Income Tax Appellate Tribunal – Kolkata
M/S. Philips India Limited … vs Acit, Circle – 12(2), , Kolkata on 15 May, 2019 IN THE INCOME TAX APPELLATE TRIBUNAL “C”, BENCH KOLKATA BEFORE SHRI S. S. GODARA, JM &DR. A.L.SAINI, AM आयकरअपीलसं./ITA No.2600/Kol/2018 ( नधा रणवष / Assessment Year:2014-15) M/s Philips India Ltd. Vs. ACIT, Circle-12(2), Kolkata 3rd Floor, Tower-A, DLF Park, 08,
Block-AF, Major Arterial Road, New
Town (Rajarhat), Kolkata-700156. थायीले खासं . /जीआइआरसं . / PAN/GIR No.: AABCP 9487 A (Assessee) .. (Revenue) आयकरअपीलसं./SA No.13/Kol/2019 A/O of ITA No.2600/Kol/2018 ( नधा रणवष / Assessment Year:2014-15) M/s Philips India Ltd. Vs. ACIT, Circle-12(2), Kolkata 3rd Floor, Tower-A, DLF Park, 08,
Block-AF, Major Arterial Road, New
Town (Rajarhat), Kolkata-700156. थायीले खासं . /जीआइआरसं . / PAN/GIR No.: AABCP 9487 A (Assessee) .. (Revenue) Assessee by :Shri P. J. Pardiwala, Sr. Advocate, Mr. Ketan V. Ved& Ms. Purba Banerjee, Advocate
Respondent by : Dr. P. K. Srihari, CIT DR
सन ु वाईक तार ख/ Date of Hearing : 13/03/2019
घोषणाक तार ख/Date of Pronouncement : 15/05/2019 आदे श / O R D E R Per Dr. A. L. Saini:
The above stay petition, SA No. 13/Kol/2019, was listed for hearing today.
However, with the consent of both the parties, the related appeal itself has been
heard today, and, as such, the stay petition is dismissed as infructuous.
M/s Philips India Ltd. (formerly Philips Electronics India Ltd.) ITA No.2600/ Kol/2018 SA No. 13/ Kol/2019 (arising out of I.T.A. No. 2600/Kol/2018) Assessment Year:2014-15 2. Now, we shall take assessee`s appeal in ITA No.2600/Kol/2018, for A.Y.
2014-15.
The captioned appeal filed by the assessee pertaining to assessment year 2014-15,
is directed against the fair assessment order passed by the Assessing Officer u/s
143(3)read with Section 92CA(3) and 144C(5) of the Income Tax Act, 1961 (in
short the ‘Act’) dated 30.10.2018, which incorporates the direction given by the
Dispute Resolution Panel-2, Kolkata,vide order dated 11.09.2018.
3. Ground No.1 raised by the assessee is general in nature and hence does not
require adjudication.
4. Ground No. 2 raised by the assessee relates to determination of arms’ length
price by the Assessing Officer / TPO / DRP for management support services
received by the assessee.
5. When this appeal was called out for hearing, the ld. Counsel for the assessee
invited our attention to the order dated 04.04.2018, passed by the Tribunal in
assessee’s own case in I.T.A. No. 2489/Kol/2017, for assessment year 2013-14,
whereby the issue of management support services (MSSA) have been discussed
and adjudicated in favour of the assessee. The ld. Counsel for the assessee
submitted that the present issue is squarely covered by the above said order of the
Tribunal, a copy of which is also placed before the Bench.
6. The ld. DR relied upon the orders of the authorities below.
7. We see no reason to take any other view of the matter then the view so taken by
the division bench of this Tribunal in assessee’s own case vide order dated
04.04.2018. In this order, the Tribunal has inter alia observed as under:
“6. We have heard the rival submissions and perused the materials available on record including the paper book of the assessee. We find that similar issue had cropped up before this tribunal in assessee’s own case for the Asst Years 2009-10 , 2010-11 , 2011-12 and 2012-13 and similar arguments were advanced by both Pa g e | 2 M/s Philips India Ltd. (formerly Philips Electronics India Ltd.) ITA No.2600/ Kol/2018 SA No. 13/ Kol/2019 (arising out of I.T.A. No. 2600/Kol/2018) Assessment Year:2014-15
the sides. We find that in the order passed for the Asst Year 2011-12, this tribunal
had held as under:-
10. We have heard the rival contentions & perused the materials available on record. In the instant case the TPO has treated the MSSA received by the assessee as stewardship services and for the benefit of AE. Accordingly the TPO valued the ALP of these services at NIL value. The order of the TPO was subsequently confirmed by the Ld. DRP.

However we note that the assessee has provided the details of the benefit derived by it from the MSSA receivbed from AE at the time of assessment proceedings. However the order of the TPO is silent on this aspect.

Similarly we also note that the Revenue in the own cases of the assessee pertaining to other assessment years as discussed above has accepted claim of MSSA of the assessee. Besides we also note that the Hon’ble ITAT in the own case of the assessee has decided impugned issue in favour of assessee in ITA No. 1141/Kol/2016 for the AY 2009-10 vide order dated 5.4.2017. The relevant extract of the order is reproduced below:

4. We have heard the rival submissions and perused the materials available on record including the paper book of the assessee. We find that the ld AR referred to the Agreement entered into by the assessee which is enclosed in page 194 of Volume 1 of Paper Book as under:-
5.2 Concern Services furnished by Philips In general, when a qualified Philips subsidiary entered into GSA agreement with Philips, it will be provided Concern Services. The major concern activities performed by Philips is related to services in commercial, accounting, auditing, financial, fiscal, social and legal matters and in all other fields in which Philips has know-how and experience. Philips shall make available to the Company such know-how, expertise and experience in the aforesaid areas as Philips now and in the future may possess and may freely and unconditionally furnish to the Company, and render assistance in this connection, all to the extent reasonably required to improve the Company’s business operation.

