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2019 (12) TMI 619 - AT - Income TaxDisallowance of Provision for Warranty - Disallowance of provision for stock obsolescence - HELD THAT:- CIT(A) was constrained to confirm the disallowances for want of details only. Hence, in the interest of natural justice, we are of the view that the assessee should be provided with one more opportunity to furnish the relevant details. Accordingly, we set aside the order passed by Ld CIT(A) in respect of both the above said issues and restore them to the file of the AO for examining them afresh by considering the details furnished by the assessee and for deciding both the issues in the light of decision rendered by the Tribunal in the assessee’s own case in AY 2008-09. The assessee is also directed to furnish the details in support of the claims made to the satisfaction of the assessing officer. Whether the recovery of administrative expenses would form part of operating income for the purpose of computing operating profit margin? - To examine the correctness of the findings of the TPO, we examined the Annual Report and it is noticed by us from Schedule 13 to the P&L Account that the above amount has been shown as 'Administrative expenses recovered' which clearly indicates that the administrative expenses recovered are nothing but the reimbursement of the expenses incurred by the assessee for the above company and therefore, if such income is excluded from the operating revenue, corresponding expenses have to be excluded from the operating cost. Hence, we are in agreement with the submission of the assessee that the administrative expenses recovered to be considered as operating revenue, considering the fact that the TPO has not reduced corresponding expenses from the operating cost. The Assessing Officer is directed accordingly. The finding of the DRP is based on settled position of law and do not require any interference. Decided in favour of the assessee
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