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2015 (6) TMI 349 - AT - Income TaxTransfer pricing adjustment - reimbursements of expenses by the Appellant to its holding company/associated enterprise ('AE') was against a service which was never received (i.e. in other words a sham transaction/colorable devise to shift cash/profits outside India) - Held that:- Reimbursement of engineering expenses and software license expenses made by assessee-company to ATI Canada was for the benefit derived by the company and is not a case of payment of extra profit/cash to the AE. Vide that order [2014 (11) TMI 44 - ITAT HYDERABAD], the ITAT has indeed allowed the software expenses and reimbursement of expenses, therefore, the disallowance per se of ₹ 17,88,20,166/- as services not provided and ALP at NIL does not stand. Therefore, ground No.2 raised before us on the issue of disallowance of entire reimbursement of expenditure is to be held in favour of assessee. We notice from the orders of the authorities and from the order of ITAT that for the Financial Year 2008-09 i.e., relevant for AY.2009-10 before us, the order of the ITAT indicate the software expenses at NIL and engineering expenses at ₹ 10,76,77,131/-. However, the orders of TPO as considered in this impugned order indicate that amount was at ₹ 17,88,20,166/-. Even though in principle, we agree with the findings of the ITAT with reference to the nature of services being rendered by the said company, we, however, direct the Assessing Officer to examine the amounts involved and reconcile the payments considered in the order of ADIT, International Taxation u/s.201(1A) and the amounts considered for disallowance in this order by the Assessing Officer.Subject to the above observations and reconciliation of the amounts involved, the disallowance of entire amount does not arise. Even though assessee has objected to the inclusion of various comparables, not giving adjustment on account of difference in depreciation policy and other objections with reference to determination of ALP, we are of the opinion that this issue has to be restored to the file of DRP for fresh adjudication. - Decided in favour of assesse for statistical purposes.
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