012- 2013 in ITA No.797/Mum/2018, this issue has been decided as under:- Printed from counselvise.com 41 ITA No. 1516/Mum/2025 and others Tata Consultancy Services Ltd. AY 2016-17, 2017-18 and 2018-19 \"9.1. We have heard rival submissions and perused the materials available on record. We find that assessee had incurred an expenditure in respect of payment towards Tata brand equity and claimed the same as business expenditure\" u/s37(1) of the Act. The assessee had made payment towards subscription fee for carrying out normal business activities of the company. The assessee submitted that the Tata brand always belong to Tata Sons and accordingly, the assessee has made payment to Tata Sons after due deduction of tax at source u/s. 1943 of the Act. The assessee also submitted that this payment is required to be made annually by all the subscribee\"s to Tata Sons towards subscription on the basis of their profitability. There is no question of capitalizing this expenditure as it is a recurring payment by the assessee The Id. DR vehemently relied on the order of the Id. AO. 9.2. We find that this Tribunal in assessee\"s group concern's case of Tata Autocomp Systems Ltd., vs. ACIT in IT (TP)A No.7596/Mum/2012 for A.Y.2008-09 dated 12/06/2013 had addressed very same issue. The decision rendered thereon shall apply mutatis mutandis to this appeal except with variance in figures. The relevant operative portion of the Tribunal order dated 12/06/2013 referred to supra is reproduced hereunder:- 2. The issue raised in ground No. 1 relates to the disallowance of ₹ 32,42,666/- made by the A.O. on account of payment made by the assessee to Mis Tata Sons Lid on account of subscription towards \"TATA\" brand equity and business promotion scheme. 3. The assessee in the present case is a company which is engaged in the business of providing services to the global automotive industries. The return of income for the year under consideration was filed by it on 30-9-2008 declaring total income of 51,05,63,935/- which was subsequently revised to 52.34,36,910/-, In the profit and loss filed along with the said return, an amount of ₹ 32.42,666/- was debited by the assessee on account of subscription paid to Tata Sons Lid. towards TATA brand equity and promotion scheme. While justifying its claim for the said payment, the following submissions were mainly made on behalf of the assessee before the A.O:- \"By entering into the agreement, the assessee became entitle to use and associated itself with TATA name, marks and marketing Indica for the company's products and services. The Tata Sons Ltd., protects and enforces the collective image and goodwill of the Tata Group, organize corporate identity, coordinate major campaign involving promotion and development of Tata name, engage the service of specialist and professional consultants for energizing and enhancing the overall Tata brand etc. By entering into the agreement, Tata Sons Ltd. had granted non exclusive and on assignable subscription to use TATA name and marketing Indica. The assessee justified the payment stating that the main goal to formulate the scheme was to justify a diverse and diffuse enterprise and make it Printed from counselvise.com 42 ITA No. 1516/Mum/2025 and others Tata Consultancy Services Ltd. AY 2016-17, 2017-18 and 2018-19 capable of facing the challenge from international brand names, post liberalization. The assessee company has derived huge benefits in the form of increase sales and also other operational efficiencies. In the past assessment years the similar payment has been allowed as deduction. The Assessee relied on the decision in the case of Radhasoami Satsang Vs. CIT (1992)193 ITR 321(SC)\" 4. The A.O. did not find merit in the above submissions made by the assessee on this issue for the following reasons given in the assessment order \"The assexsee company was incorporated on 17.10.1995 with the name Tata Autocomp Systems Ltd. Therefore, the assessee company had been using the name TATA since then. It is not a case where prior permission was required to use the \"TATA\" name at the time of incorporation The aforesaid arrangement of payment of subscription towards brand- equity was entered only on 04.06.2001 Le. more than five years after the incorporation. By using TATA word in its name since then itself gives the assessee right to use TATA brand Further, it is seen that the major holding (74%) of the assessee-company is with Tata Industries Ltd. Tata Motors Ltd, and Tata Sons Ltd. All these three companies have been using the name TATA since long As regards assessee's submission that the similar claim had been-allowed in past, it may be noted that this particular issue was never examined in past. Further. perpetuity of a mistake cannot be allowed to continue. Since, this issue had never been examined in past and had been allowed without any verification, with due respect to the ratio of the decision in the case of Radhasoami Satsang Vs. CIT (1992) 193 ITR 321 (SC), it is submitted that the same is not applicable to the present case. The similar issue is involved in the case of Tata Chemical Ltd. a group company of the Tata Group wherein, DRP have confirmed the proposed addition on the ground of disallowance of brand equity subscription. For the reasons given above, the A.O. proposed disallowance of 32,42,666/- on account of subscription paid by the assessee to Tata Sons Ltd. in the draft assessment order against which objection was filed by the assessee before the DRP The DRP found the objection of the assessee to be unsustainable keeping in view that a similar issue was being agitated by the Department at various appellate forums. Consequently, final disallowance of 2 32,42,666/- was made by the A.O. on this issue. 5. We have heard the arguments of both the sides and also perused the relevant material available on record. The Id counsel for the assessee, at the outset, has invited our attention to the copy of relevant agreement entered into by the assessee company with Tata Sons Ltd. on 4th June, 2001 placed at assessee's paper book page No. 207 to 225 in order to point out the obligation Printed from counselvise.com 43 ITA No. 1516/Mum/2025 and others Tata Consultancy Services Ltd. AY 2016-17, 2017-18 and 2018-19 of Tata Sons to look after the entire brand of TATA group. The said obligation being relevant in the present context are extracted below from page No. 210 and 212 of the assessee's paper book- \"a) To protect and promote the interests generally of the Subscriber both in India and abroad. To this end, the Subscriber hereby authorizes the Proprietor to act on its behalf in protecting and enforcing the collective image and goodwill of the Group and preventing any newly developed mark or symbol from being usurped and/or diluted in any way. b) To organize periodically as may be deemed necessary corporate identity and brand promotional activities and campaigns through various media including electronic telecommunication/satellite communication media (e.g. TATA Website) etc. printing and publishing of promotional material and such other activities as in the opinion of the Board of Directors of the Proprietor Company, will enhance the TATA Brand Equity and correspondingly benefit the business of the Subscriber. c) To co-ordinate major campaigns involving the promotion and development of the Business Name Marks and Marketing Indica. d) to engage the services of specialist agencies both National and International as the need may be to energise and enhance the Overall TATA Brand Equity which eventually could result in a greater market share for the products and services of the Subscriber and help in the preservation and vindication of the trust and confidence reposed by customers, business associates, stockholders and the society in general. e) To engage profession consultants for conducting industry/organizational studies/research for the formulation of Group business strategies and policies that would assist the subscribing companies to emerge as business leaders in the evolving markets. f) For the attainment of the overall objectives of the TATA Brand Equity & Business Promotion Scheme and interacting closely with the participating TATA Companies in a certainly coordinated manner, engage and set up a team of senior personnel and/or advisors/consultants and/or specialists firms as well as provide them with the necessary supporting staff and facilities to perform their functions. g) To take steps to make available a pool of sharable resources of the TATA Group including managerial talent trained in TATA values to the Subscriber. h) To provide necessary guidance to the Subscriber in order to ensure appraise the performance of the Subscriber in various areas of its activity and to guide and assist the Subscriber in the attainment of higher standards of quality of its products, services and management. 1) To adopt the JRD Quality Value and/or other such process as a means of appraise the performance of the Subscriber in various areas of its activity and to guide and assist the Subscriber in the attainment of higher standards of quality of its products. Services and management. Printed from counselvise.com 44 ITA No. 1516/Mum/2025 and others Tata Consultancy Services Ltd. AY 2016-17, 2017-18 and 2018-19 j) To provide such support and assistance to the Subscriber as the Board of Directors of the Proprietor Company may consider necessary in certain circumstances including securing the support of Group companies to the extent and in a manner permissible under the prevalent laws. k) to encourage support to the Subscriber's business from Group companies subject to the availability of products and services of a desirable quality at competitive rates. 1) to undertake activities which in the opinion of the Board of Directors of the Proprietor Company are essential for the purpose of promoting, developing. maintaining, managing and legally protecting the Business Name, the Marks and Marketing Indica in India and abroad and thereby endeavor to promote the business of the Subscriber to achieve greater profitability and enhancement of stakeholder value. m) To undertake measures to preserve the stability of the management of the Subscriber in order to protect the larger interests of its stakeholders. n) To provide resources for availing services in the areas of 1. Financial and Strategic Management. 2. Legal and Economic matters. 3. Management Development and Human Resources. 4. Corporate Communications. 5. Community Services. o) For the purposes of promoting the business of the Subscriber to provide assistance in accessing the network of domestic and international business contacts and availing the services of the domestic and overseas offices of the Proprietor and the Group Companies. p) To institutionalise mechanisms to share and propagate best management practices amongst the Subscribing companies. q) To manage and supervise the implementation of the Scheme and ensure compliance with the terms of this Agreement and the Code\". The ld. counsel for the assessee has also invited our attention to the relevant portion of the agreement did 4th June, 2001 at page 218 containing subscription clause whereby the assessee was obliged to pay the subscription at the stipulated rate to Tata Sons Ltd. for the services rendered in connection with maintaining and promoting the entire brand and image of TATA group. 6. As further submitted by the Id. counsel for the assessee, M/s Rallis India Ltd. another company belonging to TATA group had also entered into a similar agreement with M/s Tata Sons and the subscription paid as per the said agreement towards TATA brand equity and business promotion scheme was disallowed by the A.O. The Id. CIT(A), however, allowed the same and the Printed from counselvise.com 45 ITA No. 1516/Mum/2025 and others Tata Consultancy Services Ltd. AY 2016-17, 2017-18 and 2018-19 Tribunal vide its order dtd. 30-8-2011 passed in ITA No. 5701/Mum/2008 for ITA No.1769/Mum/2018 and other appeals M/s. Tata Consultancy Services Ltd., 28 A.Y. 2004-05 upheld the order of the Id. CIT(A) on this issue. The copy of the said order is placed on record at page 1 to 21 of the compilation of the judgments filed by the Id. counsel for the assessee and a perusal of the same shows that a similar issue was decided by the Tribunal in favour of the assessee by agreeing with the view of the ld. CIT(A) that the payment in question not only permitted the use of TATA name but also gave an opportunity to the assessee to inform the business world that it was having the back up of excellence, with a code of conduct and a promise of quality. It was held that the fact that the TATA group was already having an infrastructure and brand equity was well established and by making such a contribution, the assessee company was benefited in its day- to-day business. The Tribunal also found that a similar issue was decided in favour of the assessee in case of Harrisons Malayalam reported in 19 SOT 363 wherein the payment made for acquiring non-exclusive licence to use the logo for the purpose of business was held to be allowable u/s 37(1) of the Act being the expenditure wholly and exclusively incurred for the purpose of business. It is pertinent to note that in the case of Tata Steel, another company belonging to TATA group, a similar subscription paid by the assessee company to Tata Sons Ltd. was proposed to be disallowed by the A.O. in the draft assessment order for A.Υ. 2008-09 and when the assessee objected to the said disallowance before the DRP by relying on the decision of the Tribunal in the case of Rallis India Ltd. (supra). the DRP directed the A.O. to allow the said expenditure after verifying as to whether the department has accepted the said decision of the Tribunal. On verification, the A.O. found that no appeal was filed by the department against the order of the Tribunal passed in the case of Rallis India Ltd. giving relief to the assessee on the issue of brand equity subscription and accordingly he allowed similar subscription paid by Tata Steel Ltd. in the final assessment completed u/s 143(3) r.w.s. 144-C of the Act vide order dtd. 27-11-2010. It is thus clear that this issue is squarely covered in favour of the assessee by the decision of the co- ordinate Bench of this Tribunal in the case of Rallis India Ltd. which has also been accepted by the department. Respectfully following the said decision of the Tribunal, we delete the disallowance made by the A.O. on account of subscription paid by the assessee to Tata Sons Ltd. towards brand equity and promotion scheme and allow ground No. I of assessee's appeal. 