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2013 (9) TMI 165 - AT - Income TaxAsjustment of arm's length price - Payment of commission - Method of computation - Held that:- All 14 international transactions has not been separately considered in the TP report and basis has been adopted as TNMM - none of the international transactions match to each other. Therefore, it cannot be said that a common method will be sufficient to compute the ALP - most appropriate method to compute ALP in respect of commission paid by the assessee is CUP method. However, the way in which TPO has applied CUP method is not appropriate. The AO has relied upon the internal transactions for arriving at a conclusion that the commission paid by the assessee is on higher side. Such opinion has been formed by TPO without giving any finding that whether or not any outside comparison is available in similar type of transactions. Such course can be adopted only in the circumstances where it is found that outside comparison is not available - matter remanded back for fresh adjudication - Decided in favour of assessee. Additions u/s 41(1) - difference in the sales tax loan liability and the actual payment - Remission of deferred sales tax liability - Held that:- the issue in appeal is admittedly covered by Special Bench decision in the case of Suizer India Ltd (2010 (11) TMI 728 - ITAT, MUMBAI), wherein it was held that, difference between the payment of net present value against the future liability credited by the assessee under the capital reserve account in its books of account is a capital receipt and cannot be termed as remission/cessation of liability and consequently no benefit has arisen to the assessee in terms of section 41(1)(a) of the Income-tax Act, 1961 - Decided in favor of assessee. Deduction u/s 80HHC - DEPB benefits - Whether entire amount received on sale of the Duty Entitlement Pass Book (DEPB) represents profit on transfer of DEPB for the purpose of the computation of deduction u/s 80HHC – Held that:- DEPB has direct nexus with the cost of imports for manufacturing an export product, any amount realized by the assessees over and above the DEPB on transfer of the DEPB would represent profit on the transfer of DEPB and while the face value of the DEPB will fall under clause (iiib) of Section 28, difference between the sale value and the face value of the DEPB will fall under clause (iiid) of Section 28 – Decided in favor of assessee. Capital or revenue expenditure - Software expenditure - Deduction u/s 80HHC - Held that: In the submissions made before Ld. DRP it has been made clear by the assessee that assessee did not purchase SAP programme. It’s existing structure of software was made compatible by the KSB Germany for which an agreement was entered into between the assessee and KSB Germany, copy of which was also filed before Ld. DRP. The nature of expenditure were also given which include Travellling cost of KSB AG Consultants and External consultants for migration and Technical architecture, Interface to subsystems and Consultation charges of KSB AG Consultants. None of these expenditure has been incurred for acquiring any asset - therefore, software expenditure was allowable as revenue expenditure - Following decision of CIT vs. Raychem [2011 (7) TMI 953 - Bombay High Court] - Decided in favor of the assessee.
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