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2013 (10) TMI 973 - AT - Income TaxAllowability of expense of prior period Held that:- Expense, related to prior period, should be either allowed in the present year or if it is not allowed in the present year, then the same should be allowed in the earlier year, to which such expenses are related to - The assessee has disclosed a loss of Rs.6,92,700/- in the present year, and in A.Y.2000-2001, the assessee has filed return of income disclosing NIL income after setting off of brought forward loss of earlier years to the extent of Rs.303.11 lakhs. Hence, even if this expenses are allowed in the earlier years i.e. A.Y. 2000-2001, it will ultimately be adjusted in the present year, by way of set off of brought forward loss, and therefore, it will make no difference even if deduction is allowed in the present year Decided against the Revenue. ALP in an international transaction to be decided by Appellate authorities Held that:- Adjustments made on account of ALP by tax authorities can he deleted in appeal al only if the appellate authorities are satisfied and record finding that ALP submitted by the assessee is fair and reasonable. Merely finding faults with the transfer price determined by the revenue authorities (AO/TPO) addition on account of 'adjustments' cannot he deleted. This is because the mandate of section 92(1) is that in every case of international transaction, income has to be determined having regard to ALP. Therefore, unless ALP furnished by the taxpayer is specifically accepted, the appellate authorities on the basis of material available on record have to determine ALP themselves. Subject to statutory Provisions, appellate authorities can direct lower revenue authorities to carne this exercise in accordance with law. The matter cannot he left hanging in between. ALP of international transaction has to he determined in every case. Excess payment of royalty - Payment of royalty at the rate of 3.75% to the AE by the assessee, as against the royalty at the rate of 3% by other group entities Held that:- Explained by the assessee before the AO that the royalty at 3.75% was applied after reducing various expenses from ex-factory sale value of the concerned products. It was also explained before the learned CIT(A) that if the effective rate is considered, then the effective rate of royalty is less than the royalty paid by other AEs to Hitachi Limited i.e. parent company - Only stated rate is not decisive and effective rate has to be considered, and when the amount of royalty paid by the assessee is considered with ex-factory sale value, without deducting various expenses, such as dealer commission, special commission, warranty etc., as has been noted by the learned CIT(A), then the effective rate worked out is only 2.3% on sale, as against 3% paid by other group entities - This finding of the fact given by learned CIT(A) could not be controverted by the learned DR of the Revenue Decided against the Revenue. Refund of excess TDS deducted Held that:- Appellant had made a wrong calculation of royalty for the period from 1.4.2003 to 30.6.2003 and deducted excess TDS and had paid the same. Therefore, the excess TDS to be recovered from the Income tax Department was worked to be Rs.16,25,243/- and the same was shown on the asset side of the balance sheet. This amount was not debited to P & L account but the appellant had wrongly disallowed the same in the statement of total income and it was claimed as deduction before the A.O. but the A.O. has not discussed the same in the assessment order and had not allowed the deduction. The A.O. is directed to allow the same as deduction Decided against the Revenue.
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