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2017 (5) TMI 1593 - HC - Income TaxTPA - Adjustment made in the Arms Length Price of international transaction by taking into account TNMM at entity level - Held that:- Considering the fact that the TPO himself has admitted that assessee is a market leader and it will be extremely difficult to identify the comparables and the fact that neither in earlier years nor in subsequent years any adjustment has been made by comparing the results at entity level, we hold that the international transaction entered by the assessee with the AE even at entity level is at arm’s length and therefore the adjustment made by the AO is not justified. See CIT ALWAR VERSUS M/S SAKATA INX (INDIA) LTD [2017 (5) TMI 1586 - RAJASTHAN HIGH COURT] Addition on account of inventories written off - Held that:- The disallowance confirmed by the ld. CIT(A) only for the reason that these items are not actually destroyed and is only a provision can’t be upheld for the reason that item wise details of the same is filed, these are the identified items and have been subsequently destroyed as per the regular procedure followed. The write off for obsolesce of such identified items is allow able deduction as per the case laws relied by the Ld. AR. In fact no provision is created in books of accounts but only the nomenclature of provision for obsolesce is used. In the balance sheet also no such provision is appearing either in the liabilities side or as reduction from asset side not the Ld. D/R could point out any such provision in the balance sheet. Therefore the disallowance confirmed by the Ld. CIT(A) is deleted. Traveling expenses disallowance - Held that:- Assessee has produced entire module, bill and vouchers of expenses for verification as desired. However, in making disallowance out of the above expenses after submission of month wise details of the expenses by the assessee,AO has not required assessee to furnish the details of any specific expenses. We also note that on these expenses, FBT is paid and that such adhoc disallowance is not made in the past and in A.Y. 07-08, the DRP has directed the AO not to make such adhoc disallowance. In these facts and circumstances, we direct the AO to delete the disallowance TDS u/s 194H - TDS liability on gifts and trade incentives - Held that:- The observation of AO that services has been received by the assessee against these payment and therefore he should have deducted tax at source on the value of the gift is ill founded in as much as the payment is not against the services but against the sale of goods to the distributors and therefore TDS provisions are not applicable. Adhoc miscellaneous expenses disallowance not permissible - bills and vouchers of expenses as desired were produced for verification and examined on test check basis. - Assessee appeal allowed.
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