Income Tax Appellate Tribunal - Mumbai
M/S. Mondelez I. Foods P. Ltd ( Formerly ... vs Addl Cit Rg 5(1), Mumbai on 31 August, 2021
IN THE INCOME TAX APPELLATE TRIBUNAL
"J" BENCH, MUMBAI
BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER AND
SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER
M.A. no.92/Mum./2021
(Arising out of ITA no.2214/Mum./2014)
(Assessment Year : 2009-10)
M/s. Mondelez India Foods Pvt. Ltd.
(Formerly known as Cadbury India Ltd.) ................ Applicant
Cadbury House, 19, Bhulabhai Desai Rd. (Original Respondent)
Mumbai 400 026 PAN - AAACC0460H
v/s
Addl. Commissioner of Income Tax ................ Respondent
Range-5(1), Mumbai (Original Appellant)
Assessee by : Shri Jehangir Mistri
Revenue by : Shri Sushil Kumar Mishra
Date of Hearing - 25.06.2021 Date of Order - 31.08.2021
ORDER
PER S. RIFAUR RAHMAN, A.M.
By this misc. application, the assessee seeks rectification in the order dated 17th February 2021, passed in ITA no.2214/Mum./2014, for the assessment year 2009-10.
2. The assessee has filed the present application by making following prayers:-
"Our Prayer In summary, the assessee prays as under:-2
M/s. Mondelez India Foods Pvt. Ltd.
(a) Insofar as Ground no.11 and 13 are concerned, the finding given by the Tribunal in Para 14 to 16 for Ground no.8 to 10 may be adopted for Ground no.11 and 13 as the facts and issues raised are similar.
(b) Insofar as Ground no.28 is concerned, the inadvertent error of remanding the matter back to the Assessing Officer for verification of the "other overheads" may be rectified and the disallowance made under section 80-IC of the Act be deleted."
3. The contents of misc. application insofar as assessee's Prayer-(a) is concerned, the same is reproduced below:-
Ground 11 to 13 - Transfer pricing adjustment on-account of payment of service fees to Cadbury Holding Limited
7. During the year under consideration, MIFPL has availed services from Cadbury Schweppes Asia Pacific Pte Limited ('CSAPL') (covered by ground no. 8 to 10) and Cadbury Holding Limited ('CHL') (covered by ground 11 to 13).
The Hon'ble ITAT while passing the order for AY 2009-10, allowed payment of service fees by MIFPL to CSAPL (covered by ground no. 8 to 10) stating that;
a. The method followed by TPO for making adjustment was not a method prescribed under the Act.
b. Further relying on the decision of the coordinate bench in case of Kodak India Pvt., Barclays Bank PLC and Vedanta Ltd., it was held that matter cannot be remanded back when the TPO has failed to follow the prescribed method under section 920. (Refer Para 14 on page 13 of the ITA T order for AY 2009-10) Since, facts and issues in relation to services availed from CSAPL (i.e. ground no. 8 to 10) and facts and issues in relation to services availed from CHL (i.e. ground 11 to 13) are identical and as both the transactions have been benchmarked by MIFPL using TNMM, findings of ITAT for ground no. 8 to 10 are to be applied for ground no. 11 to 13 as well. The Tribunal has erroneously relied on the order for A.Y. 2008-09, this being a mistake apparent from record may be rectified and the findings given in Para 14 to 16 may be adopted for Ground No. 11 to 13 also.
3M/s. Mondelez India Foods Pvt. Ltd.
4. In view of the submissions of the learned Counsel for the assessee and since the mistake being apparent on the face of record, we proceed to rectify the mistakes.
5. The concluding part, vide Para-19 and 20 of grounds no.11 to 13, of the impugned order dated 17th February 2021, passed in assessee's appeal being ITA no.2214/Mum./2014, for the assessment year 2009-10, are hereby substituted and be read as under:-
"19. Having considered the rival submissions and having perused the material on record, we find that the related facts and circumstances of the issue raised by the assessee in the grounds no.11 to 13 of the present appeal is materially identical to the issue decided by us vide grounds no.8 to 11, in Para-14, 15 and 16, wherein we have allowed the issue while following the decision of the Co-ordinate Bench of the Tribunal rendered in Kodak India Pvt. Ltd. v/s ACIT, [2013] 37 taxmann.com 233 (Mum.). Since the issue raised in these grounds no.11 to 13, are identical to the issue decided by us in grounds no.8 to 11 vide Para-14, 15 and 16, as aforesaid, consistent with the view taken therein, we set aside the impugned order passed by the learned CIT(A) and allow these grounds. Thus, grounds no.11 to 13, are allowed."
