Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2017 (4) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2017 (4) TMI 1527 - AT - Income TaxAllocation of expenses to the 10A unit by the AO resulting reduction of deduction u/s 10A - HELD THAT:- Identical issue was considered by this Tribunal in assessee's own case for the AY 2002-03 to 2004-05 CIT (Appeals) had deleted the allocation following the decisions of the Tribunal in assessee's own case and the Supreme Court. Disallowance of commission expenses - AO noted that the assessee has claimed the commission paid to the sales agents - AO disallowed the commission payment made to the extent the assessee failed to produce the details of the customers however the CIT (Appeals) has estimated the disallowance only to 20% of the amount which was disallowed by the AO - HELD THAT:- It is pertinent to note that for the Assessment Year 2004-05, the CIT (A) has observed that the AO to allow the claim of the assessee subject to the verification of names or ascertain more details relating to these payments being furnished by the assessee. Thus the earlier year’s order does not give any guidance of restricting the disallowance to 20%. When the assessee has not produced complete details and there is no basis of estimation of restricting the disallowance by the CIT (Appeals), we set aside this issue to the record of the AO for reconsideration and adjudication after verification and examination of the complete details to be filed by the assessee. Transfer Pricing Adjustment - TPO while computing the ALP has apparently taken the gross profit margin of the AMDL at entity level by assuming that the entire activity of AMDL is only trading in the medical equipments - HELD THAT:- In the case on hand, the international transactions in trading segment is confined only to the purchases made from the AE. Since there are other transactions of import and procurement from domestic market therefore the adjustment cannot be made by considering the entire trading segment of the assessee. Thus on principle, we do not find any error on these points however, the CIT (Appeals) has undertaken to recompute the margins of the comparable as well as assessee by considering the fresh material which was not available with the TPO/A.O. which it is not permissible to the CIT (Appeals) to do this exercise of recomputation without giving an opportunity to the TPO/A.O. The proper course of action on the part of CIT (Appeals) would have been to ask the TPO/A.O. for remand report by considering all the relevant material. CIT (Appeals) did not choose to issue any remand order but undertaken the entire exercise on his own. Thus it is clear that the TPO/A.O. was not given an opportunity in this process of recomputing the margins of the comparable as well as assessee. We set aside this issue to the record of the TPO/A.O. to consider and verify relevant record and then determine the ALP in the light of our above observations. Payment of royalty - assessee has paid the royalty to its AE @ 2% on sale - AO / TPO held that none of the comparable company has paid royalty for trading segment - HELD THAT:- Adjustment of royalty payment made by the Assessing Officer and the CIT (Appeals) has deleted the same. Since this issue is common to the issue involved in the Asst. Year 2005-06. In view of our finding on this issue for the Assessment Year 2005-06 this issue stands set aside to the record of the TPO/A.O. on same terms.
|