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Income Tax Appellate Tribunal, DELHI BENCH : I-1 : NEW DELHI
Before: SHRI R.K. PANDA & SHRI K. NARASIMHA CHARY
BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER AND SHRI K. NARASIMHA CHARY, JUDICIAL MEMBER Assessment Year: 2006-07 Mars International India Pvt. Ltd., Vs DCIT, C/o PricewaterHouse Coopers Pvt. Ltd., Circle-6(1), Sucheta Bhawan, 1st Floor, CR Building, 11-A, Vishnu Digamber Marg, New Delhi. New Delhi. PAN: AAACE6794J (Appellant) (Respondent) Assessee by : Shri Anubhav Rastogi, Advocate Revenue by : Shri Surendra Pal, CIT, DR Shri Mehboob Ali, Sr. DR Date of Hearing : 18.02.2020 Date of Pronouncement : 21.02.2020 ORDER
PER R.K. PANDA, AM:
This appeal filed by the assessee is directed against the order passed u/s 143(3) r.w. section 144C of the IT Act, 1961.
This appeal was earlier decided by the Tribunal vide 29th March, 2017. Subsequently, the Tribunal in MA No.420/Del/2017, order dated 19th June, 2019, recalled the order for the limited purpose of adjudication of Grounds No.2, 4.1, 4.4, 4.5, 4.6 and 4.7. Therefore, we confine our finding to only Grounds No.2, 4.1, 4.4, 4.5, 4.6 and 4.7., which are as under:- “4. That on the facts and in circumstances of the case and in law, while confirming the addition of balance Rs. 6,52,37,419 /- the Ld. DRP has grossly erred in: 4.1 disregarding the ALP, as determined by the appellant in the TP documentation maintained by it in terms of section 92D of the Act read with Rule 10D of the Income-tax Rules, 1962 (‘Rules’); 4.2. not taking into cognizance the Appellant’s notification submitted before the H’ble DRP that tax has already been deducted and deposited by the appellant on the salaries of seconded employees to India on an amount of Rs.3,89,52,783 and the income has been offered to tax in India; 4.3. considering the ALP of reimbursement of expatriate salaries (of Rs.3,89,52,783 paid by the appellant) as Nil on the basis of an alleged arbitrary/ frivolous ground that the salary paid to expatriates was not at par with the salary paid by the appellant to its senior management personnel; 4.4 holding that cost contributions/ reimbursement paid by appellant have not resulted in any ‘economic and commercial benefit’ to the appellant; 4.5 not taking into cognizance the contentions/ arguments/ evidentiary data put forth by the appellant in support of the fact that the cost contributions/ reimbursement paid by the appellant are valid business expenses and genuinely pertain to the appellant’s business operations; 4.6 not taking into cognizance the additional evidence that was submitted before the H’ble DRP to demonstrate that intra - group services were actually received by the Appellant which were commensurate with the payments made in that aspect; 4.7 not appreciating the functional analysis conducted by the appellant and holding that the appellant has not benchmarked the international transactions in the nature of cost contributions/ reimbursements;”
The ld. Counsel for the assessee submitted that the TPO, in the instant case disallowed 20 items of various expenditure, the details of which are as under:-
S.No. Nature of charge Amount (in INR) 1 Testing Charges 6,015,359 2 Regional President Charge 7,546,250 3 Share of corporate service fee 5,242,865 4 IT Cost 257,195 5 Maintenance of NIR Equipment 1,077,931 6 Patent Allocation Charges 48,035 7 Regional share of Global Personnel & Organization 53,736 8 Research and development expenses 3,787,312 9 Product transit insurance expenses 72,903 10 Employee compensation and benefit survey expenses 68,750 11 Breeder loyalty research expenses 186,114 12 Hotel Charges 47,978 13 Travel Expenses 758,113 251,494 14 Training expenses 15 Personal tax consultancy charges 174,095 16 Trial cost of puppy food 506,128 17 Safety meeting expenses 176,002 18 Clearing and forwarding expenses 14,376 19 Reimbursement of Salary Cost 38,952,783 20 Reimbursement of consultancy charges 26,861,146 Total 92,098,565
The Tribunal, in the original order, has restored the issues relating to reimbursement of salary cost and reimbursement of consultancy charges to the file of the TPO/AO for deciding the issue afresh. Therefore, he has no objection if the remaining items are also restored to the file of the AO/TPO for fresh adjudication in the light of the direction of the Tribunal while adjudicating the reimbursement of salary cost and consultancy charges.
The ld. DR has no objection for the same.
After hearing both the sides, we find, the Tribunal, while deciding the issue of reimbursement of salary cost and reimbursement of consultancy charges, has restored the issue to the file of the AO/TPO on the ground that there was neither 3 any finding by the TPO on this issue nor the DRP has looked into the crucial evidences. Accordingly, the Tribunal had restored the issue to the file of the AO/TPO for adjudication of the issue afresh. Under these circumstances and considering the fact that two major expenses have been restored to the file of the AO/TPO for verification, therefore, in all fairness, we deem it proper to restore the above grounds relating to disallowance of other expenses to the file of the AO/TPO for verification of the expenses with evidences already filed or to be filed by the assessee and decide the issue afresh in accordance with the law. The grounds raised by the assessee are accordingly allowed for statistical purposes.