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2018 (1) TMI 329 - AT - Income TaxDisallowance u/s. 40(a)(i) - Held that:- We hold that the proviso to section 40(a)(i)is not having retrospective effect and is not applicable for the year under appeal, that there was no default on behalf of the assessee in deducting or paying the tax as per the provisions prevalent at that point of time. As far as cases relied upon by the DR is concerned, we would like to mention that they lay down general principles, they do not deal with the issue on hand. Words “or” as well as “and’ can have two different meanings. But, do decide the matter before us, the case of Puthuthotam Estates (1980 (1) TMI 34 - MADRAS High Court) cited by the DR is of no help. Considering these facts, we decide ground no. 1 against the AO. Claim of expenses - determine the arms length price (ALP) of the professional fees paid to BOS - Held that:- We find that the assessee had entered in to two separate contracts, that one contract was about fees to be received by it, that the other one was about expenses to be incurred, that the AO mixed those two contracts that he had not doubted the incurring of expenditure, that he was of the opinion that expenditure was to be allowed in the next assessment year, that TPO had not found any defect in the method of determining the ALP of the international transaction(IT) entered in to by the assessee, that mark up of 11. 79% has not be doubted by him. It appears that the TPO, while passing order u/s. 92 took over the role of the AO. As per the provisions of the Act the only role assigned to the TPO is to find out as to whether the IT is at arm’s length or not. He is not supposed to take decision about accounting policy to be followed by the assessee, nor he should comment upon as how to compute income if an assessee follows a particular method of accounting. In the case before us, the assessee is following project completion method and showing the income from the project accordingly. Expenditure incurred by it have to considered for arriving at the taxable income of the year under appeal. There in nothing on record to negate the finding of fact given by the FAA that income corresponding to the Pre-FID expenditure was offered for taxation. So, in our opinion, there is no need to interfere with his order. Confirming the same, we decide second ground of appeal
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