The assistance may relate to :

a. the distribution and trading of products, particularly with respect to advertising, sales promotion, public relations, market research (in particular, information and trends on the world market), labeling, packaging, shipping and forwarding, long-term export business and international public tendering and purchasing from Third parties;

b. advice and support with respect to the supply of requirements of the Company from other resources ;

c. financial, accounting and auditing matters relating to such subjects as:

Pa g e | 3 M/s Philips India Ltd. (formerly Philips Electronics India Ltd.) ITA No.2600/ Kol/2018 SA No. 13/ Kol/2019 (arising out of I.T.A. No. 2600/Kol/2018) Assessment Year:2014-15 i. accounting and auditing principles and methods;
ii. budgeting methods; iii. capital structure, loans, exchange risks, financial research,
warranties and guarantees, credit management, the establishment and management of finance and lease companies and all further banking activities, including long-term finance plans;
iv. development of data processing d. fiscal and legal matters , including patents, trademarks and customs duties, particularly in international transactions ;

e. personal matters particularly with respect to :

i. the selection and training of personnel ; ii. an adequate personnel policy; f. insurances; g. admittance at the Company’s specific request and at mutually agreed terms of a reasonable number of employees of the Company to its premise to the extent to which Philips has the free right to do so, so that they can acquaint themselves with commercial and other knowledge as specified above, familiarize themselves with the organization of the Philips Concern and with working methods used by it or receive advice on specific matters in the fields described above;

h. sending at the Company’s specific request such experts from Philips to the Company’s offices as may be agreed between the parties for such period or periods as may be agreed between them to advise the Company on matters as mentioned above;

i. any other similar matters which the Company may reasonably refer to Philips or which Philips itself may deem appropriate.

4.1. The ld AR also brought to our notice page 196 of the Paper Book
containing the functions performed as below:-

Functions are defined as the activities that each of the entities participating in
a particular transaction performs as a normal part of their operations.
Functions can be divided into broad categories:

– strategic management functions are those activities that determine the
overall strategy and organization of the firm ;

-corporate service functions assist in the day-to-day management of the
organization (e.g. finance, human resources, information systems, etc.,);

-product and process development functions relate to design, research and
development activities ;

Pa g e | 4 M/s Philips India Ltd. (formerly Philips Electronics India Ltd.) ITA No.2600/ Kol/2018 SA No. 13/ Kol/2019 (arising out of I.T.A. No. 2600/Kol/2018) Assessment Year:2014-15
-procure functions are those activities related to the sourcing and purchase of raw materials and other inputs to the production process;

-make functions are activities that impact the manufacture of a company’s products including production planning and control and process improvement;

-move functions focus on the organization of outbound logistics to deliver products to the customer ; and -sell functions include marketing, advertising , sales and distribution activities.

4.2. We find that no adjustment on account of Management Support Service Charges were made in the past by the revenue from Asst Years 2005-06 to 2008-09 though the agreement is effective from 22.10.2004 onwards. We also find that Article 6 of MSSA enclosed in page 294 of the Paper Book on ‘Taxes’ is as under:-

The costs, taxes, stamp duties and similar charges arising out of this agreement shall be borne by the Company (assessee) if such amounts are due in the Country, and by Philips if such amounts are due outside the Country with the exception of :

a. taxes which can be claimed back or credited against tax by the Company in accordance with the legal provisions which shall be chargeable to the Company; and b. taxes which can be claimed back or credited against tax by Philips in accordance with the legal provisions, which shall be chargeable to Philips.

The ld AR argued that the assessee had complied with the TDS obligations on the
subject mentioned payments and the same has been accepted by the department.
He also referred to the summary of emails from Pages 333 to 378 and further
emails which are enclosed in Exhibit II from pages 800 to 854 of Paper Book. He
also referred to the exclusion of 12000000 Euros towards the Shareholder
function costs in the overall cost allocation to the assessee company which is
enclosed in page 795 of the Paper Book. We find that the assessee had also
furnished before the lower authorities , the details of specific benefits derived by it
on each of the emails corresponded between the assessee and KPENV comprising
of various services rendered by KPENV pursuant to the MSSA. In fact the
benefits derived from each of the services is furnished in the separate column in
the said reply dated 11.1.2013 before the ld TPO which is also enclosed as
Exhibit II in the Paper Book filed by us. The ld TPO simply replied in his remand
report filed before the ld DRP to these emails and the reply of the assessee by
stating that the services rendered are only in the nature of control, supervisory
and monitoring functions. The assessee in turn filed rejoinder to this remand
report by specifically pointing out the benefits derived from each of the services
and also by objecting to the remand report of the ld TPO by stating that the ld Pa g e | 5 M/s Philips India Ltd. (formerly Philips Electronics India Ltd.) ITA No.2600/ Kol/2018 SA No. 13/ Kol/2019 (arising out of I.T.A. No. 2600/Kol/2018) Assessment Year:2014-15
TPO had not assigned any reason for concluding that the services are in the
nature of control, supervisory and monitoring functions. We find that the
assessee had specifically replied that it was benefitted by substantial cost
reduction on an overall basis by utilizing the services rendered by KPENV
pursuant to MSSA. The details of these benefits derived are enclosed in pages
965 to 981 of the Paper Book. The ld AR also drew our attention to the order of
the ld DRP dated 23.12.2013 passed in the hands of KPENV for the Asst. Year
2009-10 (enclosed in page 1018 to 1043 of Paper Book) , wherein the ld DRP
agreed that KPENV had rendered services which are in the nature of ‘Fee for
Technical Services’ on going through each and every clause of the MSSA and
Management Support Charges were paid by Philips India Ltd (assessee herein) to
KPENV for receiving such services. We find that in Para 38 of the said order of
ld DRP in the hands of KPENV, it was held as below:-

38. In view of the above, it is evident that in order to ensure the survival and success of PIL (i.e. Philips India Ltd) , the assessee has been involved in the selection and training of PIL’s personnel and in the process, ‘made available’ ‘technical knowledge, experience, skill’ to the personnel , which will enable the personnel to fulfill such specialized tasks on their own. Therefore the assessee’s claim of not fulfilling the ‘make available’ condition is rejected.

The ld DRP in in para 39 of the said order (enclosed in page 1040 of paper book)
had further held that the consideration of all these facts leads to the conclusion
that the deliverables under the MSSA are predominantly in the form of ‘commercial knowhow’ and not commercial services and therefore covered by the
definition of the term ‘Royalty’ under Article 12 of the DTAA.

