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2019 (10) TMI 1371 - AT - Income TaxTP Adjustment - characterization of services rendered to its AE - assessee claims that services rendered to its AE are in the nature of engineering design services - TPO has accepted the fact that the assessee is into mainly engineering design services; however, he has characterized the services rendered by the assessee to AE as ITES/BPO services - HELD THAT:- When the assessee is having different stream of services including engineering design services and ITES services, it has to furnish complete segmental details while carrying out its TP study. But, the assessee has aggregated its services while carrying out TP study to determine ALP of international transactions with AE - TPO has recharacterized services rendered to the AE into ITES services without assigning any reasons as to how services rendered by the assessee are coming within the ambit of ITES services. Therefore, we are of the considered view that there are some lapses from both sides while determining ALP of international services with AE. Co-ordinate Bench of ITAT, in the case of Continental Automotive Components (India) Pvt. Ltd. [2019 (4) TMI 1929 - ITAT BANGALORE] has considered identical issue and restored the issue back to the file of the TPO/AO for characterization of services rendered by the assessee to its AE. Therefore, considering the facts and circumstances of this case and also consistent with view taken by the Co-ordinate Bench, we restore the issue to the file of the TPO for denovo consideration and to decide the issue of characterization of services rendered by the assessee to its AE. TDS Liability - Disallowance of expenditure on computer software under section 40(a)(ia) - HELD THAT:- We find that an identical question has been considered by the Co-ordinate Bench of ITAT, in the case of Teekays Interiors Solutions [2019 (4) TMI 193 - ITAT BANGALORE] where the Tribunal, after considering relevant facts and also the decision in the case of CIT Vs. Samsung Electronics Co. Ltd [2011 (10) TMI 195 - KARNATAKA HIGH COURT] held that the assessee cannot be fastened with the liability to deduct tax at source retrospectively on the basis of subsequent judgment of jurisdictional High Court, when the law stood at that point of time was very clear that there is no requirement of TDS on such payments. We direct the AO to delete the additions made towards disallowance of expenditure under section 40(a)(ia). Levy of interest under section 234B and 244A - HELD THAT:- Levy of interest mandatory in nature and which also depends upon total income computed for the year under consideration and hence the AO is directed to re-compute interest under section 234B and 244A of the of the Income Tax Act, 1961 on total income computed as per the provisions of the Act.
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