9.3. Respectfully following the same, we find no infirmity in the order of the Id. CIT(A) allowing the said expenditure as a Revenue expenditure. Accordingly, the ground No.5 raised by the Revenue for the A.Y.2012-13 is dismissed.” 14.4. As we mulled on the concept of ‘brand’, we learnt that a valuable brand isn’t built overnight and it isn’t built by visuals alone. It’s shaped by every promise made and every experience delivered. At its core, brand value comes from trust, relevance and consistency. For a brand to stand apart, it is characterised by certain differentiating attributes with predominantly value based architecture. There is purpose which is built Printed from counselvise.com 46 ITA No. 1516/Mum/2025 and others Tata Consultancy Services Ltd. AY 2016-17, 2017-18 and 2018-19 in the DNA of the organisation which the brand represents. It carries unmatched trust capital to enjoy credibility across diverse sectors of socio-economic setup. There is coherence in corporate governance delivered through moral leadership. It can be linked to national pride, progress and seen as a benchmark for a corporate behaviour. Attributes of quality assurance, integrity, fairness, performance and the like become synonymous to such a brand. 14.5. Keeping the above in the context, it is important to deal with the contention of ld. CIT DR who submitted on Tata Consultancy Services that there is more to the brand value of the Tata Consultancy Services than the name “TATA” which has been generated by the assessee. To our mind, what adds value to this entire name of “Tata Consultancy Services” is the word “TATA”. If this word “TATA” in “Tata Consultancy Services” is replaced with any other word/name/phrase would have significant impact on the valuation which has not been tested yet. The question over which one has to mull is whether the name of this phrase “Tata Consultancy Services” when replaced by another word for “TATA”, would it command the similar brand value and position in the global market in the domain in which it works. 14.6. For the above, reference was made to the comprehensive agreement put in place called the Brand Equity and Business Promotion (BEBP) agreement which provided companies of the Tata group the right to use the unified Tata brand for a licence fee prescribing clear guidelines for its usage. Those companies who signed this agreement only have the right to use the ‘Tata’ name. This BEBP agreement lists the requirements a company has to meet if it wishes to use the ‘Tata’ name and brand. For instance, each company signing this agreement Printed from counselvise.com 47 ITA No. 1516/Mum/2025 and others Tata Consultancy Services Ltd. AY 2016-17, 2017-18 and 2018-19 would have to adhere to the Tata Code of Conduct, which laid down the ethical principles that would govern all aspects of business. In addition, each company would have to become part of a business excellence framework defined by the group. Details from this agreement have already been considered by the Coordinate Bench on assessee’s own case, relevant paragraphs already extracted above. 14.7. Considering the discussions made above, on the submissions made by both the parties, as well as there being no change in material facts and position of law, respectfully following the judicial precedents in earlier years as extracted above, ground raised by the Revenue in this respect is dismissed. V. State taxes paid overseas 15. During the year under assessment, assessee has paid the \"State taxes\" amounting to Rs.28,20,48,554/- in the USA on its USA sourced income. The same is claimed as a deductible expense in the return of income. Ld. Assessing Officer has, relying on various decisions including decision of Hon'ble Bombay High Court in the case of S Inder Singh Gill, 471 ITR 284, Hon'ble Karnataka High Court in the case of Kirloskar Electric Co Ltd. 228 ITR 676, Hon'ble Madras High Court in case of CIT vs Indian Overseas Bank 50 ITR 725 and Hon'ble Calcutta High Court in case of Jeevan Ltd vs CIT 48 ITR 170 and ITAT decision in assessee's own case for Assessment Year 2005-06 held that the said amount is not liable to be allowed as deduction either u/s 37(1) or section 40(a)(ii). 16. We have examined the detailed submission made by the assessee and gone through the documents placed on record. It is observed that Printed from counselvise.com 48 ITA No. 1516/Mum/2025 and others Tata Consultancy Services Ltd. AY 2016-17, 2017-18 and 2018-19 the issue is squarely covered in favour of the assessee in its own case by the Coordinate Bench for Assessment Years 2007-08 to 2015-16. Relevant portion of the order of Coordinate Bench, dated 18.12.2023 for Assessment Year 2015-16 in ΙΤA No.2413/Mum/2021 is reproduced below: 29. The assessee filed the appeal before the Id. CIT(A). The Id. CIT(A) has allowed the appeal of the assessee after following the decision of ITAT in the case of the assessee itself for assessment year 2007-08 to 2010-11. The Id. CIT(A) has also referred the decision of ITAT for assessment year 2009-10 vide ITA No. 5713/Mum/2016 for assessment year 2009-10 in his finding which is reproduced as under: 6. We have considered the rival submissions and perused the material on record. From the stage of the assessment proceeding itself, it is the claim of the assessee that the term \"tax\", as defined under section 2(43) of the Act would only include taxes chargeable under the Indian Income Tax Act. It is the further case of the assessee that since in respect of the State taxes paid overseas, the assessee is not eligible to claim relief under section 90 or 91 of the Act, it will not be covered under section 40(a)(ii) of the Act. On a perusal of provisions of sub-section (43) of section 2 of the Act, it becomes clear that the term \"tax\" has been defined to mean any tax paid under the provisions of the Act. Section 40(a)(ii) of the Act says that any rate or taxes levied on the profits or gain in any business or profession would not be allowable as deduction. Explanation- 1 to section 40(a)(ii) of the Act inserted by the Finance Act, 2006, w.e.f. 1st April 2006, further clarifies that any sum eligible for relief of tax either under section 90 ог 91 of the Act would not be allowable as deduction under section 40(a)(ii) of the Act. It is the say of the assessee that the tax eligible for relief under section 90 of the Act are only those taxes which are levied by Federal /Central Government and not by any local authority of State, City or County. Thus, it is ineligible for any relief under section 90 of the Act. The aforesaid submissions of leaned Sr. Counsel for the assessee, prima facie, is acceptable if one has to strictly go by the meaning of \"tax\", defined under section 2(43) of the Act, as it only refers to tax paid under the provisions of the Act. It is also worth mentioning, the State taxes paid by the assessee in DTAA countries are not eligible for relief under section 90 of the Act. Therefore, the issue which arises is, whether it can be allowed as deduction under section 37 of the Act. No doubt, in assessee's own case in assessment year 2005-06, the Tribunal in the order referred to above following its own decision in DCIT v/s Tata Sons Ltd., [2011] 43 SOT 27 (Mum.), has held that the State taxes paid overseas cannot be allowed as deduction in view of the provisions of section 40(a)(ii) of the Act. However, the aforesaid legal position has substantially changed after the decision of the Hon'ble Jurisdictional High Court in Reliance Infrastructure Ltd. (supra). While interpreting the provisions of section 2(43) of the Act, vis-a-vis section 40(a)(ii) of the Act, the Hon'ble Court held that the tax which has been paid abroad would not be covered within the meaning of section 40(a)(ii) of the Act, since, the meaning of the word \"tax\" as defined under section 2(43) of the Act would mean only the tax chargeable under the Act. Thus, as per the aforesaid decision of the Hon'ble Printed from counselvise.com 49 ITA No. 1516/Mum/2025 and others Tata Consultancy Services Ltd. AY 2016-17, 2017-18 and 2018-19 Jurisdictional High Court, taxes levied overseas which are not eligible for relief either under section 90 or 91 of the Act, would not come within the purview of section 40(a)(ii) of the Act. It is the specific plea of the assessee that the State tax is not covered either under Indo-US or Indo-Canada tax treaty, hence, not eligible for any relief under section 90 of the Act. Pertinently, unlike section 91 read with Explanation-(iv), section 90 does not provide for inclusion of tax levied by any State/local authority of that country within the expression 'income tax'. In view of the aforesaid, we direct the Assessing Officer to verify whether the State taxes paid by the assessee overseas are eligible for any relief under section 90 of the Act and if it is not found to be so, assessee's claim of deduction should be allowed. In view of our decision above, no separate adjudication of grounds no. 1.2 is required. Following the decision of ITAT as referred in the order of the Id. CIT(A) as above, we don't find any reason to interfere in the decision of Id. CIT(A) therefore, this ground of appeal of the revenue is dismissed\" 5.2.2 Thus ITAT in the above referred decision for A.Y.2015-16 has relied on its order for A.Y.2008-09 wherein AO was directed to verify whether the State taxes paid by the assessee overseas are eligible for any relief under section 90 of the Act and if it is not found to be so, assessee's claim of deduction should be allowed. Respectfully following the decision of the Hon'ble ITAT A.Y. 2015-16, the AO is directed to follow the directions given by ITAT in its order for A.Y.2015-16.” 17. Respectfully following the judicial precedents in earlier years as extracted above and there being no change in material facts, we do not find any reason to interfere with the findings arrived at by ld. CIT(A). Accordingly, ground raised by Revenue in this respect is dismissed. VII. No TDS on imported software and software for internal use 18. During the relevant assessment year, assessee imported certain software products for its business. The software products imported were both, for use in its own business as well as for the purpose of trading. The breakup of the same is given below: Particulars Amount (Rs.) Software for internal use 44,50,18,306 Software for trading purpose 13,03,38,139 Total 57,53,56,445 Printed from counselvise.com 50 ITA No. 1516/Mum/2025 and others Tata Consultancy Services Ltd. AY 2016-17, 2017-18 and 2018-19 18.1. During the assessment proceeding, it was submitted by the assessee that payment for purchase of software being similar to payment for purchase of any ‘product’/’goods’, such payment does not become taxable in India, unless the vendor has a permanent establishment in India. Ld. Assessing Officer treated the expenses for imported software utilised for internal use and imported software for third party sale, in the nature of royalty and since no TDS had been done by assessee u/s 195, the consideration so paid is disallowed u/s40(a)(i) of the Act. 19. We have examined the detailed submission made by assessee and gone through the documents placed on record. Assessee has made an elaborate submission with respect to non-deductibility of TDS on the amount referred to above from which we find that the matter has been adjudicated in preceding Assessment Years in a manner that imported software for internal use is capitalized and depreciation is allowed after capitalization and those for trading purposes to be subjected to TDS on account of royalty. 19.1. This issue has been decided by the Coordinate Bench of ITAT, Mumbai in assessee’s own case in ITA/7513/Mumbai/2010, dated 23.03.2017 for Assessment Year 2005-06 in favour of assessee. Subsequently, following the said order, the Coordinate Bench decided the issue in favour of assessee for Assessment Year 2007-08 to Assessment Year 2015-16. While deciding on this issue, reliance is placed on the decision of the Hon'ble Supreme Court in the case of Engineering Analysis Centre of Excellence (P) Ltd., vs. CIT reported in 432 ITR 471. The same finding applies to the facts of the present Printed from counselvise.com 51 ITA No. 1516/Mum/2025 and others Tata Consultancy Services Ltd. AY 2016-17, 2017-18 and 2018-19 Assessment Year before us also. Accordingly, grounds raised by the revenue in this respect are dismissed. 19.2. Relevant portion of the order of the Coordinate Bench for Assessment Year 2015-16 in ITA No. 2413 and 2477/Mum/2021 in assessee’s own is reproduced below: \"33. Heard both the sides and perused the material on record. We have perused the decision of ITAT for assessment year 2012-13 vide ITA No. 797/Mum/2018. The relevant operating part of the decision is reproduced as under: 7.1. We have heard rival submissions and perused the materials available on record. We find that the very same issue was subject matter of adjudication by this Tribunal in assessee's own case for A.Y.2009-10 in ITA No.5713/Mum/2016 dated 30/10/2019. The facts recorded in the order passed by this Tribunal for A.Y.2009-10 and the adjudication of the same by the lower authorities is reproduced below as the same facts are prevailing in this year also except with variance in figures and yet another exception is that agreement copies were duly filed by the assessee during the year under consideration before the lower authorities. \"8. Brief facts are, during the assessment proceedings, the Assessing Officer noticing that the assessee has claimed expenditure incurred in respect of purchase of software called upon the assessee to furnish the necessary details. On verifying the details furnished by the assessee, he found that the assessee had purchased software for its internal use amounting to 47,36,54,498, and for trading purpose amounting to 31,03,03,823. After perusing the details, the Assessing Officer was of the view that the amount paid towards acquiring software brought along with support service is in the nature of royalty as per section 9(i) (vi) of the Act. In this context, he referred to Explanation-3 to section 9(1)(vi) of the Act as well as CBDT Circular no.621 dated 9th December 2019. Having held so, the Assessing Officer observed that since the assessee had not deducted tax at source while making payment for purchases of software both for internal use as well as for trading purpose, the amount paid is liable for disallowance under section 40(a) (i) of the Act. Accordingly, he disallowed the entire amount of 78,39,58,321. The assessee challenged the aforesaid disallowance before the first appellate authority. 