4.3.3.4. From the above it would be clear that the receipts in respect of MSSA
would be taxable either as FTS (to the extent they are services rendered) or
Royalty (to the extent it is providing commercial know-how or commercial
experience). As both FTS and Royalty are taxable at the same rate under the
DTAA, it does not matter that there is no clear cut separation or quantification in
the MSSA of the service and the know-how portions. The entire receipts would be
chargeable to tax in India under the DTAA as well as the I.T. Act.

4.2.1. Hence based on the aforesaid order of ld DRP in the hands of KPENV for
the Asst Year 2009-10, we find that the ld DRP had treated the receipts of
Management Support Services Charges from assessee herein (i.e. Philips India
Ltd) in the hands of KPENV as FTS or Royalty and made it taxable in India. So
once the same is accepted as FTS or Royalty in the hands of KPENV, the nature
of payment cannot be different in the hands of the assessee herein by simply
placing reliance on the benefit test, even though the benefits derived by the
assessee pursuant to MSSA has been elaborated in detail by the assessee by way
of substantial cost reduction. We also find that the assessee had paid service tax
of Rs 14,87,24,134/- on payment of Management Support Service Charges of Rs.
125,27,30,863/-.
Pa g e | 6 M/s Philips India Ltd. (formerly Philips Electronics India Ltd.) ITA No.2600/ Kol/2018 SA No. 13/ Kol/2019 (arising out of I.T.A. No. 2600/Kol/2018) Assessment Year:2014-15 4.3. We find that the ld DR argued that assessee had not proved that services were received by the assessee and had derived commercial and economic benefits out of the MSSA. He argued that only general reply was given by the assessee with regard to the benefits derived. He argued that these services were rendered by KPENV to other group companies also and quantum of benefit vis a vis the service is not proved by the assessee.

4.4. We find that the assessee had also proved the benefits derived by way of increase in turnover from the years ended 31.3.2005 onwards pursuant to the MSSA. It is reiterated that MSSA was entered into on 22.10.2004 and the following table would prove the benefit derived by way of increase in turnover in figures as well as in percentage prior to rendering of management support services and thereafter :- Sr. No. Year Ended Sales (Rs. % increase (taking Remarks Crores) year 200-01) as the base year
1 March 2001 15313 – No Management support
2 March 2002 15709 3% services received during this
3 March 2003 16379 7% period
4 March 2004 16293 6%
5 March 2005 21484 40% Management support services were received from FY 2004- 05 onwards (i.e., first year of receipt of management support services)
6 March 2006 23829 56% Subsequent years in which
7 March 2007 22790 49% Management support services
8 March 2008 27621 80% continued to be received by
9 March 2009 28645 87% the Assessee
10 March 2010 31162 104%
11 March 2011 34867 128% 4.5. In the instant case, we are convinced that the assessee had indeed received the services from KPENV which fact is also acknowledged by the ld DRP in the hands of KPENV as stated supra. The benefits derived by the assessee out of these services by way of substantial cost reduction and increase in turnover substantially cannot be swept under the carpet. We find that no adjustments to ALP was made in the Asst Years 2005-06 to 2008-09 in respect of the very same MSSA by the ld TPO for the assessee. We find that the principles of consistency need to be followed and cannot be given a go by when there is no change in the Pa g e | 7 M/s Philips India Ltd. (formerly Philips Electronics India Ltd.) ITA No.2600/ Kol/2018 SA No. 13/ Kol/2019 (arising out of I.T.A. No. 2600/Kol/2018) Assessment Year:2014-15 facts and circumstances of the case from the earlier years. Reliance in this regard is placed on the decision of the Hon’ble Supreme Court in the case of Radhasaomi Satsang vs CIT reported in (1992) 193 ITR 321 (SC) .
4.6. We find that the decision relied upon by the ld AR on the Hon’ble Delhi High
Court in the case of CIT vs Cushman and Wakefield (India) (P) Ltd reported in
(2014) 367 ITR 730 (Del) is well founded wherein it was held that :- “35. The Transfer Pricing Officer’s report is, subsequent to the Finance Act, 2007, binding on the Assessing Officer. Thus, it becomes all the more important to clarify the extent of the Transfer Pricing Officer’s authority in this case, which is to determining the arm’s length price for international transactions referred to him or her by the Assessing Officer, rather than determining whether [such services exist or benefits have accrued. That exercise – of factual verification is retained by the Assessing Officer under Section 37 in this case.] Indeed, this is not to say that the Transfer Pricing Officer cannot -after a consideration of the facts – state that the arm’s length price is ‘nil’ given that an independent entity in a comparable transaction would not pay any amount. However, this is different from the Transfer Pricing Officer stating that the assessee did not benefit from these services, which amounts to disallowing expenditure. That decision is outside the authority of the Transfer Pricing Officer.
36. In this case, the issue is whether an independent entity would have paid for such services. Importantly, in reaching this conclusion, neither the Revenue, nor this Court, must question the commercial wisdom of the assessee, or replace its own assessment of the commercial viability of the transaction. The services rendered by CWS and CWHK in this case concern liaising and client interaction with IBM on behalf of the assessee-activities for which, according to the assessee’s claim-interaction with IBM’s regional offices in Singapore and the United States was necessary. These services cannot – as the Income-tax Appellate Tribunal correctly surmised-be duplicated in India insofar as they require interaction abroad. Whether it is commercially prudent or not to employ outsiders to conduct this activity is a matter that lies within the assessee’s exclusive domain, and cannot be second- guessed by the Revenue.” [brackets provided by us] 4.7. We also find that the decision relied upon by the ld AR on the co-ordinate bench of this tribunal in the case of DCIT vs Bata India Ltd reported in (2016) 69 taxmann.com 120 (Kolkata Trib) dated 6.4.2016 had considered the decisions of Hon’ble Delhi High Court in the case of CIT vs EKL Appliances Ltd (2012) 345 ITR 241 (Del) ; CIT vs Cushman & Wakefield (India) (P) Ltd (2014) 367 ITR 730 (Del) and co-ordinate bench of Mumbai Tribunal in the case of Dresser Rand India (P) Ltd vsAddl CIT (2011) 47 SOT 423 (Mum) and applied the principles emanating out of those judgements and applied the same to the facts of the case in Bata India Ltd. In the said case (i.e Bata India Ltd supra) it was observed as under:-

