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2017 (4) TMI 917 - ITAT MUMBAITDS u/s 195 - Addition of reimbursement of expenses to the head office(HO)for expenses incurred on behalf of the assessee by the HO - Held that:- We find that the assessee had made payment its sister concern located in Singapore for the services rendered by that entity, that it had claimed the payments were reimbursements only without any mark up. The assessee had produced the debit note raised by the foreign entity.The invoices issued by the SGS talk about reimbursement,software maintenance charges,data communication charges, EDP consumables and others.If the DRP had some doubt about maintenance of software,it should have called for explanation from the assessee. But,doubt cannot take place of evidence to confirm any addition. Page 24 of the paper book contains detail of various charges paid by the assessee to the foreign entity.The Panel has not brought anything on record to controvert the entries appearing in it. Besides,Protocol 7 to the DTAA also supports the stand taken by the assessee. As relying on Steria case [2016 (8) TMI 166 - DELHI HIGH COURT] we are of the opinion payment made by the assessee was neither royalty nor FFTS. It was case of pure and simple reimbursement. Secondly, the assessee had not made any payment to Singapore Telecommunication - Decided in favour of assessee. Not allowing the TDS credit on interest income paid to HO - Held that:- During the course of hearing before us, the AR stated the assessee had paid interest to the HO for which TDS was paid, that the departmental authorities had denied to give credit for the taxes paid,that AO should be directed to give the credit for the tax paid by it, the DR left the issue to the discretion of the Bench. Thus we are of the opinion that matter should be sent back to the file of AO.He is directed to give credit for the taxes paid after verification. Second Ground is allowed in favour of the assessee,in part. Adjustment to the sales credit commission earned on sale of treasury products on behalf of the AE - Held that:- Identical issue stands decided in favour of the assessee by the order of the Tribunal for the AY.2008-09 wherein as considered it fair and proper and in the interest of justice to set aside this matter to the A.O./TPO with a direction to consider the said objections of the assessee and recompute the average margin of the comparables after taking into consideration the said objections. We also direct the A.O./TPO to apply the average margin of comparables so recomputed to the operating cost of the assessee relating to its relevant transactions with its AEs in order to determine the ALP of the said transaction as well as the TP adjustment to be made in respect of such transactions.Needless to observe that the A.O. shall offer proper and sufficient opportunity to the assessee of being heard on this matter.
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