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2022 (5) TMI 1524 - AT - Income TaxTP Adjustment - comparable selection - TPO aggregating both the CP division and GIC division - AR reiterated that CP division provides market analysis and consulting services; while GIC division provides low end back office support services to its AE - HELD THAT:- Five companies cannot be considered as comparable companies to the GIC division providing back office support services. Accordingly we direct the Assessing Officer/TPO to not include these five companies while determining ALP of international transactions of GIC division. With these observations, we set aside the issue of determining ALP of international transaction in GIC division. Disallowance u/s 40(a)(ia) - there was double disallowance as contended by the assessee - amount consisted of two disallowances and in the Tax audit report one amount was again reported in Clause 27(b)(i) of the tax audit report and hence it was disallowed again under section 40(a)(ia) - HELD THAT:- Since the claim of the assessee requires verification, we restore this issue to the file of Assessing Officer to examine the claim that this disallowance pertains to non-STPI unit. After carrying out due verification, the AO may take decision in accordance with law. Needless to mention the Assessing Officer should eliminate double disallowance from the concerned unit only. Unreconciled entry relating to credit card expenses appearing in AIR statement - AO noticed that there was difference in the amount of credit card expenses between the books of accounts and AIR statement - AO disallowed the difference, since the assessee did not furnish relevant details - HELD THAT:- As AR submitted that the assessee may be provided with an opportunity to explain its case before the AO and furnish the details - we restore this issue to the file of the Assessing Officer for examining it afresh. If the assessee is not able to furnish the details to the satisfaction of the Assessing Officer, then the Assessing Officer is free to take appropriate decision in accordance with the law. Rejection of claim for bad debts written off - Additional claim of assessee - contention of Ld A.R that the amount so written off as bad debts against the debtors account is allowable as deduction under section 36(1)(vii) - HELD THAT:- Since the claim of the assessee appears to be in accordance with the law and since it is the duty of the AO to determine correct total income, we admit the above said additional claim of the assessee. Deduction claimed under section 36(1)(vii) can be allowed, if the assessee has complied with the provisions of sec. 36(2) of the Act. Hence this claim of the assessee, in our view requires verification at the end of AO. Accordingly, we restore this issue to the file of the Assessing Officer for examining it in accordance with law. TP adjustment restricted to the international transactions entered with the AEs of the assessee - HELD THAT:- As relying on case of Ognibene India (P) Ltd [2019 (8) TMI 1862 - ITAT PUNE]we hold that the Ld DRP was justified in giving the direction to restrict transfer pricing adjustment to international transaction entered with AR.
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