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2021 (11) TMI 1148 - AT - Income TaxTP Adjustment - Exclusion of Comparables - HELD THAT:- As the comparable “ Killick” is functionally different from the assessee, hence, we hereby direct the same may be excluded from the list of final comparables. Inclusion of Comparables - With regard to CPRIL, we find that the company engaged in organizing conferences, tours, demonstration of products, seminars, publicity campaign through various media channel, demonstrations of client products, hotel bookings, conference literature etc. Having gone through the functions of the assessee which have been duly mentioned in the above paras of this order, we hold that the comparable CPRIL is functionally dissimilar. With regard to MIL, we find that the comparable Offers Consultancy in the areas asset development, community and experience management, strategic event management and communication & marketing. We find that the functions of this comparable are different from that of the assessee. Hence, we decline to interfere with the order of ld. DRP in this comparable. Interest on Receivables - AR argued extensively as to how adjustment with regard to interest on receivables cannot be resorted to - HELD THAT:- Primarily, we find that the assessee is a debt free company and has no claim of interest payable. Hence, in the specific financial conditions of the assessee, we hold that no adjustment is required on this ground. Incorrect Computation of Margins - HELD THAT:- TPO erred in not giving effect to the directions of ld. DRP who directed to verify and take correct margins of the comparables and adopted an inconsistent approach while computing operating margin of the comparable companies used in the determination of the ALP resulting in incorrect margins of the comparable companies. Detailed computation of margins of comparables provided to TPO pursuant to ld. DRP directions. As perused the same in the paper book at page nos. 1709 to 1747. The AO is directed to re-compute the margins. Claim of education cess as an allowable expenditure - Interpretation of provisions of Section 40(a)(ii) - Deduction u/s 37(1) - HELD THAT:- Education Cess is not of the nature described in sections 30 to 36, Education Cess is not in the nature of capital expenditure, Education Cess is not personal expense of the assessee, it is mandatory for it to pay Education Cess and for the purpose of computation of Education Cess, the Income ‘Tax’ is taken as the criteria for computational purpose. Thus, the expense of Education Cess is mandatory expenses to be paid but does not fall under capital expense and personal expenditure and hence may be allowed as deduction. Also gone through the various judgments of judicial authorities pan India wherein the fresh claim of the assessee is considered and the deduction u/s 37 of Education Cess has been allowed. The Hon’ ble High Court of Bombay [2020 (3) TMI 347 - BOMBAY HIGH COURT] held that the appellate authorities may confirm, reduce, enhance or annul the assessment or remand the case to the AO, because the basic purpose of a tax appeal was to ascertain the correct tax liability in accordance with the law. Keeping in view the provisions of the Act pertaining to Section 40(a)(ii) and Section 115JB, Circular of the CBDT No. 91/58/66- ITJ(19), the orders of Co-ordinate Benches of ITAT and judicial pronouncements of the Hon’ble High Court of Bombay and Hon’ble High Court of Rajasthan, we hereby hold that the assessee is eligible to claim the deduction of the ‘Education Cess’ as per the provisions of Section 37 - Appeal of the assessee is allowed.
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