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2016 (5) TMI 926 - AT - Income TaxTransfer pricing adjustment - ALP determination - Held that:- Assessee has determined ALP using the cost plus method but failed to submit the necessary the working for the same at the time of assessment under section 92CA of the Act. Therefore the TPO opined that the auditor of the assessee has not carried out any working in determining the ALP. So the TPO adopted the TNMM method and worked out the ALP in the case of the assessee. However before us the learned AR admitted that the assessee failed to produce the working in support of its claim in the determination of the ALP prepared using the cost plus method as the administrative office was located in Chennai. We further find from the records that in the subsequent assessment years the assessee has determined the ALP on the basis of cost plus method and the same was accepted by the TPO. Now in our considered view and in the interest of natural justice and fair play we are inclined to restore this file to TPO for fresh adjudication as per law after giving opportunity to the assessee. Deemed dividend addition u/s 2(22)(e) - Held that:- AO has treated the advance received by the assessee against a sale of properties as deemed dividend because assessee was holding the equity shares of the company, carrying voting rights more than 10%. However from the facts of the case we find that the money received by the assessee was representing the sale of the flats and therefore we conclude that the advance received by the assessee was not on returnable basis. The advance representing against the consideration for the sale of the flats is out of the purview of the provisions of section 2(22)(e) of the Act. In holding so we are putting our reliance in the decision of Hon'ble Bombay High Court in the case of CIT v. Nagindas M Kapadia ( 1988 (12) TMI 89 - BOMBAY High Court ) wherein Hon'ble court has held that only the payments and advances to the extent of accumulated profits could be treated as loans or advances within the meaning of Sec.2(22)(e) and this was what the Tribunal had done and, therefore, the Tribunal was right in holding that only ₹ 28,500 and ₹ 10,000 could be treated as deemed dividend in the assessment years 1968-69 and 1969-70.
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