27. The Hon’ble High Court of Delhi in the case of CIT v. EKL Appliances Ltd.[2012] 345 ITR 241/24 taxmann.com 199/209 Taxman 200 as well as CIT v. Cushman & Wakefield (India) (P.) Ltd.[2014] 367 ITR 730/46 taxmann.com 317 (Delhi), rendered similar ruling as was rendered in the case of Dresser-Rand India (P.) Ltd. (supra). In the case Pa g e | 8 M/s Philips India Ltd. (formerly Philips Electronics India Ltd.) ITA No.2600/ Kol/2018 SA No. 13/ Kol/2019 (arising out of I.T.A. No. 2600/Kol/2018) Assessment Year:2014-15
of Cushman & Wakefield India (P.) Ltd. (supra), the Hon’ble Delhi High
Court observed that whether a third party – in an uncontrolled transaction
with the Taxpayer would have charged amounts lower, equal to or greater
than the amounts claimed by the AEs, has to perforce be tested under the
various methods prescribed under the Indian TP provisions. In the context
of cost sharing arrangement, the Hon’ble High Court opined that concept
of base erosion is not a logical inference from the fact that the AEs have
only asked for reimbursement of cost. This being a transaction between
related parties, whether that cost itself is inflated or not only is a matter to
be tested under a comprehensive transfer pricing analysis. The basis for
the costs incurred, the activities for which they were incurred, and the
benefit accruing to the Taxpayer from those activities must all be proved
to determine first, whether, and how much, of such expenditure was for the
purpose of benefit of the Taxpayer, and secondly, whether that amount
meets ALP criterion. In the present case however, the arrangement
between the AE and the Assessee is not a cost sharing arrangement but a
payment for specific services rendered. To this extent the above
observations of the Hon’ble High Court may not be relevant to the present
case.
28. The following aspects would require consideration in order to identify
intragroup services requiring arm’s length remuneration:
– Whether services were received from related party.
– Nature of services including quantum of services received by the related party.
– Services were provided in order to meet specific need of recipient of the services.
– The economic and commercial benefits derived by the recipient of intragroup services.
– In comparable circumstances an independent enterprise would be willing to pay the price for such services?
– An independent third party would be willing and able to provide such services?
Whether payment made to AE meets ALP criterion will be determined,
keeping in mind all the above factors, as well.
29. Keeping in mind the principles emanating from the aforesaid
decisions, we shall now proceed to examine the material on record to see
the nature of services received by the Assessee and as to whether the same
were at Arm’s Length.
47. In the light of the discussion in paragraphs 30 to 46, We hold that the
Assessee has established the nature of services including quantum of
services received by the related party, that services were provided in order
to meet specific need of the Assessee for such services, the economic and
commercial benefits derived by the Assessee of intragroup services.
Pa g e | 9 M/s Philips India Ltd. (formerly Philips Electronics India Ltd.) ITA No.2600/ Kol/2018 SA No. 13/ Kol/2019 (arising out of I.T.A. No. 2600/Kol/2018) Assessment Year:2014-15 4.8. We also find that in the recent decision of the Hon’ble Delhi High Court in the case of Knorr-Bremse India (P) Ltd vs ACIT reported in (2016) 380 ITR 307 (Del) wherein the relevant head notes is reproduced herein below :-
Section 92C of the Income-tax Act, 1961 – Transfer pricing – Computation of arm’s length price (Comparables and adjustments/Adjustments –
General) – Assessment year 2007-08 – Whether answer to issue whether a transaction is at an arm’s length price or not is not dependent on whether transaction results in an increase in assessee’s profit; mere failure to establish that transactions resulted in a profit does not indicate that they were not at an arm’s length price and even if profit is established, it does not necessarily follow that transaction was at an arm’s length price – Held, yes [Para 21] We find that this judgement had approved the earlier decision of Hon’ble Delhi High Court in the case of Cushman and Wakefield (India) (P) Ltd supra and also the decision of EKL Appliances supra. 4.9. In view of the aforesaid findings and respectfully following the judicial precedent relied upon hereinabove, we hold that the determination of ALP for Management Support Services at Rs NIL is unwarranted and accordingly the upward adjustment made by the ld TPO in the sum of Rs. 125,27,30,863/- is deleted. Accordingly, the Ground Nos 2 & 3 raised by the assessee are allowed.

We find that there is no change in the facts and circumstances during the year under appeal with regard to MSSA when compared to that in the earlier years and hence respectfully following the judicial precedents relied upon hereinabove, we hold that the determination of ALP for Management Support Services at Rs NIL is unwarranted and accordingly the upward adjustment made by the ld TPO in the sum of Rs 300,40,09,360/- is deleted. Accordingly, the Ground Nos. 2, 4.1. and 4.3. raised by the assessee are allowed. ”
8. As the issue is squarely covered in favour of the assessee by the decision of Co-
ordinate Bench in assessee’s own case (supra) in I.T.A. No. 2489/Kol/2017
forA.Y 2013-14, and there is no change in facts and law and the revenue is unable
to produce any material to controvert the above said findings of the Co-ordinate
Bench. Therefore, respectfully following the decision of Co-ordinate Bench we
allow ground No. 2 raised by the assessee.
9. Ground No. 3 raised by the assessee relates to determination of arm’s length
price for advertising , marketing and promotion (AMP) expenses.

