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2019 (4) TMI 2124 - AT - Income TaxTP Adjustment - restriction of adjustment to quantum of international transactions - HELD THAT:- We do not have any hesitation in holding that the transfer pricing adjustment should be restricted to the international transactions only and it cannot be applied to uncontrolled transactions. While determining ALP of international transactions, benchmarking has to be done only on AE transactions and not for entire turnover. Therefore, we direct the AO/TPO to restrict the adjustment on account of ALP to the extent of the transaction with AE only. Disallowance u/s 40(a) (i) on the domestic transaction - Since the assessee has not claimed any deduction of this expense in its profit and loss account, in computing the disallowance u/s 40(a)(i), this amount was excluded by the assessee in its tax return - HELD THAT:- The assessee has clearly made out its case, supra, that section 40(a) (ia) is not applicable in its case, as it has not claimed a deduction in computing the profit & loss account to the extent of Rs.23.3 Crores, therefore, the disallowance made by AO is not justified. Therefore, we direct to delete the disallowance. We find from the orders of lower authorities that they have not appreciated the facts and circumstances on the other issues raised by the assessee. Therefore, we deem it fit to remit those issues back to the AO /TPO for reexamination / verification on the basis of materials to be furnished by the assessee. The assessee has also pleaded that there is a mistake apparent on record in computing the disallowance for the current year (FY 2011-12), submitting that it has disallowed pertaining to prior years. However, the AO had disallowed u/s 40(a)(ia) on account of non-deduction of TDS which included sum disallowed by the appellant in AY 2012-13. This has resulted in dual disallowance. We remit this issue also back to the file of the AO / TPO for re-examination/ verification Disallowance of Service Tax, Sales Tax & VAT u/s. 43B - Since the disallowed sums were not claimed as an expenditure, the assessee pleaded that in accordance with the jurisdictional High Court decision, the AO cannot make the disallowance - HELD THAT:- Since the facts are not clear from the above portion, we deem it fit to remit this issue back to the AO/TPO for verification. In case, the amounts were not claimed as an expenditure in the profit & loss account, the AO/TPO shall apply the law laid down in EVEREST LITHO PRESS. [2006 (1) TMI 98 - MADRAS HIGH COURT]. Ad-hoc disallowance of travelling expenditure - AR submitted that during the assessment proceedings, the appellant has submitted the requested information to substantiate the claim - HELD THAT:- We have considered the rival submissions. Since the substantial issues are remitted back to the AO/TPO, supra, we deem it fit to remit this issue also to the file of the AO/TPO for a fresh examination and decision. The assessee shall place all relevant materials before the A.O./TPO and comply to the requirements of A.O./TPO in accordance with law. The A.O/TPO shall after affording effective opportunity to the assessee shall decide the issues in accordance with law.
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