Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2022 (5) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2022 (5) TMI 1534 - AT - Income TaxTP adjustment made in respect of manufacturing segment - manufacturing segment consisted of manufacturing and distribution of desktops and note books - assessee had benchmarked the international transactions in manufacturing segment under internal CUP method - TPO adopted TNM method and accordingly made transfer pricing adjustment - HELD THAT:- As in in assessment year 2015-16 [2020 (3) TMI 471 - ITAT BANGALORE] we set aside the order passed by the A.O. on this issue and restore the same to the file of TPO/AO with the direction to apply CUP method as most appropriate method and examine ALP accordingly, after providing adequate opportunity of being heard to the assessee. TP adjustment made in relation to “Advertising, marketing and promotion expenditure (AMP expenses) - HELD THAT:- We direct AO/TPO to first examine the applicability of decision rendered by Hon’ble Delhi High court in the case of Maruti Suzuki India Ltd. [2015 (12) TMI 634 - DELHI HIGH COURT] to the facts of the present case and accordingly first determine the question as to whether the AMP expenses would fall under the category of international transaction. If it is held to be not an international transaction, then the question of making any transfer pricing adjustment will not arise. After hearing the assessee and examining the facts afresh, the AO/TPO may take appropriate decision in accordance with law. Disallowance of provision for warranty - HELD THAT:- Identical disallowance made by the AO in assessment year 2011-12 has since been allowed by Hon’ble High Court of Karnataka [2021 (2) TMI 1337 - KARNATAKA HIGH COURT] in the assessee’s own case following the decision rendered in the case of Bharat Earth Movers [2000 (8) TMI 4 - SUPREME COURT] by holding that no substantial question of law has arisen on this issue. Accordingly, following the decision rendered by the coordinate bench as well as Hon’ble jurisdictional High Court, we direct the A.O. to delete the disallowance relating to provision for warranty. Addition of “provision for warranty” to the net profits under Explanation 1 to sec. 115JB for the purpose of computing book profits, holding the same as ‘contingent liability’ - HELD THAT:- We hold that there is no requirement of making addition of provision for warranty to the net profit for computing book profit u/s 115JB of the Act. Accordingly, the AO is directed to delete the same. The order passed by Ld CIT(A) on this issue stands set aside. Addition of “provision for compensated absence” (Provision for leave encashment) treating it as contingent liability while computing book profit u/s 115JB - HELD THAT:- We notice that an identical issue has been considered in the assessee’s own case in assessment year 2011-12 and the Tribunal held that the provision for leave encashment need not be added back to book profits for the purpose of computing tax liability u/s 115JB of the Act. Thus we hold that the provision for compensated leave (provision for leave encashment) need not be added to the net profit for the purpose of computing book profit u/s 115JB of the Act as the same is not contingent liability.
|