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2016 (5) TMI 255 - ITAT DELHITDS liability - Payment to Association of Tennis Profession (ATP) - disallowance u/s 40(a)(i) - Held that:- Section 194E read with Section 115 BBA apply to payments made to a non-resident sports association or an institution. In the instant case, ATP is undisputedly a governing body of the world wide men’s professional Tennis Circuit, responsible for ranking of its players and coordinating the Tennis Tournament in the world. In such circumstances we are of the opinion that ATP is a non-resident sports institution and therefore Section 194E applies to the payments made by the assessee to the ATP. In the light of the above, the order of the CIT (A) is reversed and the order of the Assessing Officer is restored - Decided against assessee Working of operating costs - Held that:- Reimbursement costs has to be excluded as the same do not involve any functions to be performed so as to consider it for profitability purposes. Thus we direct AO/TPO to exclude reimbursement costs while working out the operating costs. - Decided in favour of assessee Exclusion of Mega Soft Ltd. as comparable and inclusion of Orient Information Technology Ltd. in the set of comparables - Held that:- As regards to the inclusion of Orient Information Technology Ltd. is concerned, the TPO had not given any particular reason for its exclusion. The said company also designs, develops and deploys customized software solution and application, so its functionality was comparable with the assessee. The said company was not considered by the TPO because it was a loss making company but that cannot be a reason to exclude it from the set of comparable in view of the decision of the ITAT Delhi Bench in the case of Yum Restaurants India Ltd. [2011 (5) TMI 852 - ITAT DELHI ] wherein it has been held that merely a company showing loss would not lose its status of comparable if other criteria depicted status of comparable. Thus this issue is remanded back to the Assessing Officer for verification of the calculations furnished by the Ld. A.R of the assessee and to be decided afresh in accordance with law. Disallowance of expenditure incurred in Indian Rupees payable to Indian Residents - non deduction of tds - Held that:- The provisions of Section 40(a)(i) of the Act do not apply to A.Y 2004-05 which is the assessment year under consideration. Therefore, no disallowance can be made in respect of expenditure incurred in Indian Rupees payable to Indian Resident on allegation of non-deduction of tax at source in respect of A.Y 2004-05 as there was no such enabling provision in the statute. Therefore, the CIT(A) rightly deleted the disallowances in respect of expenditure incurred in Indian Rupees payable to Indian Residents - Decided in favour of assessee Disallowance of 20% of the miscellaneous expenses - Held that:- A.O has not given any basis for making the adhoc disallowance. - CIT (A) has rightly deleted the adhoc estimated disallowance of miscellaneous expenses, and this ground of the Department appeal is liable to be dismissed. - Decided in favour of assessee
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