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2019 (1) TMI 1674 - AT - Income TaxTP adjustments - Arm's Length price - marketing expenses - cost allocation of Central Service Charges - corresponding expenditure of comparable companies - common service center services provided by AE - the cost incurred thereon would have to be shared by all the participant countries including the assessee-company in the ratio of turnover. These services are in the nature of shared services and are therefore customized for the Abbott group. Held that:- the assessee obviously had to incur certain advertisement and marketing expenses for distribution of its products. In any case, we also hold that the ld.TPO cannot look into the propriety of incurrence of expenses by the assessee. - The role of ld.TPO is to see whether all transactions carried out by the assessee with its AEs fall within the ambit and meaning of international transaction u/s 92B of the Act and that whether the same was transacted at arm's length price, for which purpose the determination of price should be made in accordance with any of the methods prescribed in the statute u/s 92C of the Act. It is not disputed that the total cost incurred by the group and the cost allocation made to assessee-company under each head was duly certified by an independent Accountant, who was appointed for this specific purpose in accordance with the conditions laid out in the Service Centre Agreement. When such costs that had been allocated to the assessee-company had been absorbed by making the payment to AEs for the services rendered by AEs (which is not disputed by the Revenue before us), then the action of the lower authorities in determining the arm's length price of such services at Rs.Nil is unwarranted. The lower authorities were not justified in determining the arm's length price in respect of marketing expenses at Rs.Nil as against the claim of ₹ 79,04,690. - Decided in favor of assessee. Bad debts - landlord refused to refund the deposit. - deposit was duly written off in the books of account by the assessee - Held that:- the ground raised by the Revenue itself is patently wrong inasmuch as the Revenue is expecting the assessee to comply with the conditions of section 36(2) of the Act by offering the income in the hands of the assessee in earlier years. The ground also suggests that the assessee had made claim u/s 36(1)(vii) of the Act, which in the instant case is not claimed by the assessee. The assessee has claimed deduction only u/s 28 of the Act after duly satisfying the conditions laid down for such claim. - Decided against the revenue.
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