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2017 (4) TMI 1621 - AT - Income TaxTP Adjustment - MAM - CPM v/s CUP - methodology to be adopted while benchmarking the international transaction - international transactions relating to export sales and receipt of sales commission - HELD THAT:- The assessee has filed on record the assessment orders relating to assessment years 2009-10 and 2010-11 which clearly reveal the transaction of export to associate enterprises being entered into by the assessee with its associate enterprises - we find no merit in the order of TPO in applying the CUP method to benchmark the international transaction of export to associate enterprises in the hands of assessee. Upholding the order of CIT(A), we dismiss this part of ground of appeal raised by the Revenue. Adjustment made in the second segment of receipt of commission from the associate enterprises - TPO had applied CUP method - The assessee has referred to the assessment orders relating to assessment years 2009-10 and 2010-11, where similar transaction of commission receipts from associate enterprises are reported as international transaction and has been benchmarked by applying CUP method and no addition has been made in the hands of assessee. We find no merit in the methodology adopted by the TPO in rejecting the method applied by the assessee. Loss suffered on account of foreign exchange fluctuations - revenue or capital loss - HELD THAT:- The Hon’ble Supreme Court in CIT Vs. Woodward Governor India (P.) Ltd. [2009 (4) TMI 4 - SUPREME COURT] had held that the losses suffered by the assessee on account of foreign exchange difference as on the date of balance sheet was an item of expenditure allowable u/s 37(1). The assessee before us has also borrowed loan in foreign exchange and on the close of each of the year was reporting the outstanding liability following the accounting method prescribed in this regard. For the year under consideration, the assessee had claimed loss on the said account of foreign exchange i.e. valuation of loan outstanding as on date of close of the year borrowed in foreign exchange. The said loss is to be allowed as deduction in the hands of assessee, following the same method as in the earlier year when gain arising at the close of the year has been added as income of the assessee. Accordingly, we uphold the order of CIT(A) in this regard and dismiss the ground of appeal raised by the Revenue. Addition on account of lease rental expenses - AO on perusal of the agreement held the expenditure to be non-allowable on the premise that the lease was non-cancelable - As per CIT(A) payments under the operational lease agreement were for the use of vehicles on monthly basis, wherein the normal repairs and maintenance was to the account of lessor and agreement was for limited period - HELD THAT:- where the assessee has entered into a contractual agreement for lease of vehicles which were used by the assessee during the course of its business and where the lease was cancelable and where the normal repairs and maintenance had to be undertaken by the lessor, expenditure incurred by the assessee is revenue in nature and hence, merits to be allowed in the hands of assessee. Accordingly, we hold so. Decided against revenue.
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