9. Learned Commissioner (Appeals) following the order passed by the Tribunal in assessee's own case for the assessment year 2005-06, held that the expenditure incurred on software products acquired for internal use is a capital expenditure, hence, the assessee is entitled to depreciation thereon. However, in respect of payment made towards software products acquired for re-sale / trading purpose, learned Commissioner (Appeals) agreed with the Assessing Officer that it is in the nature of royalty, hence, the assessee was required to deduct tax at source. 7.2. We find that the Id. AR argued that the amendment brought out by the Finance Act, 2012 will not have any retrospective effect based on the principle of \"impossibility of performance\", since assessee cannot be expected to deduct Printed from counselvise.com 52 ITA No. 1516/Mum/2025 and others Tata Consultancy Services Ltd. AY 2016-17, 2017-18 and 2018-19 fox at source in respect of transactions effected in earlier years. This argument has to be dismissed as the year under consideration is A.Y.2012-13 where amendment has been brought. 7.3. The Id. AR further argued that even under the applicable DTAA the payment for purchase of software cannot be regarded as royalty since the definition of royalty under DTAA is narrower than the definition in the Act. The Id. AR without prejudice, in respect of purchase of software for trading purpose, argued that assessee does not obtain any license from the seller and only earns margin on trading or re-selling of such software. Accordingly, he submitted that the same cannot be treated as royalty and no disallowance u/s. 40(a)(i) of the Act could be made on the same. He also drew attention of the Bench to certain clauses in the resetting agreement entered into between assessee and Microsoft Regional Sales Corporation and submitted that assessee is only a re-seller of the software product and assessee was not entitled to make any alterations to the software in order to make copies thereon. Finally, the Id. AR also submitted on without prejudice basis that in any case, provisions of Section 40(a)(i) of the Act would not be made applicable to allowance of depreciation on Imported software if the same is treated as capital in nature. 7.4. Per contra, the Id. DR vehemently relied on the orders of the lower authorities. 7.5. We find ultimately that this issue has been restored to the file of the Id. AO by this Tribunal in A.Y.2009-10 by making certain observations. We find that while rendering this decision and also for the decision of A.Y.2010-11 in ITA No.974/Mum/2018 dated 18/08/2020, the decision of the Hon'ble Supreme Court in the case of Engineering Analysis Centre of Excellence (P) Ltd., vs. CIT reported in 432 ITR 471 was not rendered. Now, we find that the issue in dispute before us has been fully settled by the aforesaid decision of the Hon'ble Apex Court in favour of the assessee by holding as under:- \"By virtue of section 90 of the Income-tax Act, 1961, once a Double Taxation Avoidance Agreement applies, the provisions of the Act can only apply to the extent that they are more beneficial to the assessee and not otherwise. Further, by Explanation 4 to section 90, Parliament has clarified that where any term is defined in a DTAA, the definition contained in the DTAA is to be looke4 at. It is only where there is no such definition that the definition in the Ad can then be applied. UNION OF INDLA V. AZADI BACHAO ANDOLAN (7003) 763 1TR 706 (SC) relied on. The expression \"copyright\" has not been defined separately in the definitions section of the Copyright Act, 1957, yet, section 14 makes it clear that \"copyright means the \"exclusive right\", subject to the provisions of the Act, to do or authorise the doing of certain acts in respect of a work\" in the case of computer programmes, section 14(b) specifically speaks of two sets of acts: the seven ads enumerated in clause (a) and the eighth act of selling or giving on commercial rental or offering for sale or for commercial rental any copy of the computer programme. All the seven acts set out in clause (a) delineate how the exclusive right with the owner of the copyright may be parted with. In essence, such right is referred to as copyright, and includes the right to reproduce the work in any material form, issue copies of the work to the pub tic, perform the work in public or make translations or adaptations of the work. The definition of an \"in fringing copy\" contained in Printed from counselvise.com 53 ITA No. 1516/Mum/2025 and others Tata Consultancy Services Ltd. AY 2016-17, 2017-18 and 2018-19 section 2(m) of the 1957 Act, in relation to a computer programme, i. e, a literary work, means reproduction of the work. Thus, the right to reproduce a computer programme and exploit the reproduction by way of safe, transfer, licence, etc., is at the heart of the exclusive right. Section 14(b)(ii) of the 1957 Act was amended twice, first in 1994 and then again in 1999, with effect from January 15, 2000. What is conspicuous in the provision after the amendment is the absence of the phrase \"regardless of whether such copy has been sold or given on hire on earlier occasions\". This is a statutory recognition of the doctrine of first sale or principle of exhaustion Copyright is an exclusive right, which is negative in nature, being a right to restrict others from doing certain acts. Copyright is an intangible, incorporeal right, in the nature of a privilege, which is quite independent of any material substance. Ownership of copyright in a work is different from the ownership of the physical material in which the copyrighted work may happen to be embodied. Importantly, by virtue of section 16 of the 1957 Act no copyright exists in India outside the provisions of the 1957 Act or any other special law for the time being in force. The making of copies or adaptation of a computer programme in order to utilise the programme for the purpose for which it was supplied, or to make backup copies as a temporary protection against kiss, destruction or damage so as to be able to utilise the computer programme for the purpose for which it was supplied. does not constitute an act of infringement copyright under section 52(1)(aa) of the 1957 Act. Section 52(1)(ad) is independent of section 52(1)(aa) of the 1957 Act, and states that the making of copies of a computer programme from a personally legally obtained copy of non-commercial personal use would not amount to an infringement of copyright. Section 52(1)(ad) of the 1957 Act cannot be read to negate the effect of section 52(1)(aa), since it deals with a subject matter that is separate and distinct from that contained in section 52(1)(aa) of the 1957 Act. There is an important difference between the right to reproduce and the right to use computer software. Whereas the former would amount to parting with a copyright by the owner thereof, the latter would not. When, under a non-exclusive licence, an end-user gets the right to use computer software in the form of a compact disk, the end-user only receives a right to use the software and nothing mare. The end-user does not get any of the rights that the owner continues to retain under section 14(b) of the 1957 Act read with sub-clauses (i) to (vii) of clause (a) thereof Thus, the conclusion that when computer software is licensed for use under an end-user licence agreement, what is also licensed is the right to use the copyright embedded therein, is wholly incorrect. The licence for the use of a product under an end-user licence agreement cannot be construed as the licence spoken of in section 30 of the 1957 Act, as such end-user licence agreement only imposes restrictive conditions upon the end-user and does not part with any interest relatable to any rights mentioned in section 14(a) and (b) of the 1957 Act. The ownership of copyright in a work is different from the ownership of the Physical material in which the copyrighted work may happen to be embedded. Any ruling on the more expansive language contained in the Printed from counselvise.com 54 ITA No. 1516/Mum/2025 and others Tata Consultancy Services Ltd. AY 2016-17, 2017-18 and 2018-19 Explanations to section 9(vi) of the Income-tax Act, 1961 would have to be ignored if it is wider and less beneficial to the assessee than the definition cont wined in the DTAA, in terms of section 90(2) of the Act read with Explanation 4 there-to... and article 3(2) of the DTAA Further, the expression copyright\" has to be understood in the context of the statute which deals with it, it being acc4Tted that municipal laws which apply in the contracting States must be applie4 unless there is any repugnancy to the terms of the DTAA. By no stretch of imagination, can the payment for such computer software amount to royalty within the meaning of article 12 of the DTA A or section 9(i)(vi) of the Act.” VIII. 14A with respect to recording of dissatisfaction r.w.s. 115JB 20. During the relevant assessment year, assessee earned dividend income of Rs. 56,48,80,329/- which is claimed as exempt under section 10(34) of the Act. Ld. Assessing Officer invoked the provisions of Rule 8D and made following disallowance: Expenditure directly Considered by the appellant for disallowance attributable to earning exempt income Considered by the appellant for disallowance Interest not directly attributable to particular income Amount of interest expenditure (other than any direct expenditure) 1,20,83,487 x (Average value of investments income from which is exempt (73.38 Cr & 453.27 Cr/2 = 263.33 Cr)/Average of total assets) (77,668.54 cr & 63065.30cr)/2 = 70,367 cr) 45,219 Amount equal to 0.5% of average value investments income from which is exempt 0.50% x 263,32,57,671 1,31,66,288 TOTAL EXPENDITURE TO BE DISALLOWED U/S 14A 1,32,11,507 20.1. Ld. Assessing Officer made the disallowance after taking into account the explanation offered by the assessee before him. This includes the facts that (a) entire interest expense incurred is for specific purpose and (b) provision of Rule 8(D)(ii) would not be applicable in case Printed from counselvise.com 55 ITA No. 1516/Mum/2025 and others Tata Consultancy Services Ltd. AY 2016-17, 2017-18 and 2018-19 the of assessee. Ld. Assessing officer in assessment order has applied Rule 8D without recording any satisfaction to this effect. 21. We have examined the detailed submission made by the assessee and gone through the documents placed on record. Rule 8D(1) specifically states that ld. Assessing Officer if not satisfied with the correctness of the claim of expenditure made by the assessee, has to record the same and such a satisfaction has to be an objective one, based on cogent reasons. The Tribunal as well predecessor of ld. CIT(A) had decided this issue in favour of the assessee, considering the facts that ld. Assessing Officer has made disallowance without recording satisfaction. The facts in the present case are similar to the preceding years in a sense that ld. Assessing Officer has mechanically applied Rule 8D and made disallowances without giving any cogent reasons. The relevant portion of order of the Coordinate Bench for A.Y.2015-16 is reproduced below: \"37. Heard both the sides and perused the material on record. We have perused the decision of ITAT in the case of the assessee itself for assessment year 2014- 15 vide ITA No. 5904/Mum/2019. The relevant part of the decision is reproduced as under: 50. For the year under consideration, we notice that the assessee has made a very detailed submission before the Assessing Officer with regard to the suo motu disallowance (refer para 6.2 on pages 41 to 44 of assessment order). The Assessing Officer, in his finding, has simply stated that he is not satisfied with the correctness of the claim of expenditure since the amount disallowed by the assessee is very meagre. It is the settled position that the Assessing Officer cannot invoke the provisions of disallowance under section 14A read with rule 8D without recording any cogent reasons as to why he is not satisfied with the correctness of the claim of the assessee. Mere recording that the amounts being meagre compared to the exempt income earned, cannot be construed as recording of satisfaction. Therefore, respectfully following the ratio laid down by the coordinate bench in assessee's own case, we hold that the CIT(A) has correctly deleted the addition made by the Assessing Officer for want of recording of objective satisfaction with cogent reasons. This ground of the revenue is dismissed.