Pa g e | 1 0 M/s Philips India Ltd. (formerly Philips Electronics India Ltd.) ITA No.2600/ Kol/2018 SA No. 13/ Kol/2019 (arising out of I.T.A. No. 2600/Kol/2018) Assessment Year:2014-15 10. When this issue was called out for hearing the ld. Counsel for the assessee
invited our attention to the order dated 04.04.2018, passed by the Tribunal in
assessee’s own case in I.T.A. No. 2489/Kol/2017, for assessment year 2013-14,
whereby the issue of arm’s length price for advertising , marketing and promotion
expenses (AMP) have been discussed and adjudicated in favour of the assessee.
The ld. Counsel for the assessee submitted that the present issue is squarely
covered by the above said order of the Tribunal, a copy of which is also placed
before the Bench.
11. The ld. DR relied upon the orders of the authorities below.
12. We see no reason to take any other view of the matter then the view so taken
by the division bench of this Tribunal in assessee’s own case vide order dated
04.04.2018. In this order, the Tribunal has inter alia observed as under:
“11. We have heard the rival submissions. At the outset, we find that the ld TPO, ld AO and the ld DRP had categorically accepted the basic fact that the assessee is a manufacturer and also engaged in distribution of products. While this is so, we are not able to comprehend the argument advanced by the ld DR that assessee is only a distributor and thereby the decision of Sony Ericsson would apply to the case. We find that since the assessee is a manufacturer cum distributor as accepted by the lower authorities, the decision rendered in Maruti Suzuki supra would be applicable to the assessee’s case, since the contention of the ld DR that assessee is only distributor, is not emanating from the records of the lower authorities. We find that the issue under dispute before us is squarely addressed by this tribunal in assessee’s own case for the Asst Year 2011-12 supra wherein it was held :-

“43. We have heard the rival submissions and perused the materials available on record. The preliminary issue here arises whether the AMP expenses constitute the international transactions so as to attract the provisions of transfer pricing of the Income Tax Act, 1961. The claim of the Ld. AR is that the AMP transaction does not represent the international transaction between the AE’s therefore no question of determining the ALP of AMP transactions. We find force in the argument of the ld. AR in the given facts and circumstances. Therefore, in our considered view the AMP cannot be regarded as international transaction. In holding so we find the support & guidance from the judgment of Hon’ble Delhi High Court in the case of Maruti Suzuki India Limited vs. CIT reported in 381 ITR 117 wherein it was held as under:
Pa g e | 1 1 M/s Philips India Ltd. (formerly Philips Electronics India Ltd.) ITA No.2600/ Kol/2018 SA No. 13/ Kol/2019 (arising out of I.T.A. No. 2600/Kol/2018) Assessment Year:2014-15 “51. The result of the above discussion is that in the considered view of the court the Revenue has failed to demonstrate the existence of an international transaction only on account of the quantum of AMP expenditure by MSIL. Secondly, the Court is of the view that the decision in Sony Ericsson Mobile Communications India (P) Ltd. case (supra) holding that there is an international transaction as a result of the AMP expenses cannot be held to have answered the issue as far as the present Assessee MSIL is concerned since finding in Sony Ericsson to the above effect is in the context of those Assessees whose cases have been disposed of by that judgment and who did not dispute the existence of an international transaction regarding AMP expenses.”

In view of we note that the facts of the above cases are identical to the present issue, thus, the principle laid down by the Hon’ble Delhi High Court in the case of Maruti Suzuki India Limited (supra) are applicable to the instant case. Respectfully following the same we dismiss the ground of appeal filed by the Revenue.
Respectfully following the same, the upward adjustment made by the ld TPO and upheld by the ld DRP is hereby directed to be deleted. Accordingly, the Grounds 3 , 4.2 & 4.3. raised by the assessee are allowed.”
13. As the issue is squarely covered in favour of the assessee by the decision of
Co-ordinate Bench in assessee’s own case (supra) in I.T.A. No. 2489/Kol/2017 for
assessment year 2013-14, and there is no change in facts and law and the revenue
is unable to produce any material to controvert the above said findings of the Co-
ordinate Bench. We find no reason to interfere in the said order of the co-ordinate
Bench and the same is hereby upheld. Therefore, respectfully following the
decision of Co-ordinate Bench we allow ground No. 3 raised by the assessee.
14. Ground No. 4 raised by the assessee relates to rule of consistency. The ld.
Counsel for the assessee does not want to press the ground No. 4 raised by the
assessee therefore, it is dismissed as not pressed.
15. Ground No. 5 raised by the assessee relates to determination of arm’s length
price for information technology (IT services).
16. When this issue was called out for hearing, the ld. Counsel for the assessee
invited our attention to the order dated 15.12.2017, passed by the Tribunal in
assessee’s own case in I.T.A. Nos. 863 & 539/Kol/2016, for assessment year Pa g e | 1 2 M/s Philips India Ltd. (formerly Philips Electronics India Ltd.) ITA No.2600/ Kol/2018 SA No. 13/ Kol/2019 (arising out of I.T.A. No. 2600/Kol/2018) Assessment Year:2014-15
2011-12, whereby the issue of determination of arm’s length price for information
technology services (IT services) have been discussed and adjudicated in favour
of the assessee. The ld. Counsel for the assessee submitted that the present issue is
squarely covered by the above said order of the Tribunal, a copy of which is also
placed before the Bench.
17. The ld. DR relied upon the orders of the authorities below.
18. We see no reason to take any other view of the matter then the view so taken
by the division bench of this Tribunal in assessee’s own case vide order dated
15.12.2017. In this order, the Tribunal has inter alia observed as under:
15. We have heard the rival contentions & perused the materials available on record. In this regard we find that the ld. DRP has deleted the addition made by the TPO in own cases of the assessee pertaining to other assessment years as discussed above. Thus, the assessee has been claiming the IT expenses for the last several years and the same was not denied and therefore in our view principle of consistency should be applied in the instant case. In this connection we are relying on the decision of Hon’ble Supreme Court in the case of Radhasoami Satsang vs. Commissioner of Income Tax (1992) 193 ITR 0321 (SC) “We are aware of the fact that, strictly speaking, res judicata does not apply to IT proceedings. Again, each assessment year being a unit, what is decided in one year may not apply in the following year but where a fundamental aspect permeating through the different assessment years has been found as a fact one way or the other and parties have allowed that position to be sustained by not challenging the order, it would not be at all appropriate to allow the position to be changed in a subsequent year.

