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Income Tax Appellate Tribunal, PUNE BENCH, ‘C’ PUNE – VIRTUAL COURT
Before: SHRI R.S. SYAL & SHRI S.S. VISWANETHRA RAVI
This appeal by the assessee is directed against the final assessment order dated 28-11-2019 passed by the Assessing Officer (AO) u/s.143(3) r.w.s.147 r.w.s.144C(13) of the Income-tax Act, 1961 (hereinafter called ‘the Act’) in relation to the assessment year 2015-16.
The first issue raised in this appeal is against the transfer pricing addition of Rs.10,22,00,000/-. Shorn off unnecessary details, it is seen that the Transfer Pricing Officer (TPO) proposed transfer pricing addition of Rs.10.22 crore vide his order dated
M/s. Vishay Components India Private Limited 31-10-2018. The draft order was notified on 21-12-2018 incorporating the said adjustment. Thereafter, the assessee moved rectification application u/s.154 of the Act before the TPO, who vide his order dated 30-07-2019 concluded that : “As a result of this order, the adjustment proposed vide order u/s.92CA(3) 31.10.2018 stands reduced to Rs. NIL.” During the course of the proceedings before the Dispute Resolution Panel (DPO), the assessee placed on record a copy of the rectification order. The DRP took cognizance of the rectification order and concluded at page 27 of its direction dated 28-08-2019 that : “The result of the above order made by the TPO, the adjustment now stands NIL and therefore other grounds become academic in nature.” While passing the final assessment order, the AO noted this fact at the table drawn on page 3 of his order, but while computing the total income, inadvertently, again added Rs.10.22 crore by relying on the original order passed by the TPO. It is thus manifest that the direction given by the DRP has not been properly given effect to by the AO in the final assessment order. Section 144C(13) of the Act categorically provides that:
`Upon receipt of the directions issued under sub-section (5), the Assessing Officer shall, in conformity with the directions, complete, notwithstanding anything to the contrary contained in section M/s. Vishay Components India Private Limited 153 or section 153B, the assessment …’. Under such circumstances, we set aside the impugned order and direct him to pass the final order in conformity with the direction of the DRP as extracted hereinabove.
The only other ground which survives in this appeal is against the disallowance made u/s.40(a)(i) of the Act. Succinctly, the facts of the ground are that the assessee paid a sum of Rs.7,11,14,060/- to its associated enterprise, viz., Vishay Intertechnology Asia Pte Ltd., Singapore, without deduction of tax at source. On being called upon to explain as to why disallowance u/s.40(a)(i) be not made for non-deduction of tax at source, the assessee submitted that the payment was in the nature of reimbursement and neither Royalty nor Fees for technical services requiring any tax deduction. Not convinced, the AO, made the disallowance, consistent with the view taken by him on this score for the assessment years 2012-13, 2013- 14 and 2014-15.
Having heard the rival submissions and gone through the relevant material on record, it is seen that identical issue came up for consideration before the Tribunal for the earlier years.
Discussing it at para 9 onwards of its order dated 19-01-2021 in for the assessment year 2014-15, the Tribunal
M/s. Vishay Components India Private Limited has finally decided it in the assessee’s favour. Similar disallowance made u/s.40(a)(i) came to be considered by the Tribunal for the assessment year 2012-13, which also got deleted. The ld. DR fairly conceded the position. Respectfully following the orders passed by the Tribunal in the assessee’s own case for the earlier years, we overturn the impugned order and delete the disallowance u/s.40(a)(i) of the Act.
In the result, the appeal is partly allowed. Order pronounced in the Open Court on 25th May, 2021.