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2022 (3) TMI 1455 - AT - Income TaxTP Adjustment - MAM - rejection of internal CUP selected by assessee as most appropriate method by the revenue authorities - HELD THAT:- As the submissions advanced are on identical facts that has already been considered by this Tribunal, for preceding assessment years as well as assessment year 2015-16 [2020 (3) TMI 471 - ITAT BANGALORE] respectfully following the above view, we direct the Ld.TPO to replace the TNMM with CUP as most appropriate method Treatment of AMP expenses pertaining to trading segment as an international transaction and determining the ALP in respect of the same - HELD THAT:- We uphod CPM to be the MAM in computing the ALP of the trading segment. Further, based on the categorical observation by the Ld.TPO regarding the trading segment to be at arm’s length, we direct the Ld.AO/TPO to delete the adjustment proposed, in respect of the AMP expenses as it cannot be treated as international transactions in the present facts of the case. Disallowance of provision of warranty - allowable revenue expenses u/s 37 - HELD THAT:- As noted that coordinate bench of this Tribunal in assessee’s own case for assessment years 2006-07 [2016 (5) TMI 1524 - ITAT BANGALORE], AY 2007-08, AY 201011 [2017 (3) TMI 1835 - ITAT BANGALORE] upheld that provision for warranty has been created on a scientific basis and hence allowable as expenditure under section 37 under the Act. Thus in assessee’s own case for preceding and subsequent assessment years relying of the decision of the Hon’ble Supreme Court in the case of Rotork Controls India Pvt.Ltd [2009 (5) TMI 16 - SUPREME COURT] we hold that provision for warranty expenditure is allowable. Disallowance of provision for leave encashment - AO rejected the submission of assessee and held that provision for leave encashment is being unascertained liability was liable to be disallowed under section 43B - HELD THAT:- We note that coordinate bench of this Tribunal in assessee’s own case for AY 2011-12 has held that leave encashment is not a contingent liability, and that, the same ought not to be disallowed while computing income under normal provisions of the Act. MAT computation u/s 115JB - warranty and provision for leave encashment as an 'unascertained liability' and added the same to book profits under section 115JB - HELD THAT:- As following the ration laid down by Hon’ble Supreme Court in case of Rotork Control [2009 (5) TMI 16 - SUPREME COURT]. we have held that the provision for warranty cannot be treated as unascertained liability. In respect of provision of leave encashment, this Tribunal in assessee’s own case for AY 2011-12 has observed that provision for leave encashment need not to be added back to book profits for the purpose of determining tax liability u/s 115JB of the Act Thus no merit in the manner in which the book profits for purposes of section 115JB has been computed.Accordingly we direct the Ld.AO to exclude the two items from the book profits for purpose of computing tax liability under section 115JB of the Act. Assessee appeal allowed.
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