\" Printed from counselvise.com 56 ITA No. 1516/Mum/2025 and others Tata Consultancy Services Ltd. AY 2016-17, 2017-18 and 2018-19 22. Respectfully following the aforesaid decision of the Coordinate Bench of ITAT, Mumbai on similar issue and considering the facts in the case of the assessee as referred above, we don't find any infirmity in the decision of ld. CIT(A). Accordingly, ground raised revenue in this respect is dismissed. IX. Brand building expenditure (AMP) 23. Assessee has claimed expenses of Rs 186,70,82,837/- towards advertising. The above includes advertisement expenditure in Newspaper/Magazine of Rs. 2,53,03,516/-, 50% of these expenses was allowed as revenue expense and balance 50% was capitalized i.e. Rs.1,26,51,758/-. Thus, ld. Assessing Officer considered expenditure of Rs. 185,44,31,079/- as capital in nature. Ld. Assessing Officer has held that these expenses are more in the nature of brand building expense. He relied on the annual report of assessee for AY 2010-11 to hold that entire advertising expenditure is geared towards building the brand. He proceeded to hold that only a small portion of the advertising is on revenue account and the expenses incurred on sponsorships, exhibitions, events/seminars/conferences and publicity are definitely in the nature of brand building. Accordingly, he thus held that out of total expense of Rs. 186,70,82,837/-, an amount of Rs. 185,44,31,079/- is spent on brand building and that its advertising campaign is designed towards building/strengthening the brand and that the advertisements are not for any specific product or service offered by it. Ld. AO while treating these expenses as capital in nature, allowed depreciation of 25% on the same. 24. We have examined the detailed submission made by the assessee and gone through the documents placed on record. The Coordinate Printed from counselvise.com 57 ITA No. 1516/Mum/2025 and others Tata Consultancy Services Ltd. AY 2016-17, 2017-18 and 2018-19 Bench of ITAT, Mumbai in Assessment Year 2008-09 to Assessment Year 2015-16, considering all the facts, has decided the issue in favour of the assessee. Relevant portion of the ITAT order for Assessment Year 2015-16 is reproduced below: \"41. Heard both the sides and perused the material on record. We have perused the decision of ITAT in the case of the assessee itself for assessment year 2011- 12 vide ITA No. 1650/Mum/2016. The relevant operating part of the decision is reproduced as under: \"34. We have considered the rival submissions and perused the material available on record. As it is evident from the details of expenditure mentioned in the aforesaid paragraphs, the expenditures were incurred by the assessee for the purpose of advertisement in newspaper, magazine, events, seminar, conferences, exhibition, advertisement at Airport, etc. We find that on identical issue, the Co-ordinate Bench of the Tribunal vide order dated 30.10.2019, passed in assessee's own case in Tata Consultancy Services Ltd. v/s ACIT, ITA no.5713/Mum/2016, for the assessment year 2009-10, vide Para-23 at Page- 22, observed as under- 23. We have considered rival submissions and perused the material on record. We have also carefully examined the case laws cited before us. On a detailed analysis of facts on record, we have noted that the reasoning of the Assessing Officer that the expenditure was incurred for brand building is without any basis. It is to be noted, before the Departmental Authorities the assessee had demonstrated that in no way it is connected with development of Tata brand. The details of expenditure incurred clearly demonstrate that they were basically for the purpose of advertising assessee's products in print media or through seminar, conferences, etc. As rightly observed by leamed Commissioner (Appeals), the Assessing Officer has brought no material on record to establish that the expenditure is for brand building. As observed earlier, the expenditure relates to advertisement in newspaper, magazine, events, seminars, conferences, exhibitions, etc. Thus, the nature of expenditure incurred by the assessee clearly indicates that it was for promoting its own business. Further, considering the turnover of the assessee, the expenditure incurred on advertisement does not appear to be unusually high. That being the case, the expenditure incurred on advertisement cannot be treated to be in the nature of capital expenditure and amortized over a period of five years. To that extent, we agree with the decision of learned Commissioner (Appeals) on the issue. However, as regards experience certainty expenditure amounting to Rs.5.28 crore, it appears that learned Commissioner (Appeals) has held it to be of capital nature on the basis that the assessee itself admitted so. However, before us, leaned Sr. Counsel for the assessee has vehemently argued that no such admission was made by the assessee before learned Commissioner (Appeals) and under a misconception, learned Commissioner (Appeals) has come to such conclusion. The leaned Sr. Counsel submitted, the experience certainty campaign was also for the purpose of advertisement only and in this context, he has furnished before us the details of such expenditure through additional evidences. Since, the additional evidences furnished by the assessee will have a crucial bearing in determining the nature of expenditure, we are inclined to admit the Printed from counselvise.com 58 ITA No. 1516/Mum/2025 and others Tata Consultancy Services Ltd. AY 2016-17, 2017-18 and 2018-19 additional evidences. However, considering the fact that these evidences were not furnished before the Departmental Authorities, to afford a fair opportunity to the Department to verify the authenticity of assessee's claim vis-a-vis the additional evidences furnished before us, we restore the issue to the Assessing Officer for de novo adjudication after providing reasonable opportunity of being heard to the assessee. We make it clear, our aforesaid direction is only with regard to the experience certainty expenditure of Rs. 5.28 crore. The decision of learned Commissioner (Appeals) on this issue is modified to this extent only. 35. The learned D.R. could not show us any reason to deviate from the aforesaid order and no change in facts and law was alleged in the relevant assessment year. Thus, respectfully following the decision of the Co-ordinate Bench rendered in assessee's own case cited supra, ground no.5, raised in assessee's appeal is allowed with similar directions. This ground is allowed for statistical purpose.\" Respectfully following the decision of the coordinate bench of the ITAT Mumbai in the case of the assessee itself on similar issue and identical facts as referred above we don't find any merit in the appeal of the revenue, therefore, the same stand dismissed.\" 25. Respectfully, following the decision of the Coordinate Bench, with similar fact pattern before us, ground raised by Revenue in this respect is dismissed. X. Brand Equity subscription to Tata Sons 26. During the year, assessee paid Rs 75,00,00,000/- to Tata Sons towards subscription fee and claimed the same as revenue expenditure. Ld. Assessing Officer treated this expenditure as capital in nature and allowed depreciation on the same. 27. We have examined the detailed submission made by the assessee and gone through the documents placed on record. Similar issue had come up in appeal in the Coordinate Bench of ITAT, Mumbai in preceding years in assessee’s own case and considering the facts, Coordinate Bench decided the issue in favour of the assessee for Assessment Year 2012-13 to 2015-16. Relevant portion of the order for Assessment Year 2015-16 is reproduced below: Printed from counselvise.com 59 ITA No. 1516/Mum/2025 and others Tata Consultancy Services Ltd. AY 2016-17, 2017-18 and 2018-19 \"45. Heard both the sides and perused the material on record. We have perused the decision of ITAT for AY 2011-12. The relevant operating part of the decision is reproduced as under. \"39. We have considered the rival submissions and perused the material available on record. As per the Tata Brand Equity and Business Promotion Agreement, the assessee was under contractual obligation to make annual payment towards the subscription fees. According to assessee, in consideration of this subscription fees, Tata Sons Limited was, inter-alia, responsible for organising corporate identity and brand promotional activities and campaigns, engage professional consultants, make available a pool of sharable resources of the Tata Group to the assessee and provide assistance in accessing the network of domestic and international business contacts and also permit the assessee to use the business name. All the activities were predominantly the activities carried out or to be carried out by Tata Sons Limited to enhance the value of TATA Brand, which is owned by Tata Sons Limited and for same expenses were incurred by Tata Sons Limited and accounted in its books of account. 40. in the case of sister concern of assessee, the Co-ordinate Bench of Tribunal in ACIT v/s M/s Rallis India Ltd.: ITA No. 5701/Mum/2008 vide order dated 30.08.2011 dismissed the appeal filed by the Revenue against the allowance of similar contribution to Tata Sons Limited under the Brand Equity and Business Promotion Scheme. In another sister concern's case, the Co-ordinate Bench of Tribunal in M/s Tata Autocomp Systems Ltd. v/s ACIT: ITA No. 7596/Mum/2012 vide order dated 12.06.2013, following the earlier decision in Rallis India Ltd. (supra), deleted the disallowance on account of similar subscription paid to Tata Sons Ltd. towards brand equity and promotion scheme. The Co-ordinate Bench also noted that department has accepted the decision in Rallis India Ltd. (supra) and no appeal has been filed by the department against the same. Further, in the present case, nothing has been brought on record to suggest that the subscription fee paid by the assessee to Tata Sons Limited under the Tata Brand Equity and Business Promotion Agreement' is different in nature from the one considered in aforesaid decisions. Thus, respectfully following the judicial precedence in case of sister concerns, we direct the Assessing Officer to delete the disallowance on account of subscription fees paid by the assessee to Tata Sons Limited. Accordingly, ground no. 6 raised in assessee's appeal is allowed.\" Respectfully following the decision of ITAT on similar issue and identical facts in the case of the assessee itself as referred supra we don't find any merit in the ground of appeal of the Revenue therefore, this ground of appeal of the revenue is dismissed.\" Printed from counselvise.com 60 ITA No. 1516/Mum/2025 and others Tata Consultancy Services Ltd. AY 2016-17, 2017-18 and 2018-19 28. Therefore, respectfully following the above decision of the Coordinate Bench with similar fact pattern before us, ground raised by Revenue in this respect is dismissed. XI. Non-TDS on commission to non-residents 29. During the year, the assessee had paid commission of Rs. 18,47,46,291/- to foreign agents in respect of overseas business and treated these payments were not chargeable to tax in India and therefore not subjected to withholding u/s 195 of the Act. According to the assessee, non-resident agents operated outside India and no part of their income arises in India. Further, since the payment is remitted directly overseas, it cannot be held to have been received by or on behalf of the agent in India. Also, such payment is not covered by any of the deeming provisions under section 9 as it is not in the nature of interest, royalty or fees for technical services etc. Accordingly, assessee claimed that commission payments to non-resident agents are not chargeable to tax in India as per the provisions of section 5 read with section 9 of the Act. 29.1. Ld. Assessing Officer held that the commission paid to foreign sales agents is taxable under section 5 read with section 9 of the Act and accordingly, the same is subject to tax deduction at source under section 195 of the Act. Ld. Assessing Officer disallowed deduction of Rs 18,47,46,291/- being commission payment to foreign agents under the provisions of section 40(a)(i) of the Act, holding that the assessee ought to have obtained no-deduction certificate from the Department if it felt that the income of the receiver may not be taxable due to some treaty provisions or otherwise relying on decision by Hon'ble Karnataka High Court in the case of Samsung Electronics Company Limited. Printed from counselvise.com 61 ITA No. 1516/Mum/2025 and others Tata Consultancy Services Ltd. AY 2016-17, 2017-18 and 2018-19 30. We have examined the detailed submission made by the assessee and perused the documents placed on record. Coordinate Bench of ITAT, Mumbai in assessee's own case decided this issue in favour of the assessee for Assessment Year 2008-09 to 2015-16. Relevant portion of the order of the Coordinate Bench for AY 2015-16 is reproduced hereunder: \"49. Heard both the sides and perused the material on record. We have perused the decision of ITAT for assessment year 2009-10 in the case of the assessee itself vide ITA No.5823/Mum/2016. The relevant part of the decision is reproduced as under: 5. We have considered rival submissions and perused the material on record. The facts on record clearly reveal that commission has been paid to non- resident agents located in their respective countries towards services rendered by them in those countries in relation to obtaining export contracts for the assessee. No material has been brought on record by the Assessing Officer to demonstrate that the non-resident agents either have any business connection in India or have PE in India so as to bring the commission payment within the tax net. The factual finding recorded by learned Commissioner (Appeals) that the non-resident agents have rendered the services in their respective countries and do not have either any business connection in India or any PE in India has not been controverted by the Revenue. Further, the nature of payment viz. commission has also not been disputed by the Revenue. That being the case, since the commission paid to the non-resident agents is not chargeable to tax in India at their hands, there is no necessity for the assessee to withhold tax under section 195(1) of the Act on such payment. Accordingly, we uphold the decision of learned Commissioner (Appeals) on this issue. Respectfully following the decision of the ITAT on the similar issue and identical facts as referred above we do not find any merit in the appeal of the Revenue. Therefore, this ground of appeal is dismissed\" 31. Respectfully following the decision of the Coordinate Bench in earlier assessment years on similar facts, ground raised by the Revenue in this respect is dismissed. XII. Foreign Tax Credit for income u/s. 10A/AA 32. During the relevant assessment year, assessee claimed relief of Rs. 528,21,58,550/- under section 90 of the Act. Ld. Assessing Officer did not allow relief u/s 90 in respect of income eligible for deduction Printed from counselvise.com 62 ITA No. 1516/Mum/2025 and others Tata Consultancy Services Ltd. AY 2016-17, 2017-18 and 2018-19 under section 10AA. Ld. Assessing Officer while restricting the relief has mentioned as under as under: \"The assessee's above contentions are considered carefully and the quantum of DIT relief has been restricted to the income doubly taxed in India and abroad. The relevant provisions of Double Taxation Agreements of the Indian Government with the countries such as USA, UK, Canada and Japan with whom the assessee having majority export business have been considered. From the analysis of the provisions of DTAA with different countries it is seen that the assessee is entitled for relief only to the extent of taxes paid overseas on the income which has been offered to tax abroad and is also taxable in India but such relief cannot exceed the rate of tax payable in India. The DIT relief is to be restricted to the quantum of overseas taxes emphasizing on the rate of tax charged in the foreign countries, the credit for the same is allowable only to the extent of taxes paid in those countries at the rates applicable there on such income and not exceeding the tax liability payable in India. 32.1. According to the assessee, ld. Assessing Officer has disregarded the provisions of section 90(1)(a)(ii) r.w. relevant DTAA signed with USA, Denmark, Hungary, Oman, South Africa, Saudi Arabia, Taiwan, Iceland, Botswana, Norway. 