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2017 (2) TMI 230 - AT - Income TaxDisallowance of commission on sales made to Satyam Computer Services, invoking TP provisions and also CUP method - Held that:- TPO cannot disallow the amount paid to Venture as the agreement under which assessee is operating covers export and domestic sales, other than those made to Venture or Venture Group. Satyam is not the part of Venture Group. Therefore, there is no valid reason for disallowing on that ground. Moreover, the TPO has to consider the ALP only under one of the methods prescribed and as already discussed in earlier year, CUP method cannot be invoked as there are no uncontrolled comparable prices. In view of that, the methodology adopted by the AO/TPO in disallowing the amount or fixing the ALP at NIL itself is not correct. TPO cannot disallow the amounts u/s. 37(1) invoking transfer pricing provisions Addition under TP provisions - Held that:- Since the difference is within (+/-) 5% range as provided u/s. 92CA(2) proviso, there is no need to make the adjustment. Exclusion of foreign currency from the export turnover - Held that:- We direct the AO/TPO to exclude the same amount from the total turnover as well while computing the deduction u/s 10A. Exclusion of expenditure in foreign currency - whether the same amount may be excluded from the total turnover as well - Held that:- Following the principles on the subject as laid down by the Hon’ble Bombay High Court in the case of CIT Vs. Gem Plus Jewellery India Ltd., [2010 (6) TMI 65 - BOMBAY HIGH COURT] and also Special Bench decision of the ITAT, Chennai in the case of ITO Vs. Sak Soft Ltd. [2009 (3) TMI 243 - ITAT MADRAS-D] AO is directed to exclude the same from the total turnover as well. Direct the AO to exclude whatever communication expenses disallowed from the export turnover, the same amount was also be disallowed from the total turnover while computing the deduction u/s 10A Disallowance of commission paid to Venture Global on entire sales under the CUP method with out there being any comparable cases - Held that:- For the reasons stated above in the earlier assessment years, instead of disallowance of the commission attributable to sales made to Satyam Group, the entire commission paid was disallowed without assigning any reasons. For the reasons stated in earlier years, we are of the opinion that TPO is not correct in disallowing the amount by determining the ALP at NIL. As stated in earlier years, the commission paid to Venture is payable and accordingly, the ground is considered allowed.
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