One these reasoning, in the absence of any material change justifying the Revenue to take a different view of the matter-and, if there was no change, it was in support of the assessee-we do not think the question should have been reopened and contrary to what had been decided by the CIT in the earlier proceedings, a different and contradictory stand should have been taken. We are, therefore, of the view that these appeals should be allowed and the question should be answered in the affirmative, namely, that the Tribunal was justified in holding that the income derived was entitled to exemption under ss. 11 and 12 of the IT Act of 1961.”
Pa g e | 1 3 M/s Philips India Ltd. (formerly Philips Electronics India Ltd.) ITA No.2600/ Kol/2018 SA No. 13/ Kol/2019 (arising out of I.T.A. No. 2600/Kol/2018) Assessment Year:2014-15 15.1 We observe that there is no change in the facts & circumstances of the case, therefore in our considered view the order of the ld. DRP needs to be reversed.
Besides the above we also note that for the AY 2009-10 & 2010-11 the Hon’ble ITAT in the own case of the assessee in ITA No. 1141/Kol/2016 & 2408/Kol/2016 set aside the matter to the ld. DRP for fresh adjudication and subsequently the ld. DRP was pleased to delete the addition as made by the TPO. The subsequent order of the ld. DRP are placed on pages 727 & 766 of the paper book. Similarly we also note that there was no addition made by the ld. DRP for the AY 2012-13 & 2013-14 on account of IT services expenses incurred by the assessee. The copies of the orders are placed on pages 795 & 879 of the paper book. In view of above, we are inclined to reverse the order of authorities below. Thus the ground raised by assessee are allowed.
19. As the issue is squarely covered in favour of the assessee by the decision of
Co-ordinate Bench in assessee’s own case (supra) in I.T.A. No. 863 & 539/
Kol/2016, forA.Y.2011-12, and there is no change in facts and law and the
revenue is unable to produce any material to controvert the above said findings of
the Co-ordinate Bench. We find no reason to interfere in the order of the division
bench and the same is hereby upheld. Therefore, respectfully following the
decision of Co-ordinate Bench we allow ground No. 5 raised by the assessee.
20. Ground No. 6 raised by the assessee relates to variation of 3% from the
arithmetic mean.
21. The ld. Counsel for the assessee informs the Bench that the assessee does not
wish to press this ground therefore we dismiss the ground No. 6 raised by the
assessee, as not pressed.
22. Ground No. 7 raised by the assessee relates to objectionspertaining to
adjustments made by the TPO on a without prejudice basis in respect of the other
segments namely consumer Lifestyle Distribution, Healthcare distribution and
Healthcare contract Manufacturing division.
23. When this this was called out for hearing the ld. Counsel for the assessee
invited our attention to the order dated 07.02.2018, passed by the Tribunal in Pa g e | 1 4 M/s Philips India Ltd. (formerly Philips Electronics India Ltd.) ITA No.2600/ Kol/2018 SA No. 13/ Kol/2019 (arising out of I.T.A. No. 2600/Kol/2018) Assessment Year:2014-15
assessee’s own case in I.T.A. No. 612/Kol/2017 for assessment year 2012-13,
whereby the issue of objection pertaining to adjustments made by the TPO on a
without prejudice basis in respect of the other segments namely consumer
Lifestyle Distribution, Healthcare distribution, Healthcare contract Manufacturing
division etc, have been discussed and adjudicated in favour of the assessee. The ld.
Counsel for the assessee submitted that the present issue is squarely covered by the
above said order of the Tribunal, a copy of which is also placed before the Bench.
24. The ld. DR relied upon the orders of the authorities below.
25. We see no reason to take any other view of the matter then the view so taken
by the division bench of this Tribunal in assessee’s own case vide order dated
07.02.2018. In this order, the Tribunal has inter alia observed as under:
“13. The Ground No. 13 raised by the assessee is without prejudice to the grounds raised by it in Grounds 2 to 5, wherein the ld TPO concluded that an adjustment may be required to be made to the international transactions of the assessee in relation to its other segments, if it is held later in judicial proceedings that intra-group service charges is actually required to be paid. In this regard, the observations of the ld TPO in para 61.5 page 164 of his order would be relevant and the same are reproduced hereunder for the sake of convenience:-

61.5. Without prejudice to the above discussion, it is proposed that the Operating Profit of the tested party i.e Assessee is taken as 12.41% and 14.17% respectively for the distribution segment and contract manufacturing division. Consequently, even if it is held in later judicial proceedings that the intragroup services is actually required to be paid then the Operating Profit Margin of the company is to be taken as given in the table above at 4.66% and 4.88% for distribution segment and contract manufacturing division respectively.
This observation of the ld TPO had triggered the raising of ground no. 6 before us by the assessee. But we find that this passive observation of the ld TPO was not at all considered in the following orders passed by the lower authorities :-

a) Order of the ld DRP dated 19.12.2016 u/s 144C(5) of the Act
b) Order passed by the ld TPO u/s 92CA(3) r.w.s. 92CA(5) & 144C(5) of the Act dated 25.1.2017
c) Final Assessment Order passed by the ld AO u/s 143(3) r.w.s. 144C of the Act dated 27.2.2017.

