Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2018 (3) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2018 (3) TMI 938 - AT - Income TaxTransfer pricing adjustment - Rejection of comparables under technical services segment - Held that:- The assessee an Indian company is involved in providing services of information dissemination, maintaining customer relationship and market development to its overseas Associated Enterprise (A.E) ExxonMobil Chemical Co., USA. It also provides application research and technical services as well as back office support services to its A.E. Thus companies functionally dissimilar with that of assessee need to be deselected from final list. Working capital adjustment & risk adjustment - Held that:- Transfer Pricing Officer has wrongly computed the margin of the comparable companies under both the segments. In this context, he drew our attention to the working of the correct margin as submitted in two separate charts. We direct the Assessing Officer to examine the aforesaid aspect and compute the arm's length price under both the segments by correctly computing the margin of the comparables. Disallowance of entertainment expenditure - Held that:- Only because the disallowance of similar nature was made in assessment year 2006–07 either for lack of evidence or some other reasons and the assessee accepted it, disallowance cannot be made in subsequent assessment years. If the assessee through proper documentary evidence is able to prove the genuineness of the expenses, there is no reason to disallow the same. In the facts of the present case, it appears that in the course of assessment proceedings, the assessee did produce sufficient documentary evidences to prove the genuineness of the expenses. Without properly examining the evidence brought on record, the Assessing Officer has disallowed part of expenditure that too on ad–hoc basis. DRP has also simply relying upon the fact that similar disallowance was made in assessment year 2006–07 has upheld the disallowance. There being no basis for disallowance of part of the expenses, we delete the disallowance made by the Assessing Officer. This ground is allowed. Disallowance u/s 40(a)(i) - fee for technical services - TDS u/s 195 - income accrued in India - Held that:- It has not been established on record that while rendering the services, EMCAP has made available technical knowledge, knowhow, skill, etc., to the assessee in a manner to enable him to apply them independently or on its own. The payment made by the assessee cannot be considered as fees for technical services as defined under Article 12(4)(b) of the India–Singapore tax treaty and for this reason also we do not have to examine taxability of the same under section 9(1)(vii) - the payment of global support service fee was made under the agreement which has continued from the year 2003. It is a matter of record that in the preceding assessment years though the assessee has paid global support service fees to EMCAP without deducting tax at source, no disallowance under section 40(a)(i) was ever made. Therefore, there being no difference in facts in the impugned assessment year, considering that the payment was made under the same contract, even, applying the rule of consistency, no disallowance under section 40(a)(i) can be made in the impugned assessment year. - Decided in favour of assessee.
|