33. We have examined the detailed submission made by assessee. The Coordinate Bench of ITAT, Mumbai in assessee’s own case decided the issue in favour of assessee Assessment Year 2007-08 to 2015-16. Relevant portion of the order of Coordinate Bench for Assessment Year 2015-16 in ITA No. 2413 and 2477/Mum/2021 in assessee’s own case is reproduced as under: \"18. During the course of appellate proceedings before us the Id. Counsel referred the decision of ITAT in the case of assessee itself for assessment year 2007-08 to 2013-14. He also submitted that foreign tax credit should be provided for taxes paid in overseas jurisdiction in respect of Sec. 10A(10AA) eligible income in India, as per the tax credit provisions of respective DTAA. He also submitted that even under MAT computation the assessee should be allowed full credit for tax paid overseas in respect of 10A/10AA income. 19. Heard both the sides and perused the material on record. We have perused the decision of ITAT for the assessment year 2009-10 vide ITA No. 5823/Mum/2016. The relevant operating part of the decision is reproduced as under. 31. We have considered rival submissions and perused the material on record. We have also applied our mind to the decisions relied upon. As could be seen, Printed from counselvise.com 63 ITA No. 1516/Mum/2025 and others Tata Consultancy Services Ltd. AY 2016-17, 2017-18 and 2018-19 while the Assessing Officer has disallowed assessee's claim of foreign tax credit in respect of income exempt under section 10A/10AA of the Act on the reasoning that only such income which is subjected to tax in both the countries would qualify for tax credit, learned Commissioner (Appeals) has restricted the relief of foreign tax credit only in respect of tax paid in USA even in respect of income which is exempt under section 10A/10AA of the Act. The learned Commissioner (Appeals) has come to such conclusion by following the decision of the Hon'ble Karnataka High Court in Wipro Ltd. (supra). The reasoning of the learned Commissioner (Appeals) on the issue is, as per the decision of Hon'ble Karnataka High Court in Wipro Ltd. (supra), the foreign tax credit benefit under section 90(1)(a)(ii) of the Act would only be applicable under Indo-US DTAA and would not be applicable to other DTAA countries and non-DTAA countries. On a careful reading of the decision of the Hon'ble Karnataka High Court in Wipro Ltd. (supra), it is noted, while dealing with identical issue the Hon'ble Court held that in the cases covered under section 90(1)(a)(ii) of the Act, it is not the case of income being subjected to tax or the assessee has paid tax on the income. The provision applies to a case where the income of the assessee is eligible to tax under the Act as well as in the corresponding law in force in the other country. The Court observed, though, income tax is chargeable under the Act, it is open to the Parliament to grant exemption under the Act from payment of tax for any specified period, normally, to incentivize the assessee the to carry on manufacturing activities or providing services. The Court thereafter referring to the treaty provisions with USA held that it is not the requirement of law that the assessee before he claims credit under the Indo-US convention or under the provision of the Act must pay tax in India on such income. The Court observed, as per the embargo placed in the DTAA, the assessee is entitled to such tax credit only in respect of that income which is taxed in USA. In similar context, the Court also referred to the tax treaty with Canada where the provisions does not allow credit for tax paid in Canada if the income is not subjected to tax in India. With regard to country's with which India does not have any agreement for avoidance of double taxation, the Court observed that as per section 91 of the Act, the assessee would be eligible to avail tax credit. Thus, on a careful reading of the aforesaid judgment of the Hon'ble Karnataka High Court, it becomes clear that where the respective tax treaty provides for benefit for foreign tax paid even in respect of income on which the assessee has not paid tax in India, still, it would be eligible for tax credit under section 90 of the Act. Like Article 25 of the Indo-USA treaty, treaties with various other countries such as Indo-Denmark, Indo-Hungary, Indo-Norway, Indo-Oman, Indo-US, Indo-Saudi Arabia, Indo-Taiwan also have similar provision providing for benefit of foreign tax credit even in respect of income not subjected to tax in India. However, Indo-Canada and Indo-Finland treaties do not provide for such benefit unless the income is subjected to tax in both the countries. Therefore, the foreign tax credit would be available to the assessee in all cases except the foreign tax paid in Finland and Canada. The Assessing Officer is directed to grant credit accordingly. Similar finding upheld by ITAT in AY 2007-08, 2008-09 and 2010-11 to 2013-14 also.\" 33.1. We have considered findings arrived at by ld. Assessing Officer and assessee's submission. In our view, double taxation relief can be Printed from counselvise.com 64 ITA No. 1516/Mum/2025 and others Tata Consultancy Services Ltd. AY 2016-17, 2017-18 and 2018-19 given in the cases where income was taxed in India and also in a foreign country. Considering the above, ld. Assessing Officer is directed to allow foreign tax credit only with respect to DTAA countries where the income was subjected to tax both, in India and foreign jurisdiction. It is also directed that the assessee would be entitled to relief only to the extent of tax paid overseas on the income which has been offered to tax abroad and also in India. However, the relief should not exceed the rate of tax payable in India. Further, respectfully concurring with the direction of the Coordinate Bench, ld. Assessing Officer in the present case is also directed to breakup foreign tax credit in three segments - taxes paid in US, Denmark, Hungary, Norway, Oman, Saudi Arabia and Taiwan; taxes paid in other DTAA countries and taxes paid in non-DTAA countries. Credit in respect of taxes paid in US Denmark, Hungary, Norway, Oman, Saudi Arabia and Taiwan should be allowed. In other DTAA countries, credit will not be available in respect of income which is claimed exempt u/s 10A/10AA/10B. In respect of non-DTAA countries, credit will not be available. Accordingly, ground raised by revenue is partly allowed. XIII. General on section 194C(2) 34. This is a general ground raised which needs no separate adjudication. XIV. Deduction u/s.10AA on interest income during assessment 35. During the year, assessee earned total interest income of Rs. 1679.48 crores, out of which an amount of Rs. 1071.96 crores was attributable to SEZ units. Accordingly, assessee at the time of assessment proceedings claimed additional deduction under section 10AA of the Act in respect of interest income attributable to its SEZ Printed from counselvise.com 65 ITA No. 1516/Mum/2025 and others Tata Consultancy Services Ltd. AY 2016-17, 2017-18 and 2018-19 units. Ld. Assessing Officer rejected the claim of the assessee on the ground that the claim was not made in the return and is raised during the assessment proceedings. Ld. Assessing Officer relied on the decision of Hon'ble Supreme Court in case of Goetz India Limited 361 ITR 505 (SC). 35.1. During the course of assessment, assessee claimed that it did not make any \"new claim\" but just asked for the re-computation of deduction under section 10AA of the Act. In view of the same, there is no requirement to file a revised return of income. Hon'ble Supreme Court in its decision in case of Goetz India Limited has observed that even though there is a restriction on the Assessing Officer to entertain the new claim without the revised return, the said restriction is not applicable if the issue is raised before an appellate authority. As per section 10AA, deduction is available in respect of profits and gains derived from the export of articles or things or from services. As per section 10AA (7) \"For the purpose of sub-section (1), the profits derived from the export of articles of things or services (including computer software) shall be the amount which bears to the profits of the business of the undertaking. being the Unit, the same proportion as the export turnover in respect of such articles or things or services bears to the total turnover of the business carried on by the undertaking.” 35.2. Therefore, profits and gains derived from export of articles is different from the income derived from the profits of the business of the undertaking. The profits of the business of the undertaking includes the profits and gains from export of the articles as well as all other incidental incomes derived from the business of the undertaking. Assessee submitted that wherever there is an intention to exclude the other income, the same is explicitly provided in the statute. While computing the deduction under section 80HHC /80HHE etc. there is Printed from counselvise.com 66 ITA No. 1516/Mum/2025 and others Tata Consultancy Services Ltd. AY 2016-17, 2017-18 and 2018-19 specific provision to exclude from the \"Profit of the Business\", the other income such as commission, brokerage, interest, rent etc. However, there is no specific exclusion while computing deduction under section 10A/10AA/10B of the Act. Therefore, in view of the aforesaid provisions, it is clear that, what is exempted is not merely the profits and gains from the export of articles but also the income from the business of the undertaking which includes interest income in the present case. 36. We have examined the detailed submission made by assessee. Similar issue had come up in appeal in the case of the assessee itself in Assessment Year 2015-16 before the Coordinate Bench of ITAT, Mumbai and the issue was decided in favour of the assessee. The relevant portion of the order of the Coordinate Bench in ITA No. 2413 and 2477/Mum/2021 is as under: “37. On the above legal position discussed by us, w we are of the opinion that the Respondent assessee was entitled to 100% exemption or deduction under Section 10-A of the Act in respect of the interest income earned by it on the deposits made by it with the Banks in the ordinary. course of its business and also interest earned by it from the staff loans and such interest income would not be taxable as Income from other Sources under Section 56 of the Act. The incidental activity of parking of Surplus Funds with the Banks or advancing of staff loans by such special category of assessees covered under Section 10-A or 10-B of the Act is integral part of their export business activity and a business decision taken in view of the commercial expediency and the interest income earned incidentally cannot be delinked from its profits and gains derived by the Undertaking engaged in the export of Articles as envisaged under Section 10-A or Section 10-B of the Act and cannot be taxed separately under Section 56 of the Act. 38. We therefore affirm and agree with the view expressed by the first Division Bench of this Court in the case of M/s. Motorola India Electronics subsequent Division Bench on 10/04/2014 in the present case. 23. We further notice that a similar view is expressed by the Jurisdictional High Court in the case of Symantee Software India P Ltd (supra) while considering the deduction under section 10A of the Act. It is relevant to mention here that the manner of computing deduction under section 10A as per the provisions of subsection (4) of the said section is similar to subsection (7) of section 10AA and therefore the ratio of the above decisions rendered in the context of deduction under section 10A would equally be applicable to deduction claimed under section 10AA. Accordingly, respectfully following the above decision of the jurisdictional High Court and also the Full Bench of the Hon' Karnataka High Printed from counselvise.com 67 ITA No. 1516/Mum/2025 and others Tata Consultancy Services Ltd. AY 2016-17, 2017-18 and 2018-19 Court, we hold that interest income is also to be considered for the purpose of arriving at the profits eligible for deduction under section 10AA. The Assessing Officer is directed to re-compute the deduction under section 10AA accordingly. The ground no 4 of the appeal is thus allowed.\" Following the decision of ITAT as referred supra we allow this ground of appeal of the assessee on the reason mentioned in the above order of the ITAT, therefore, this ground of appeal of the assessee is allowed.\" 36.1. Respectfully following the above stated decision of the Coordinate Bench in assessee’s own case and facts being similar, ground raised by the Revenue in this respect is dismissed. XV. Subscription fees u/s. 40(a)(ia) 37. During the year under assessment, assessee made payments towards subscription services amounting to Rs. 9,47,14,367/- to various non-residents without deducting withholding taxes. These payment towards subscription services were mainly for the following categories: i. Online access to database/periodical/research subscription journals ii. Subscription towards software licenses iii. Webinar access 37.1. Assessee submitted following facts to substantiate its claim for non-deduction of withholding taxes: i. These are publications and is not an information or advice given individually. The information is available on subscription to anyone willing to pay. ii. It is a copy righted information and cannot be passed on to anyone else. There is no license granted to the assessee to use it in any manner or quote to anyone else. Printed from counselvise.com 68 ITA No. 1516/Mum/2025 and others Tata Consultancy Services Ltd. AY 2016-17, 2017-18 and 2018-19 iii. The access is on a Non-Exclusive Basis, where the customer is not granted the exclusive right to reproduce and adapt the work or distribute the content of the database. iv. Fee is payable even if no service is utilized. It is like a gate pass or entry fee and cannot be treated as imparting of information. v. Information is accessible by any subscriber on payment of requisite price with regular internet access for which no particular software or hardware is required. vi. It is for use of a copyrighted right in the article. Just as a book is a copyright article, purchase of the book allows a use of information contained therein but do not transfer any of the copyright therein. vii. There was nothing so secret or confidential in the periodical/journal, which has been supplied for the benefit of the assessee. The information is in the form of collection of data on the subject, available in the market and the information in the periodical/journal in any manner cannot be termed as imparting of technical industrial, commercial or scientific knowledge, experience of skill of the supplier, absolutely meant for the assessee. viii. With this access, assessee has not received any knowledge as to how the databases are maintained nor does it have any licence for commercial exploitation of the Copyright with regard to the database maintained. ix. Additionally, OECD commentary also justify the claim, which states that when the provider makes a repository of information available for customers to search and retrieve, or where special industry or investment reports are either sent Printed from counselvise.com 69 ITA No. 1516/Mum/2025 and others Tata Consultancy Services Ltd. AY 2016-17, 2017-18 and 2018-19 or made available for purchase and download from an online catalogue or index, the payments made will be considered business income, falling within Article 7 of the tax treaty. x. The assessee is not allowed to exploit the database commercially under the agreement. xi. The principle, i.e., the provisions of DTAA if beneficial to the assessee, should prevail over the Act, is very well recognized and established principle and this principle has been upheld by the Supreme Court in Azadi Bachao Andolan's case wherein the Court emphatically held thus: \"No provision of the DTAA can possibly fasten a tax liability where the liability is not imposed by the Act. If a tax liability is imposed by the Act, the Agreement may be resorted to for negating or reducing it; and, in case of difference between the provisions of the Act and the Agreement, the provisions of the Agreement would prevail over the provisions of the Act and can be enforced by the appellate authorities and the Court.