Hence we hold that the passive observations made by the ld TPO had been completely ignored by the ld DRP and in the giving effect order to DRP directions Pa g e | 1 5 M/s Philips India Ltd. (formerly Philips Electronics India Ltd.) ITA No.2600/ Kol/2018 SA No. 13/ Kol/2019 (arising out of I.T.A. No. 2600/Kol/2018) Assessment Year:2014-15 and in the final assessment order. Accordingly, the said observations would have no relevance in the proceedings for the assessee and there is no grievance that could be caused to the assessee in that regard. There is no impact for the assessee pursuant to the aforesaid passive observations of the ld TPO. The various contentions raised by the assessee are left open in view of giving effect order to DRP passed by the ld TPO and final assessment order passed by the ld AO. Hence we are of considered opinion that adjudication of Ground No. 6 raised by the assessee would be superfluous.”
26. The said issue is also covered by the assessee’s own case in I.T.A. No.
2489/Kol/2017, for assessment year 2013-14, order dated 04.04.2018, wherein the
Tribunal has inter alia observed as under:
“14. The Ground no. 7 raised by the assessee does not require any specific adjudication in view of our decisions rendered for the other grounds on the issue of transfer pricing.”
27. As the issue is squarely covered in favour of the assessee by the decision of
Co-ordinate Bench in assessee’s own case (supra) in I.T.A. No. 612/Kol/2017 for
ay 2012-13, and there is no change in facts and law and the revenue is unable to
produce any material to controvert the above said findings of the Co-ordinate
Bench. We find no reason to interfere in the said order of the Co-ordinate Bench
and the same is hereby upheld.
28. Ground No. 8 raised by the assessee relates to use of non-contemporaneous
data by the TPO.
At the outset itself, the ld. Counsel for the assessee informs the Bench that the
assessee does not want to press this ground, therefore we dismiss the ground as not
pressed.
29. Ground No. 9 raised by the assessee relates to disallowance of Rs.
15,52,53,987/- being lease rent paid in respect of motor cars treating the same as
capital expenditure.
30. When this issue was called out for hearing, the ld. Counsel for the assessee
invited our attention to the order dated 04.04.2018, passed by the Tribunal in
assessee’s own case in I.T.A. No. 2489/Kol/2017, for assessment year 2013-14, Pa g e | 1 6 M/s Philips India Ltd. (formerly Philips Electronics India Ltd.) ITA No.2600/ Kol/2018 SA No. 13/ Kol/2019 (arising out of I.T.A. No. 2600/Kol/2018) Assessment Year:2014-15
whereby the issue of lease rental paid in respect of motor cars treating the same as
capital expenditure has been discussed and adjudicated in favour of the assessee.
The ld. Counsel for the assessee submitted that the present issue is squarely
covered by the above said order of the Tribunal, a copy of which is also placed
before the Bench.
31. The ld. DR relied upon the orders of the authorities below.
32. We see no reason to take any other view of the matter then the view so taken
by the division bench of this Tribunal in assessee’s own case vide order dated
04.04.2018. In this order, the Tribunal has inter alia observed as under:
15. DISALLOWANCE OF LEASE RENTALS – Rs 6,86,60,107/- Ground Nos. 8.1 to 8.3 The brief facts of this issue is that the assessee claimed lease rental paid for motor car taken on finance lease from Citi Corp amounting to Rs.8,38,64,111/-. The same was treated as capital expenditure by the ld AO based on the reliance placed in assessee’s own case for the Asst Year 2003-04 which got confirmed by this tribunal. The ld DRP observed as under:-
The lease rentals paid by the assessee for the year 2003-04 were disallowed and the action was upheld by the ITAT. Subsequent matters have been pending. Though this adjustment has been allowed in 2011-12 , the panel upon consideration of the facts is not inclined to allow relief to the assessee. The proposed adjustment is upheld in view of the available adverse jurisprudence on identical facts. The objection is thus diposed off.

Aggrieved, the assessee is in appeal before us on the following grounds :-
8. Lease Rental 8.1. The Learned AO and DRP erred in law and on facts in disallowing Rs. 8,38,64,111 being the lease rent paid in respect of cars treating the same as capital expenditure.

8.2. The Learned AO and DRP erred in law and on facts in disallowing the lease rent paid without taking cognizance of the decision of the Supreme Court in the case of ICDS Ltd. vs. CIT (2013) 350 ITR 527 (SC).

8.3. Strictly without prejudice to the above, the Learned AO and DRP erred in law and on facts in not allowing depreciation on total payment towards lease transactions including interest. Pa g e | 1 7 M/s Philips India Ltd. (formerly Philips Electronics India Ltd.) ITA No.2600/ Kol/2018 SA No. 13/ Kol/2019 (arising out of I.T.A. No. 2600/Kol/2018) Assessment Year:2014-15 15.1. The ld AR argued that this issue is covered by the decision of the Hon’ble Supreme Court in the case of ICDS Ltd vs CIT reported in (2013) 350 ITR 527 (SC) wherein it was held that :-
‘the lessor i.e the assessee is the owner of the vehicles. As the owner, it used the assets in the course of its business, satisfying both requirements of section 32 of the Act and hence, is entitled to claim depreciation in respect of additions made to the trucks, which were leased out.”
The ld AR stated that the assessee herein is a lessee and is entitled for deduction towards lease rentals paid towards cars taken on finance lease. He also stated that the lessor had confirmed that it had claimed depreciation in the relevant Asst year on the said cars which were leased out to the assessee. He further placed reliance on the decision of the Hon’ble Rajasthan High Court in the case of Rajshree Roadways vs UOI reported in 263 ITR 206 (Raj) wherein it was held that the lessee would be entitled to the deduction of rent paid by him and the benefit of the depreciation shall be available to owner of the asset. Further the Special Leave Petition (SLP) filed by the department against the said decision before the Hon’ble Supreme Court has been dismissed. He further placed reliance on the co-ordinate bench decision of this tribunal in the case of The Royal Bank of Scotland N.V. vs DDIT in ITA No. 1738/Kol/2009, 1926/Kol/2010 , 519/Kol/2011 and 1805/Kol/2012) dated 13.4.2016 wherein on identical matter, the issue was decided in favour of the assessee. In response to this, the ld DR fairly conceded that the issue is covered by the decision of the Hon’ble Supreme Court in the case of ICDS Ltd supra.

