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2016 (3) TMI 1105 - AT - Income TaxALP adjustments in respect of the payment of fees for technical services - Held that:- . As regards the question of simple arithmetic mean versus weighted average, we find that proviso to Section 92C(2) categorically states that “where more than one price is determined by the most appropriate method, the arm's length price shall be taken to be the arithmetical mean of such prices”. There is no room for importing the concept of weighted average here. The law refers to arithmetical mean and the arithmetical mean is, in plain words, “a mathematical representation of the typical value of a series of numbers, computed as the sum of all the numbers in the series divided by the count of all numbers in the series”. We are not, therefore, persuaded by the grievance raised by the Assessing Officer. In our considered view, it was only arithmetical mean which is relevant in this context. There is no infirmity in the stand of the DRP on this issue. The impugned ALP adjustment is contrary to the scheme of the Act. The authorities below have been swayed by the considerations which were not germane to the issue. We, therefore, uphold the grievances of the assessee and direct the Assessing Officer to delete the ALP adjustments in respect of the payment of fees for technical services Investments in REC bonds included in the computation of disallowance under section 14A r.w.r. 8D - Held that:- Issue is remitted to the file of the Assessing Officer for factual verification and resultant adjustment in the disallowance under section 14A r.w.r. 8D. If this investment does not result in a tax exempt income, it cannot be taken into account in computation of disallowance under rule 8D. The Assessing Officer will, therefore, modify the disallowance accordingly. Deduction under section 36(1)(va) - claim declined pertaining to the payment of employees’ contribution for the provident fund before the due date of filing of the income tax return - Held that:- This issue is now squarely covered, in favour of the assessee, by Hon’ble jurisdictional High Court’s judgment in the case of CIT Vs Ghatghe Patil Transport Ltd [2014 (10) TMI 402 - BOMBAY HIGH COURT ]. In this view of the matter, the impugned disallowance is hereby deleted. Disallowance on account of buy back expenses stands deleted. Disallowance in respect of sales promotion and conference expenses - no evidence of benefit from these activities and that even the expenses incurred prior to 10th December 2009, i.e. amendment in the code of conduct of the medical professionals, should have been disallowed - Held that:- Having heard the rival contentions and having perused the material on record, however, we see no reasons to interfere in the matter. The thrust of Assessing Officer’s disallowance was that there was nothing to show that expenses were necessarily required to be incurred inasmuch as there was no direct cause and effect relationship between the expenses incurred and the business profits of the assessee. Obviously, the Assessing Officer was swayed by irrelevant consideration. This expenses may or may not be necessary in that sense but that does not matter. As long as the expenses are incurred wholly and exclusively for the business, whether necessarily or not, these expenses are deductible in nature. As regards the relevance of the MCI code of conduct, the disallowance is made only because the expenses are held to be hitting the provisions of Explanation to Section 37(1) of the Act. That point, due to smallness of the amount, has not been contested before us, and we need not deal with it in detail.In the light of the above discussions, as also bearing in mind entirety of the case, we see no merits in the grievance of the Assessing Officer.
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