\" 37.2. Ld. Assessing Officer did not accept the claim of assessee, treating the same as covered under the definition of \"royalty\" under section 9(1)(iv) and 9(1)(vi) of the Act as well as Article 13(2)/(3) of the treaty. Therefore, TDS was required to be done on these payments which was not done. Considering the provision u/s.40(a)(ia), ld. Assessing Officer disallowed the said amount. 38. We have examined the detailed submission made by assessee. Similar issue had come up in appeal in assessee’s own case in Assessment Year 2015-16 before the Coordinate Bench and the issue was decided in favour of assessee. The relevant portion of the order of the Coordinate Bench in ITA No. 2413 & 2477/Mum/2021, is as under: \"14. Heard both the sides and perused the material on record. We have perused the decision of Hon'ble Bombay High Court in the case of Dun & Bradstreet Information Services India Pvt. Ltd. as referred supra by the Id. Counsel wherein held that payment to non-resident for import of business information reports from Printed from counselvise.com 70 ITA No. 1516/Mum/2025 and others Tata Consultancy Services Ltd. AY 2016-17, 2017-18 and 2018-19 an American company were not liable to deduction of tax at source u/s 195 of the Act. 15. We have also perused the decision of ITAT in the case of American Chemical Society Vs. DCIT (IT) wherein held that subscription fees received by assessee, a corporation based in USA from providing access to its online chemistry database and online authorise the independent customers would not qualify as royalty in terms of Sec. 9(1)(vi) and Article 12(3) of India USA DTAA. We have also considered the submission of the assessee that subscription was paid for the services pertaining to publication and same were not an information or advice given individually. The subscription services were not of the nature of transfer of right in the copyright in the article etc. The AO has not contrary disproved the material fact that subscription was made for use of a copyrighted article and not for transfer of right in the copyright in the article and assessee had not received any licence for commercial exploitation of the copyright. In view of the facts and findings as discussed we consider the Id. CIT(A) is not justified in sustaining such disallowance, therefore, this ground of appeal of the assessee is allowed. 38.1. Respectfully following the findings in aforesaid decision of the Coordinate Bench in assessee’s own case and fact pattern being same, ground raised by Revenue in this respect is dismissed. XVI. Warranty income of CMC already offered 39. Facts for this issue are that during the income tax assessment of CMC Ltd for Assessment Year 2015-16, ld. Assessing Officer had added the warranty period revenue of Rs.3,28,86,506/- to the income of CMC Ltd. Further, ld. Assessing Officer in the said order mentioned that since CMC Ltd got merged with the assessee w.e.f. 01.04.2015, the warranty period income of CMC Ltd disallowed in Assessment Year 2015-16 may be allowed to the assessee in Assessment Year 2016-17. Assessee mentioned that since the department has considered the entire income in the first year itself, income considered by CMC Ltd in the subsequent year should be allowed as a deduction. However, ld. Assessing Officer did not allow the same. 40. We have examined the submission made by the assessee. It is seen from the assessment order of CMC Ltd for AY 2015-16 that ld. Printed from counselvise.com 71 ITA No. 1516/Mum/2025 and others Tata Consultancy Services Ltd. AY 2016-17, 2017-18 and 2018-19 Assessing Officer had added the warranty period revenue of Rs.3,28,86,506/- to the income of CMC Ltd in that year itself. Admittedly, ld. Assessing Officer did mention in the said order that since CMC Ltd has merged with Tata Consultancy Services Ltd w.e.f. 01.04.2015, the warranty period income of CMC Ltd disallowed in Assessment Year 2015-16 may be allowed to the assessee in AY 2016- 17. It is seen that there is further mentioning about the amount disallowed in the case of CMC Ltd in Assessment Year 2014-15 of Rs. 2,15,64,320/- has been accounted for in FY 2014-05 relevant to Assessment Year 2015-16 and the same has been allowed as deduction from an amount of warranty income to be taxed in Assessment Year 2015-16 on the basis of directions on similar issue given by ld. CIT(A) in earlier assessment years. Considering the similarity of fact pattern and observations made by the ld. Assessing Officer in the assessment made for CMC Ltd, warranty period income of Rs.3,28,86,506/-which was added back in Assessment Year 2015-16 is allowed as a deduction in the Assessment Year 2016-17. Accordingly, ground raised by Revenue in this respect is dismissed. XVII. Year-end provisions u/s. 37(1) 41. During the relevant assessment year, assessee made provisions for expenses of Rs 503,23,91,647/- referred to as ‘year-end provisions’, relating to contractor's payments, professional, technical support fees etc. as required under the mercantile system of accounting. However, ld. Assessing Officer disallowed this year-end provision of expenses u/s 37, considering the same as unascertained liability and not incurred during the year, to make the addition thereof under both, normal computation as well as under the MAT computation. Printed from counselvise.com 72 ITA No. 1516/Mum/2025 and others Tata Consultancy Services Ltd. AY 2016-17, 2017-18 and 2018-19 41.1. Ld. CIT(A) after examining the detailed submission made and case laws relied on by assessee observed that assessee is following a mercantile system of accounting under which ‘Matching Principle' is one of the fundamental accounting principles requiring the assessee to recognize expenditure which are corresponding to revenue recognised in books of accounts, to present true and fair picture of its financial performance to various stakeholders. As per standard accounting practices, not providing for known expenses/losses would, in fact, distort the operating results of the business and it would not reflect true and fair profit of the year. Ld. CIT(A) noted that assessee had not provided for expenses for which services have been availed by it, meaning thereby, the liability towards those expenses has already accrued to the assessee. The provisions created in books of account are not ad-hoc provision but are created towards services availed or goods received from the vendors for which bills are yet to be received or where bills are received but has not been passed through its regular vendor checking and management approval cycle. Additionally, the books of accounts of the company are audited by the independent auditors in terms of requirement of the Act and the Companies Act, 2013. The criteria for recognising provision in ICDS X is in sync with Ind AS 37. Accordingly, the year-end provision made by assessee as per prevalent accounting standard are similar as required by ICDS X. In present case, the provision required as per accounting standard and ICDS are conformity except for provision of Rs. 42,92,63,354/- which is disclosed by the assessee in Form 3CD and effect to this regard has also been given in its return of income. Accordingly, assessee made true and fair disclosure in Form 3CD with corresponding effect in total income reported by it in its return filed. Thus, based on the accounting principles discussed above, ld. CIT(A) observed that it is an ascertained Printed from counselvise.com 73 ITA No. 1516/Mum/2025 and others Tata Consultancy Services Ltd. AY 2016-17, 2017-18 and 2018-19 liability and the same is eligible for deduction while computing total income. Accordingly, ld. CIT(A) directed ld. Assessing Officer to delete the disallowance of provision for expenses. 41.2. The same issue was dealt by the Coordinate Bench in assessee’s own case for Assessment Year 2013-14 in ITA No.797/Mum/2018, dated 11.04.2022, allowing the ground raised by the assessee in this respect. While dealing with this issue, Coordinate Bench placed reliance on the decision of Coordinate Bench of ITAT, Mumbai in the case of Mahindra and Mahindra Ltd. vs. DCIT in ITA No.8597/Mum/2010, dated 06.06.2012. Relevant extract of the order in assessee’s own case is reproduced below: “We have heard rival submissions and perused the materials available on record. We find that assessee had made certain provisions for expenses at the end of the year for which deduction of tax at source has not been made. Ld. Assessing Officer disallowed the same for non-deduction of tax at source invoking the provisions of Section 40(a)(ia) of the Act both under normal provisions of the Act as well as under the computation of book profits u/s.115JB of the Act. We find that the Id. CIT(A) had deleted the said disallowance by observing as under:- \"This is a matter arising for the first time in the case of assessee and has three parts, I, II and III. The Assessing Officer deals with the same in para 14 of assessment order. The genesis of the disallowance under section 40(a)(ia) is remark in Audit Report under section 44AB which is as under: In the opinion of the company, year-end provisions of expenses which are reversed in the subsequent year are not liable for deduction of tax at source as such provisions are made only for the purpose of preparation of annual financial statements in accordance with applicable accounting principles/standards 16. I first take up the part I on the matter of disallowance u/s 40(a)(ia). The Assessing Officer called for explanation of the assessee who stated inter alia that a. Entry concerned is made as per accounting standards and policy b. The person concerned to whom sum is payable is not identifiable from the entry Tax deduction at source is effected when the person to whom sum payable is identified and thereafter Form 16A is issued. d. Certain case decision is cited Printed from counselvise.com 74 ITA No. 1516/Mum/2025 and others Tata Consultancy Services Ltd. AY 2016-17, 2017-18 and 2018-19 The Assessing Officer overruled the assessee and reasons recorded by him included the following: A. Even when sum is credited to suspense account tax deduction at source is to be made B. Bangalore ITAT in case of IBM India Pvt Ltd [TS-305-ITAT-2015(Bang] has stated that even when sum is credited to suspense account tax deduction at source is to be effected and this included provision 17. The matter is examined. The primary requirement to effect disallowance under section 40(a)(ia) is by identifying a default in complying with provision relating to TDS. The explanation before Assessing officer is that provision is created in books in accordance with accounting principle and reversed next year. This is a consistent method of accounting followed by the assessee. Here a provision created by book entry is disallowed by invoking section 40(a)(ia). If at all Assessing Officer had to make a disallowance under section 40(a)(ia) the entry(ies) must be split up by identifying (a) to whom payable (b) whether the sum credited is one where tax is deductible at source (c) under which section tax is deductible at source and (d) whether same exceeds threshold limits specified In section. Identification of violation in respect of specific entry or a set of entries in tax deduction at source was a fundamental exercise keeping in view provisions of XVII-B was the first step before invoking section 40(a)(ia). This exercise is not carried out. As no default in deduction of tax at source is recorded, the question of disallowance does not arise. Hence on this count assessee succeeds on part I of the ground. 18. Part II is the disallowance of whole of the sum created as provisions. The Assessing Officer disallowed the same after recording reasons that\"... Even then assessee cannot be allowed the deduction of provisions w/s 37 as in such situation provision is nothing but an ac/hoc provision, liability for which has ether not accrued or cannot be ascertained ant thus the provision cannot be said to have been laid out or expended wholly and exclusively for the purposes of business\". The written submission does not contain a specific comment on this part. In course of hearing, the appellant stated that this is a consistent method where income and expenses are accounted for following the principle of accrual and that this consistent method is disturbed without adequate recording of reasons or analysing facts. 19. 