15.2. We have heard the rival submissions. We find that the issue under dispute is covered by the decision of the Hon’ble Supreme Court in the case of ICDS Ltd supra in favour of the assessee. Hence respectfully following the same, we allow the Ground No. 8 raised by the assessee.”
33. As the issue is squarely covered in favour of the assessee by the decision of
Co-ordinate Bench in assessee’s own case (supra) in I.T.A. No. 2489/Kol/2017,
for A.Y2013-14, and there is no change in facts and law and the revenue is unable
to produce any material to controvert the above said findings of the Co-ordinate
Bench. We find no reason to interfere in the said order of the Co-ordinate Bench
and the same is hereby upheld. Therefore, respectfully following the decision of
Co-ordinate Bench we allow ground No. 9 raised by the assessee.
34. Ground No. 10 raised by the assessee relates to disallowance of Rs.
3,48,91,184/-, being excess depreciation to the tune of 15% claimed by the
company on moulds.
Pa g e | 1 8 M/s Philips India Ltd. (formerly Philips Electronics India Ltd.) ITA No.2600/ Kol/2018 SA No. 13/ Kol/2019 (arising out of I.T.A. No. 2600/Kol/2018) Assessment Year:2014-15
35. When this issue was called out for hearing, the ld. Counsel for the assessee
invited our attention to the order dated 04.04.2018, passed by the Tribunal in
assessee’s own case in I.T.A. No. 2489/Kol/2017, for assessment year 2013-14,
whereby the issue of depreciation on moulds was discussed and adjudicated in
favour of the assessee. The ld. Counsel for the assessee submitted that the present
issue is squarely covered by the above said order of the Tribunal, a copy of which
is also placed before the Bench.
36. The ld. DR relied upon the orders of the authorities below.
37. We see no reason to take any other view of the matter then the view so taken
by the division bench of this Tribunal in assessee’s own case vide order dated
04.04.2018. In this order, the Tribunal has inter alia observed as under:
“16.2. We have heard the rival submissions. The ld AR stated that the moulds were owned by the assessee and used for the purpose of its business. Further, the moulds were exclusively used in the plastic factory by the job workers / co-makers to whom moulds were given by the assessee to be used in the plastic factory, under its control and supervision and prayed that depreciation @ 30% would be eligible on the said moulds. We find that this issue has been considered by this tribunal in assessee’s own case for the Asst Year 2011-12 in ITA Nos. 863 & 539/Kol/2016, dated 15.12.2017 wherein it was held as under:-

“27. We have heard the rival contentions and perused the material available on record. In the instant case, issue relates to depreciation claimed by the assessee @ 30% on moulds on the ground that these are used in plastic factories. However, the amount of depreciation claimed by the assessee on moulds was disallowed by the assessee on the ground that higher rate of depreciation on moulds is available only if these are used in the plastic factory. The view taken by the AO was subsequently confirmed by the Ld. DRP. Now the issue before us arose whether assessee is eligible for depreciation on moulds at higher rate in the given facts and circumstances. It is undisputed fact that assessee has been claiming depreciation on moulds @ 30% in all the earlier years which was granted by the Revenue and no dispute with regard to rate of depreciation arose in the earlier years despite the fact that the assessments for earlier years were framed u/s 143(3) of the Act. In this regard, we observe that the assessee was allowed depreciation at higher rate in all the earlier years and no disallowance was made on account of this. However, we note that similar disallowance was also made by the ld. DRP for the A.Y. 2012-13 & 2013-14. The ld. AR before us has also not brought anything on record evidencing that the assessee had plastic factory. The Ld. AR has just Pa g e | 1 9 M/s Philips India Ltd. (formerly Philips Electronics India Ltd.) ITA No.2600/ Kol/2018 SA No. 13/ Kol/2019 (arising out of I.T.A. No. 2600/Kol/2018) Assessment Year:2014-15 verbally submitted that in most of the products which appears to be true. But as such no documentary evidence was filed in support of the assessee’s claim. However in the interest of justice and fair play, we are inclined to restore this matter to the file of AO for fresh adjudication in accordance with the law. The Ld. AR is directed to produce necessary documents in support of his claim. Hence, the ground of appeal filed by the assessee is allowed for statistical purposes.”

Respectfully following the aforesaid judicial precedent, we restore this matter to the file of the ld AO for fresh adjudication in accordance with law. The assessee is at liberty to adduce fresh evidences before the ld AO in support of its contentions. Accordingly, the Ground Nos. 9.1 to 9.4 raised by the assessee are allowed for statistical purposes.”
38. As the issue is squarely covered in favour of the assessee by the decision of
Co-ordinate Bench in assessee’s own case (supra) in I.T.A. No. 2489/Kol/2017,
for A.Y 2013-14, ( where the ITAT restored this matter back to the file of AO for
fresh adjudication and the assessee is at liberty to adduce fresh evidences before the ld
AO in support of its contentions ) and there is no change in facts and law and the
revenue is unable to produce any material to controvert the above said findings of
the Co-ordinate Bench. We find no reason to interfere in the said order of the Co-
ordinate Bench and the same is hereby upheld. Therefore, respectfully following
the decision of Co-ordinate Bench we allow ground No. 9 raised by the assessee
for statistical purposes.
39. Ground No. 11 raised by the assessee relates to short grant of tax deducted at
source / tax collected at source.
We direct the Assessing Officer to verify the TDS certificate and grant credit to
the assessee in accordance with law.
40. Ground Nos. 12 and 13 raised by the assessee relate to interest u/s 234A and B.
We note that these grounds are consequential in nature and do not require any
adjudication.
41. Ground No. 14 raised by the assessee relates to levy of additional tax and
interest on distributable profits.

Pa g e | 2 0 M/s Philips India Ltd. (formerly Philips Electronics India Ltd.) ITA No.2600/ Kol/2018 SA No. 13/ Kol/2019 (arising out of I.T.A. No. 2600/Kol/2018) Assessment Year:2014-15
We direct the ld. Assessing Officer to compute correctly DDT and grant credit for
the amount of DDT paid by the assessee after appropriate verification and
examination of the facts.
42. In the result, the appeal of the assessee is allowed as per the discussion made
(supra). Order pronounced in the Court on 15.05.2019 Sd/- Sd/- (S.S. GODARA) (A.L.SAINI) या यकसद य / JUDICIAL MEMBER लेखासद य / ACCOUNTANT MEMBER
कोलकाता /Kolkata; दनांक/ Date: 15/05/2019
(SB, Sr.PS) Copy of the order forwarded to:
1. M/s Philips India Ltd. (formerly Philips Electronics India Ltd. )
2. ACIT, Circle-12(2), Kolkata
3. C.I.T(A)- 4. C.I.T.- Kolkata.
5. CIT(DR), Kolkata Benches, Kolkata.
6. Guard File.
True copy By Order Assistant Registrar ITAT, Kolkata Benches Pa g e | 2 1

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