6. With regard to second Prayer-(B) made by the assessee, the learned Sr. Counsel in its misc. application stated as under:-
Ground 28 - Corporate tax adjustment on account of alleged excess deduction under section 80-IC of the Act
8. In AY 2009-10, the Hon'ble ITAT was concerned with the reduction of Rs 10,01,28,000 in the deduction under section 80-
IC of the Act in respect of MIFPL's unit at Baddi, Himachal Pradesh.
9. The learned Assessing Officer ('AO') had reduced such 4 M/s. Mondelez India Foods Pvt. Ltd.
deduction by altering the allocation of following 3 items to the Unit in Baddi (see page 1722 of the compilation):
Finance cost;
Operation and Establishment expenses; and
Net Increase in stock
10. A similar reduction in section 80-IC of the Act was made by the learned AO in AY 2007-08, which was rejected by the Hon'ble ITAT in its order for AY 2007-08 dated 4 July 2019 (see para 26 to 33 of the order enclosed at page 1394-1414 of the compilation), except that the Hon'ble ITAT had remitted the matter for verification, a part of the operational and Establishment expenses called "other overheads". In its order for AY 2009-10, the Hon'ble ITAT has noted the order for earlier years and followed the same (see para 38, page 43) and held that "Accordingly, we deem it fit to remit only the verification of allocation of other overhead to the file of the AO"
11. The Assessee says that in the current year, all operational and establishment expenses have been uniformly allocated and therefore, there is no separate category of "other overheads"
which would require verification.
Therefore, the Assessee submits that in the current year, nothing is required to be remitted for verification since there is no separate allocation method for "other overheads". It is humbly submitted that the inadvertent mistake apparent from record be corrected and ground 28 be allowed."
7. In view of the above, the concluding Para-38 (para which is above ground no.29 at Page-47) is hereby substituted and be read as under:-
"38. ......... Therefore, respectfully following the above decision of Co-ordinate Bench wherein identical issue is settled in favour of the assessee. We notice that the Co- ordinate Bench has accepted the method of allocation with regard to interest, VRS decrease in stock, direct expenses, direct marketing cost and selling & distribution expenses, 5 M/s. Mondelez India Foods Pvt. Ltd.
royalty and technical fees. The bench has remitted back to AO only the other overhead for verification. Now before us, it is brought to our notice that all operational and establishment expenses were uniformly allocated and there is no separate category of "Other Overheads". Accordingly, we also deem it fit to remit only for limited purpose of verification of aspect of allocation method adopted to the file of the Assessing Officer. In case, it is found that there is no other overhead allocation, then the issue may be decided in favour of the assessee. Therefore, we are inclined to accept the submission of Ld. AR. Accordingly, the ground raised by the assessee is allowed for statistical purposes."
8. The order dated 17th February 2021, passed in ITA no.2214/ Mum./2014, for the assessment year 2009-10, is modified to the above extent only. With the above corrections in the order, there would be no change in the final outcome of the appeal.
9. In the result, misc. application is allowed.
Order pronounced in the open Court on 31.08.2021 Sd/- Sd/-
VIKAS AWASTHY S. RIFAUR RAHMAN
JUDICIAL MEMBER ACCOUNTANT MEMBER
MUMBAI, DATED: 31.08.2021
6
M/s. Mondelez India Foods Pvt. Ltd.
Copy of the order forwarded to:
(1) The Assessee;
(2) The Revenue;
(3) The CIT(A);
(4) The CIT, Mumbai City concerned;
(5) The DR, ITAT, Mumbai;
(6) Guard file.
True Copy
By Order
Pradeep J. Chowdhury
Sr. Private Secretary
Assistant Registrar
ITAT, Mumbai