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2015 (9) TMI 843 - AT - Income TaxTransfer pricing adjustment - international transaction relating to reimbursement of interest and other finance cost - whether whatever is reimbursed by the assessee to MRK goes to the Deutsche Bank account and the MRK is not the beneficiary of any income in any form? - Held that:- As decided in assessee's earlier AY we find merit in the assessee's contention that the MKR is not just a material seller to the assessee. Therefore, in principle, we cannot appreciate the approach of the TPO in accepting (i) the "international 15 transactions" involving the payment of cost for import of the raw materials and (ii) rejecting the reimbursement of the finance cost, interest cost etc amounting to ₹ 17.81 cr and (iii) not charging of the "corporate guarantee commission" on the MKR. The TPO must determine ALP of the purchase price of the raw material as a whole after considering all the relevant segments of the price ie purchase cost, administrative cost and the finance cost and interest cost, guarantee commission etc. In the remand proceedings, after considering all these segments of the pricing, if TPO finds that the unit price of the raw material is at ALP, in that case, there is no need for any TP additions. - Decided in favour of assessee for statistical purposes. Adhoc disallowance of 20% of total expenditure incurred on repairs and maintenance and treating the same as capital expenditure - Held that:- While deciding the appeal for AY 06-07 the Tribunal had decided the identical issue stating that CIT (A) surprisingly on the basis of some test check of vouchers affirmed the order of AO by differing from the findings in earlier two years. We are not fully convinced with the test conducted by the CIT (A) as he himself recorded that assessee out of the expenditure claim with reference to M/ s Sunny Constructions/ S.R. Containers treated part of the expenditure as capital and part has been claimed as revenue expenditure. It indicates that assessee has consciously segregated the capital expenditure and revenue expenditure for which no fault can be found. Moreover, AO also recorded that all the necessary details and vouchers have been placed before the authorities. Therefore, we are convinced that AO very mechanically and perfunctorily disallowed 20% on adhoc basis without establishing any expenditure as capital expenditure. There cannot be any adhoc disallowance out of the revenue expenditure as was done by AO. Therefore, we reverse the order of the CIT (A) and direct AO to allow the claim as such. In case any depreciation was allowed on the disallowed amount, AO is directed to withdraw the same. - Decided in favour of assessee.
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