1 find from the assessment order that the views of appellant is not considered. The decision is taken without examining relevant facts. Verification of annual reports of the company reveal no significant change in accounting policy. The Assessing Officer has made a disallowance merely because provision is created. The disallowance without examining the nature of provision by itself renders it wrong. There are admissible and inadmissible provisions. The disallowance made sans valid reasons has no locus stand The heading of the disallowance and the computation statement mentions the same as disallowance under section 40(a)(i) which leaves doubt as to whether there is an unambiguous finding regarding eligibility under section 37. As an emphatic finding which is reason based is not present in the assessment order, the alternate disallowance under section 37 is also held not in order, Printed from counselvise.com 75 ITA No. 1516/Mum/2025 and others Tata Consultancy Services Ltd. AY 2016-17, 2017-18 and 2018-19 20. Part III of the ground is against adding the same in computation of Book Profit under section 115JB. I had deleted the substantive addition on both counts. Keeping in view this decision, the Assessing Officer is directed to recompute book profit under section 11SJB. 21. In view of discussion above, he Assessing Officer is directed to delete the addition of Rs 2.655,677,983 Parts 1, II and III of the ground is disposed of accordingly\" We find that provision has been made in the books by the assessee as per the standard accounting practices followed by it and that since the accounts of the company are closed within short period after the end of the year, before which the data or invoice from the concerned vendor was not available with the assessee whereas the services had already been provided by the vendor to the assessee. In respect of these items, the assessee had made provision for expenses in its books as per the applicable accounting standard and as per the generally accepted accounting principles on accrual basis. Since the concerned vendor account is not credited by the assessee they are not identifiable for want of bills, the assessee has credited provision for expenses and had not deducted tax at source for the same, as according to the assessee, only when the party name is identifiable, the provisions of 40(a)(ia) of the Act would come into operation. Accordingly, it pleaded that no liability of TDS could be fastened on the assessee when the payee is not identifiable. We further find that the very same issue has been the subject matter of adjudication of this Tribunal in the case of Mahindra and Mahindra Ltd., vs DCIT in ITA No.8597/Mum/2010 for A.Y.2006- 07 dated 2006-07 dated 06/06/2012 wherein this ground has been adjudicated as under:- \"19 Next ground of appeal is about addition made under section Mafia) in respect of year-end provision of Rs. 4,25,52,623-AO on pages 104 (para23) has discussed the issue as under- \"It has been stated by auditors in note for clause 17(f) and auntie 7 (b) of form 3 CD audit report, that company is not detecting the TDS on year end provision as they are of the view that the liability of deducting TDS arises in subsequent year when Bill of the party is booked\" 19.1 After considering the submissions made by the appellant AO held that same was not acceptable because expenses under consideration was liable to TDS and were squarely covered by the provisions of chapter XVIIB of the Act. He was of the view that once the assessee was debating the P&L account, it automatically was crediting the party account based on matching principle. 19.2. Before us AR submitted that amount in question was year-end accounting provision to book, expenditure incurred, but in respect of which there was no obligation to either pay or to deduct tax at source is because no income had accrued to the payee, that no order had been passed under section 201 of the act holding, the appellant to be an assessee in default. Therefore, no disallowance could be made under section 40afia), He referred to page number 265 of the paper-book that gives details of provision on which TDS was not paid. As per the AR bills for the said expenditure were not received during the year under consideration. Printed from counselvise.com 76 ITA No. 1516/Mum/2025 and others Tata Consultancy Services Ltd. AY 2016-17, 2017-18 and 2018-19 As per the AR, the appellant company would make year-end provisions based on services rendered by various lenders/professionals. These provisions represented cost of various activities carried out by the company during the relevant financial period. Since, the company was following the Mercantile system of accounting it was required to account for such expenses, even though the concerned parties had not submitted their bills or such bills were pending for approval based on the internal system. At that point of time, since bills from the contractors had not been raised though that was owed by the company in favour of any specific party. Such a debt would be owed only on receipt of the bills and after it had been passed following the procedure. Only at that point of time relationship of debtor and creditor was established and was also an obligation to pay that would amount within the agreed period of time. The obligation, to deduct tax at source from the account of a specific party arose only at the time the bill was passed not before that. Citing the example of audit fees the AR submitted that obligation to pay the fees to the statutory auditors arises only after they complete the statutory audit He relied upon the decisions of GE India Technology Centre Private Lid (327 ITR 456) and Industrial Development Bank of India(107 ITD45) in this regard. DR submitted that work was already carried out for the assessee, that appellant should have deducted tax source. He further submitted that once the amount was debited to profit and loss account provisions of section 40(a)(ia) were applicable 19.3. We find that the AO has not examined the issue about year-end payments. There is a difference between the payments that are made during the year and the payments made at the fag-end of the year In our humble opinion in 2nd category of payments tax has been detected in the subsequent year when Bills are booked In this regard we have also considered the amendment made to Sec. 40(a)(ia) by the finance act.2008, with retrospective effect from 1.4.2005 We have also perused the case laws relied upon by the AR Principles discussed in the said judgement is also support our view that provisions of tax deducted at source were not applicable in case consideration. 18.3. Respectfully following the same, we find no infirmity in the order of the Id. CIT(A) granting relief to the assessee. Accordingly, the ground raised by the Revenue in this respect is dismissed.” 41.3. On identical fact pattern, this ground was allowed by the Coordinate Bench in assessee’s own case for Assessment Year 2014-15 also in ITA No. 5904/Mum/2019, dated 15.09.2025 wherein it also relied on the decision for Assessment Year 2013-14 (supra). 42. There being no material change in fact pattern and in the applicable law, respectfully following the above stated judicial precedents, we do not find any reason to interfere with the findings Printed from counselvise.com 77 ITA No. 1516/Mum/2025 and others Tata Consultancy Services Ltd. AY 2016-17, 2017-18 and 2018-19 arrived at by ld. CIT(A). Accordingly, ground raised by the Revenue in this respect is dismissed. XVIII. 80G vis-à-vis CSR expenses 43. During the year, assessee claimed deduction of Rs 141,01,06,855/- under section 80G in respect of donations made. In compliance with the requirements laid down in section 135 of the Companies Act, 2013, assessee had incurred total Corporate Social Responsibility (CSR) expenditure of Rs. 379.70 crores. The same was disallowed by adding it back in the computation of total income as per the provisions of Explanation 2 to section 37(1) of the Act. In respect of the said CSR expenses added back under section 37(1), a deduction to the extent of 50% was claimed towards eligible CSR spend, qualifying within the provisions of section 80G of the Act. However, ld. Assessing Officer disallowed the entire deduction claimed under section 80G on the ground that the deduction so claimed is on account of CSR activities. 43.1. Ld. CIT(A) examined the detailed submission made and various case laws relied upon by the assessee. IT was noted that section 80G(1) provides that in computing the total income of the assessee, there shall be deducted in accordance with the provisions of this section, such sum paid by assessee in the previous year as a donation. Further, section 80G(2) lists down the sums on which deduction shall be allowed to the assessee. Section 80G specifically mentions two instances viz, section 80G(2)(a)(iiihk) and (iiihl), i.e. contribution towards Swacha Bharat Kosh and Clean Ganga Fund where CSR expenditure is not allowable as deduction under section 80G. Additionally, Memorandum to the Finance Act (No.2), 2014 also clearly indicates that CSR expenses Printed from counselvise.com 78 ITA No. 1516/Mum/2025 and others Tata Consultancy Services Ltd. AY 2016-17, 2017-18 and 2018-19 disallowed under section 37(1) of the Act can be allowed as deduction under any other provisions of the Act, subject to satisfaction of relevant conditions as mentioned under respective sections. Also, Ministry of Corporate Affairs (MCA) issued Frequently Asked Questions ('FAQ') through General circular no. 01/2016, dated 12.01.2016 with specific FAQ No. 6. This clarification issued by one arm of the Government supports the view that deduction under section 80G is allowable on such contributions. Even various Hon'ble High Courts and Coordinate Benches of ITAT have also held that except two donations mentioned in section 80G(2)(a)(iiihk) and (iiihl), all eligible donations will be allowed as deduction u/s 80G of the Act. Considering the above facts, ld. CIT(A) allowed the claim of deduction under section 80G in respect of CSR expenses incurred. 43.2. Reference is made to the decision of Coordinate Bench of ITAT, Mumbai in the case of Inter Gold India Pvt. Ltd. in ITA No.4400/Mum/2023, dated 05.08.2024, wherein similar issue was dealt though in the context of revisionary order u/s.263, the Coordinate Bench after detailed elaboration on the provisions of the Act as contained in section 80G, section 37(1), as well as considering the FAQ issued by Ministry of Corporate Affairs (MCA) held in favour of the assessee by holding that claim of deduction u/s. 80G by the ld. Assessing Officer cannot be held to be unsustainable in law or amounts to erroneous and prejudicial to the interest of revenue. Coordinate Bench thus, reversed the revisionary order of ld. PCIT on this issue. Relevant observations and findings of the Coordinate Bench are extracted below from Para 12 for ready reference. “12. Claiming a deduction from computation of business income as provided from sections 28 to 44DB is different from claiming a deduction under chapter VIA of the Act which is allowed from Total Income. As per Explanation 2 to Section 37, CSR expenditure is not allowable as deduction while computing the business income under the provision of Section 28-44DB, whereas deduction u/s.80G is allowed while Printed from counselvise.com 79 ITA No. 1516/Mum/2025 and others Tata Consultancy Services Ltd. AY 2016-17, 2017-18 and 2018-19 computing the total income under Chapter VIA. There is no pre-condition that claim for deduction u/s.80G on a donation should be voluntary. It is independent of computation of business income as it is allowed from Gross Total Income. The assessee had disallowed the CSR expenses while computing business income. Further, there is no dispute that the assessee has filed complete details of donation and also filed the certificate u/s.80G which was enclosed before the AO. Section 80G (1) of the Act provides that in computing total income of the assessee, they shall be deducted in accordance with the provision of Section, such sum paid by the assessee in the previous year as a donation. Deduction under Chapter VIA provides deduction from the gross total income which is computed after making necessary allowances / disallowances in accordance with Section 28-44BB of the Act including Explanation to Section 37(1). Thus, Section 37(1) and Section 80G of the Act are independent and the principles governing what is not allowable u/s. 37(1) have been provided in the section itself. Even in section 80G also, what is not allowable has also been provided under the Act. For instance, Section 80G specifically mentions two clauses, viz., section 800(2)(a)(iihk) and (iiihl), i.e., contributions towards 'Swacha Bharat Kosh' and 'Clean Ganga Fund', where donation in the nature of CSR Expenditure is not allowable as deduction under section 80G of the Act. Therefore, the disallowances for deduction under section 80G vis-à-vis CSR can be restricted to contributions made to these Funds mentioned in Section 800(2)(a)(iiihk) and (iiihl) only. It is an undisputed fact that the assessee has not claimed any deduction against the aforesaid clauses of 80G (2)(a) of the Act and as such entire donation claimed by the assessee is allowable u/s 80G. The Ministry of Corporate Affairs (\"MCA\") has issued \"FAQs\" through General circular no. 01/2016 dated January 12, 2016 (FAQ No. 6) and has clarified on the issue as follows: \"Question No. 6: What tax benefits can be availed under CSR? Answer: No specific tax exemptions have been extended to CSR expenditure per se. The Finance Act, 2014 also clarifies that expenditure on CSR does not form part of business expenditure. While no specific tax exemptions have been extended to expenditure incurred on CSR, spending on several activities like Prime Minister's Relief Fund, scientific research, rural development projects, skill development projects, agriculture extension projects etc, which fund place in Schedule VII, already enjoys exemptions under different sections of the Income- tax Act, 1961.\" 12. This clarification being issued by the Ministry of Corporate Affairs, Government of India clarifies that donation covered under CSR Expenses which not are eligible for the deduction under section 80G of the Income-tax Act, 1961, but are allowed under different sections. Ergo, there is nothing that if any expenditure is disallowable u/s 37 the same cannot be allowed under other provisions of Act, if the conditions of allowability are satisfied. Thus, allowing the claim of deduction u/s.80G by the 1d. AO cannot be held to be unsustainable in law or amounts to erroneous and prejudicial to the interest of the Revenue. Thus order of the Ld. PCIT is reversed on this point.” 