TMI Blog2023 (6) TMI 577X X X X Extracts X X X X X X X X Extracts X X X X ..... are not also supported by any agreement. We fail to understand that how the lower authorities have reached at a conclusion on the 3 Sample debit notes which are in a foreign language. Assessee has also not narrated the facts properly that how the above expenditure cross-charged to the assessee company by its associated enterprises. Even the complete breakup of the expenditure showing the nature of expenditure was also not submitted. Set-aside ground back to the file of the learned transfer pricing officer with a direction to the assessee to substantiate the nature of such expenditure, and how such expenditure have benefited to the assessee. The learned TPO may examine the same and decide the issue afresh in accordance with the law. Disallowance of foreign exchange losses - DRP upheld the disallowance holding that there is no evidence submitted by the assessee that the expenditure of foreign exchange loss is allowable as business expenditure HELD THAT:- Additional evidence furnished by the assessee shows that the assessee submitted description of expenditure, foreign currency in which transaction was incurred, amount of expenditure in foreign currency, date of booking, exchange rate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctional Net Margin Method at whole entity level and therefore the same is also benchmarked under the same. 1.3 The learned TPO/ AO/ DRP erred in not appreciating the fact that the AES of the Assessee incurred certain expenses pertaining to travelling, SAP related charges, advertising, etc. which were initially borne by the AES and then cross-charged to the Assessee. The Assessee subsequently reimbursed these expenses incurred by its AES on cost-to-cost basis, without any mark up. Such expenses are purely for administrative convenience and therefore the same should be allowed. 1.4 The learned TPO/ AO/ DRP erred in not appreciating the fact that reimbursement of expenses do not involve a separate provision of services by the AE, as such reimbursements are incurred for the purpose of the administrative convenience of the Assessee. Further, Hon'ble DRP has incorrectly assumed the reimbursement as an intra group services while determining the arm's length price as nil. Such cost reimbursed by the Assessee to its AE is similar to the price typically charged in the third- party scenario. 2. Disallowance of foreign exchange loss on remittances under section 43AA of the Act amountin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ffered during the course of the assessment proceedings. In view thereof, the appellant has not under-reported/ misreported income as per section 270A of the Act. 3.3 The appellant prays that the learned AO be directed to drop the penalty proceedings initiated under section 270A of the Act. 4. The appellant craves leave to add to, amend, alter, vary, omit or substitute the aforesaid grounds of appeal or add a new ground or grounds of appeal at any time before or at the time of hearing of the appeal as it may be advised. 03. We find that the ground number 3 of the appeal against initiation of penalty proceedings is premature, does not require adjudication hence dismissed. 04. Before referring to the grounds of appeal, we refer to the facts of the case. Brief facts of the case shows that assessee is a company engaged in the business of buying and selling of trucks and spares and also engaged in agency business, renting of trucks, installation services, warranty services and maintenance activities for the lift trucks. Assessee filed its return of income at rupees Nil. Return of income was picked up for scrutiny. As assessee has entered into international transaction of import of tracks ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... adjustment of ₹ 3,251,464/ determining the arm's-length price of the same at Rs. Nil. Accordingly, order under section 92CA (3) of the act was passed on 27/7/2021 proposing the above adjustment. 07. The learned AO further noted that assessee has claimed foreign exchange loss of ₹ 69,539,201/ . The learned AO found that the foreign remittance loss of ₹ 36,584,150 incurred by the assessee was not supported with detailed calculation of the loss. Assessee furnished the date of booking and the date of payment of purchases, expenses reimbursement and freight charges on account of which foreign remittance loss of the above amount is claimed. On questioning, the assessee submits that the loss of this amount is on account of foreign remittances and pertained to realized losses. Assessee also stated that foreign exchange loss pertaining to capital items have already been disallowed by the assessee in the return of income thus, balance loss claimed by the assessee is of revenue nature and therefore same is allowable. Assessee submitted the details of the foreign exchange remittances showing the amount of expenditure in foreign currency, date of booking of expenditure in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to produce any material evidence to suggest that such expenditure has been laid out for the purposes of the business of the assessee, the same cannot be allowed. Accordingly the disallowance of foreign exchange loss on remittance of ₹ 36,584,150 was also rejected. iii. With respect to the disallowance of foreign exchange loss amounting to ₹ 6,963,346 which was pertaining to financial year 2016 17 and being reversal entry, the learned dispute resolution panel directed the learned assessing officer to delete the addition. 011. Accordingly the learned AO passed the assessment order under section 143 (3) read with section 144C (13) of the act dated 31/7/2022 wherein the transfer pricing adjustment of ₹ 3,251,464 and disallowance of foreign exchange loss on remittance under section 43AA of the act of ₹ 36,584,150 was retained in the total income of the assessee was determined at ₹ 33,619,430/ . The book profit was also increased by the above to adjustments, consequently book profit was determined at ₹ 36,921,437/ . 012. The assessee is aggrieved with the above order and is in appeal before us. We heard the rival contention and perused the orders of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learned TPO may examine the same and decide the issue afresh in accordance with the law. 014. Second ground of appeal is with respect to disallowance of foreign exchange losses. During the course of assessment proceedings the learned assessing officer asked the assessee about the details of the foreign exchange loss of ₹ 69,539,201/ the assessee submitted the summary of such losses and also bifurcated that into revenue account as well as on capital account. Assessee also submitted a detailed with respect to the amount credited on the income side and amount debited on expenditure side. The learned assessing officer disallowed the same holding that assessee could not furnish the complete detail. Before the learned dispute resolution panel the assessee submitted the additional evidences. Those evidences are uploaded on ITBA website and AO was asked to furnish the remand report. Before the passing of the direction by the DRP, no such remand report from the AO was received. There is no finding of learned dispute resolution panel that whether such additional evidences were admitted or not. However the learned dispute resolution panel agreed with the finding of the learned AO. On re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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