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2023 (2) TMI 1220 - ITAT MUMBAITP Adjustment - international transaction on recovery of expenses - HELD THAT:- As in assessee’s own case for A.Y. 2011-12 and in view of the fact that no such transfer pricing adjustment has been made by the Revenue qua the international transaction on recovery of expenses from A.Y. 2004-05 to A.Y. 2010-11, we are of the considered view that when ALP of the international transactions rendering services by the assessee to its AEs, for which it is to be compensated on cost + mark up basis have already been benchmarked separately, the day to day pocket expenses incurred by the assessee during rendering of such services are to be reimbursed on cost to cost basis. Incurring of such expenses has not been disputed by the Revenue Department. When there is no element of profit or mark up in the hands of the AE in incurring the day to day pocket expenses the same is not to be bench marked. In view of section 92(1) of the Act income arising from an international transaction is liable to be computed for the purpose of ALP as prescribed under section 92C - TPO has considered the ALP at 10% of expenses recovered on adhoc basis without conforming to the methods prescribed u/s 92C(1) - So in view of the matter and following the order passed by the co-ordinate Bench of the Tribunal adjustment made by the TPO/AO qua international transaction of reimbursement of expenses received by the assessee from its AE is not sustainable in the eyes of law, hence ordered to be deleted. Addition u/s 143(1) without issuing any notice to the assessee and this addition has also not found mention in the draft assessment order which is in violation of section 144C - AO disallowed an amount being the difference between the disallowance reported in section 37 in the income returned (in respect of CSR contribution) and tax audit report (in respect of loss on sale of fixed assets) - AO also disallowed an amount u/s 40(a)(ia) - HELD THAT:- During the course of argument the Ld. A.R. for the assessee contended that he has already moved an application for rectification before the AO which has not been decided. We are of the considered view that since there is apparent error in making aforesaid addition by the AO, the same be rectified u/s 154 of the Act. So we hereby direct the AO to decide the rectification application lying pending with him (AO) for disposal within a period of three months from the date of receipt of order. So ground as decided in favour of the assessee for statistical purposes. Disallowance of delay in deposit of employees contribution of provident fund (PF)/ Employees’ State Insurance Corporation (ESIC) beyond the due date prescribed under the Act - assessee candidly conceded that this issue is no longer res-integra now having been decided by the Hon’ble Supreme Court in case of Checkmate Services Pvt. Ltd [2022 (10) TMI 617 - SUPREME COURT] - HELD THAT:- So in view of the decision rendered by the Hon’ble Supreme Court, we are of the considered view that employees’ contribution on account of PF & ESIC deposited by the employer after due date prescribed under the Act is not an allowable deduction. So since the assessee has failed to comply with the condition precedent for depositing the employees’ contribution on account of PF & ESIC before the due date prescribed under the Act the same has been rightly disallowed by the AO. Decided against the assessee.
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