44. Heard both the sides and perused the material on record. The issue in hand is no longer res integra in view of aforesaid decision as well as in view of provisions of the Act adequately dealt by the ld. CIT(A). Facts narrated are not in dispute. Nothing cogent brought on record before us by the ld. DR to controvert the existing position. On overall Printed from counselvise.com 80 ITA No. 1516/Mum/2025 and others Tata Consultancy Services Ltd. AY 2016-17, 2017-18 and 2018-19 consideration of facts, applicable law and judicial precedents, we do not find any reason to interfere with the findings arrived at by ld. CIT(A). Accordingly, ground raised by the Revenue in this respect is dismissed. XIX. Gratuity expenses debited to OCI in profit and loss 45. During the year under consideration i.e. Assessment Year 2017- 18, assessee debited its profit and loss account for contribution made to an approved gratuity fund as under: Particulars Amount (Rs.) P&L charge for the period 233,87 45 733 OCI charge for the period 200,41,81,000 Total 434,29,26,733 45.1. Till Assessment Year 2016-17, assessee was debiting the entire amount of provision in respect of contribution to an approved gratuity fund in profit and loss account. Effective AY 2017-18, there was a change in accounting standard. The new accounting standard for accounting employee benefits, viz. ‘IND AS-19’ requires the company to account for employee benefits considering the following items in Other Comprehensive Income (OCI): i. actuarial gains and losses ii. return on plan assets, excluding amounts included in net interest on the net defined benefit liability (asset), and iii. any change in the effect of asset ceiling, excluding amounts included in net interest on the net defined benefit liability (asset) 45.2. Accordingly, assessee debited Rs 233.87 crores in Profit & Loss account above the line and Rs 200.41 crores in Other Comprehensive Printed from counselvise.com 81 ITA No. 1516/Mum/2025 and others Tata Consultancy Services Ltd. AY 2016-17, 2017-18 and 2018-19 Income (OCI) in its books of accounts. In Assessment Year 2016-17, assessee claimed the entire expenses debited to P&L Account in its return of income. The same was allowed by the Department. In AY 2017- 18, the assessee claimed the amount of Rs 233.87 crores debited to Profit & Loss Account but inadvertently missed to claim in its return, the expense of Rs 200.41 crores debited to OCI. Accordingly, this was claimed as a deduction during the course of assessment proceedings. However, ld. Assessing Officer neither considered the said claim of deduction while determining assessed total income nor commented on the same. Assessee contended that this claim of provision for employee benefits is already present in its return of income and hence, what it requested is modification to claim already existed in the return. 45.3. Ld. CIT(A) examined the detailed submission made by assessee. Until AY 2016-17, assessee was debiting the entire gratuity amount to P & L Account and the same was allowed as a deduction by the Department. Owing to change in the mandatory accounting standard requirements effective AY 2017-18, assessee is required to split the gratuity into two segments, one is to be debited to Profit and Loss Account and second is to be debited to OCI. It is noted that OCI forms part of the Profit and Loss statement though having specific disclosure requirements in terms of change in accounting standards. Also, admittedly there is no dispute on the fact of assessee having already paid the said amount before the due date of filing of return of income. In the Tax Audit Report also, there is no reporting on outstanding gratuity amount. In view this factual position ld. CIT(A) held that assessee is entitled to claim deduction in respect of gratuity debited to OCI and allowed the ground of appeal. Printed from counselvise.com 82 ITA No. 1516/Mum/2025 and others Tata Consultancy Services Ltd. AY 2016-17, 2017-18 and 2018-19 45.4. This issue had come before the Coordinate Bench of ITAT Delhi in the case of Genpact India (P) Ltd v. ACIT [2025] 174 taxmann.com 691 (Del) wherein its catch note reads on similar factual patter as under: Where assessee incurred an expense of Rs. 73.09 crores towards gratuity which was duly reported in audit report and out of Rs. 73.09 crores, payment of Rs. 54.24 crores was debited to statement of profit and loss for computing 'profit before tax' and balance payment of Rs. 18.85 crores was routed through OCI and adjusted with 'profit after tax' to compute 'total comprehensive income for year' in statement of profit and loss account, since entire gratuity amount was duly paid by assessee within due date prescribed under section 139(1), there was no scope for making any brought forward adjustment of Rs. 18.85 crores on account of gratuity under section 43B as there was no mismatch between amount returned in audit report and deduction claimed in return 46. Considering the discussions made above on the factual position and submissions made, we do not find any reason to interfere with the findings arrived at by ld. CIT(A). Accordingly, ground raised by the Revenue in this respect is dismissed. XX. Tax sparing credit u/s.90 on dividend received [ground no. 01 in the appeal by the assessee] 47. Through ground no. 1 raised by the assessee, it has claimed benefit of “Tax Sparing Credit” towards dividend income received by it from its 100% owned subsidiary named Tata Consultancy Services Asia Specific Pte Limited (TAPL), under India-Singapore DTAA. The amount of tax credit claimed is Rs.9,96,61,577/- being “Singapore tax paid” as defined under Article 25(3) of the India-Singapore DTAA which has been denied by the ld. AO. 47.1. TAPL had received approval under the Economic Expansion Incentives (EEI) and was subjected to concessional rate of tax. During the year, assessee received dividend of USD 45 million equivalent to Rs. 297.18 Cr. from TAPL, which the assessee offered to tax u/s. 115BBD of the Act. TAPL was subjected to concessional rate of tax u/s. 43D of Printed from counselvise.com 83 ITA No. 1516/Mum/2025 and others Tata Consultancy Services Ltd. AY 2016-17, 2017-18 and 2018-19 Domestic Income Tax Law of Singapore since October, 2003. According to the assessee, it is entitled to relief by way of tax sparing credit under para (3) of Article 25 of India-Singapore DTAA in respect of tax that would have been otherwise payable in the absence of tax concession granted by Singapore authority u/s.43D of the Singapore Income Tax Act. Since TAPL was subjected to concessional rate of tax on certain portion of income in accordance with “Economic Expansion Incentives Scheme”, assessee is entitled to tax credit in the form of tax sparing of Rs.9,96,61,577/- in terms of provisions contained in paragraph (2) and (3) of Article 25 of India-Singapore DTAA. 47.2. In this respect, relevant provisions of Article 25 are extracted below for ready reference: “Article 25. AVOIDANCE OF DOUBLE TAXATION 1….. 2. Where a resident of India derives income which, in accordance with the provisions of this Agreement may be taxed in Singapore, India shall allow as a deduction from the tax on the income of that resident an amount equal to the Singapore tax paid, whether directly or by deduction. Where the income is a dividend paid by a company which is a resident of Singapore to a company which is a resident of India and which owns directly or indirectly not less than 25 per cent of the share capital of the company paving the dividend, the deduction shall take into account the Singapore tax paid in respect of the profits out of which the dividend is paid. Such deduction in either case shall not however, exceed that part of the tax (as computed before the deduction is given) which is attributable to the income which may be taxed in Singapore. 3. For the purposes of paragraph 2 of this Article, \"Singapore tax paid\" shall be deemed to include any amount of tax which would have been payable but for the reduction or exemption of Singapore tax granted under: (a) the provisions of the Economic Expansion Incentives (Relief from Income-tax) Act and the provisions of sections 13(1)(t), 13(1)(u), 13(1)(v), 13(2), 134, 13B, 13F, 14B, 145, 431, 43C 43D. 43E, 43F. 43G. 43H, 43- 1, 43.J and 43K of the Income-tax Act, insofar as they were in force and have not been modified since the date of signature of this Agreement, or have been modified in minor respects so as not to affect their general character. (b)….” Printed from counselvise.com 84 ITA No. 1516/Mum/2025 and others Tata Consultancy Services Ltd. AY 2016-17, 2017-18 and 2018-19 47.3. From paragraph (3) of Article 25 above, Singapore tax paid deems to include any amount of tax which would have been payable, but for reduction or exemption of Singapore tax granted under the provisions of Economic Expansion Incentives scheme which includes provisions of Section 43D. Further, as per paragraph (2) of Article 25, assessee is entitled to underlying tax credit in respect of corporate income tax paid in Singapore by TAPL for the dividend income received by it during the year. 47.4. Also, provisions contained u/s. 90 of the Act are taken into account, whereby as per provisions of Section 90(1)(a)(ii), Central Government may enter into an agreement with any country outside India for granting relief in respect of income tax chargeable under the Act and under the corresponding law in force in that country, as the case may be, to promote mutual economic relations, trade and investment. Further, provisions of Section 90(1)(b) refer to Central Government signing tax treaty for avoidance of double taxation of income under the Act. This covers exemption method which exempts from tax, in India any income taxed in the other treaty country whereby assessee gets taxed only in one treaty jurisdiction. 48. In the course of assessment proceedings, assessee furnished approval under Economic Expansion Incentives along with working of underlying tax sparing credit as well as returns of TAPL filed in Singapore. Based on these submissions, ld. AO observed that assessee has considered entire Profit After Tax (PAT) for calculation of tax sparing credit. In this respect, assessee submitted that entire PAT has gone to reserves and dividend has been paid out of such reserves. Accordingly, First In First Out (FIFO) method is applied to calculate tax sparing Printed from counselvise.com 85 ITA No. 1516/Mum/2025 and others Tata Consultancy Services Ltd. AY 2016-17, 2017-18 and 2018-19 credit. Contrary to this, ld. AO took the view that it would not be rational to assume that entire reserves of TAPL have been lying ideal and no investments made out of the reserves except for the paying dividends only. According to him, since assessee did not furnish any details in regard to investment activities of TAPL and observing that exemption benefits were available to the assessee for AY 2005-06 to AY 2012-13 only, claim on account of tax sparing credit was disallowed. Aggrieved, assessee went in appeal before the ld. CIT(A) who also sustained the said disallowance. 49. The assessee had furnished computation of tax sparing credit by applying both FIFO method as well as Last In First Out (LIFO) method which are extracted below: Printed from counselvise.com 86 ITA No. 1516/Mum/2025 and others Tata Consultancy Services Ltd. AY 2016-17, 2017-18 and 2018-19 Printed from counselvise.com 87 ITA No. 1516/Mum/2025 and others Tata Consultancy Services Ltd. AY 2016-17, 2017-18 and 2018-19 Printed from counselvise.com 88 ITA No. 1516/Mum/2025 and others Tata Consultancy Services Ltd. AY 2016-17, 2017-18 and 2018-19 49.1. From the perusal of the observations and findings arrived at by the ld. AO while disallowing the tax sparing credit, it is noted that the disallowance is based on rejecting the methodology adopted by the assessee for calculating the same. Per se, there is no denial of the tax sparing credit to the assessee, considering the provisions of India- Singapore DTAA and the Act, as narrated above. The dispute relates only to the method of calculation which should be either based on FIFO method or LIFO method. While adopting FIFO method by the assessee, it has considered dividend distribution from the accumulated profits of TAPL which form part of its reserves. However, ld. AO by observing that there is no rational to assume that entire reserves of TAPL were lying ideal and no investments have been made out of the said reserves except for making dividend payments, has not considered the FIFO method. For want of further details about the utilisation of reserves of TAPL to ascertain if any investment activities were made from the said reserves, the claim of tax sparing credit was disallowed. 49.2. Based on the above, we find that dispute in the present case relates only to the method of calculation and eligibility of assessee to claim tax sparing credit under article 25(2) and (3) is not in dispute. Assessee has furnished details for computing tax sparing credit under both the methods i.e. FIFO and LIFO method with marginal difference in the two. Denial by the ld. AO is based on assumption in respect of utilisation of reserves of TAPL. Nothing cogent has been brought on record to establish the assumption of utilisation of reserves otherwise by the TAPL. Considering the factual position and the provisions of applicable DTAA as well as Act, calculation of tax sparing credit made by the assessee by applying FIFO method seems to be appropriate. Accordingly, we direct to allow the tax sparing credit to the assessee Printed from counselvise.com 89 ITA No. 1516/Mum/2025 and others Tata Consultancy Services Ltd. AY 2016-17, 2017-18 and 2018-19 based on the working given by it under FIFO method. Ground No.1 raised by the assessee in its appeal is allowed. 50. We have dealt with the above listed issues by giving our observations and findings which covers respective grounds of appeal raised by both, assessee and the revenue, details of which is already tabulated above. Our above stated observations and findings shall apply mutatis mutandis to appeal for each assessment year to the respective ground of appeal. 51. In the result, appeals of both, revenue and assessee are partly allowed for all the three assessment years. Order is pronounced in the open court on 30th December, 2025 Sd/- Sd/- (Pawan Singh) (Girish Agrawal) Judicial Member Accountant Member Dated: 30th December, 2025 MP, Sr. P.S. Copy to: 1 The Appellant 2 The Respondent 3 DR, ITAT, Mumbai 4 5 Guard File CIT BY ORDER, (Dy./Asstt. Registrar) ITAT, Mumbai Printed from counselvise.com "
Other Referred Cases
DCIT vs. Tata Consultancy Services Limited, WNS Global Services Pvt. Ltd. vs. ACIT, Tata Autocomp Systems Ltd. vs. ACIT, Motorola India Electronics vs. CIT, Engineering Analysis Centre of Excellence (P) Ltd. vs. CIT, Genpact India (P) Ltd. vs. ACIT, Mahindra and Mahindra Ltd. vs. DCIT, Tata Steel vs. ACIT, Rallis India Ltd. vs. CIT, Tata Sons Ltd. vs. ACIT
Laws Referred To
Income-tax Act, 1961, Double Tax Avoidance Agreement between India and Singapore
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