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2018 (4) TMI 41 - AT - Income TaxNon providing opportunity to the assessee before reference of the matter to the Transfer Pricing Officer - Held that:- We find that in the case of Vodafone India Services P. Ltd. (2015 (10) TMI 2487 - HIGH COURT OF BOMBAY), the Hon'ble jurisdictional High Court has expounded that the grant of personal hearing before referring the matter to TPO has to be read into section 92CA(1) in cases where the jurisdiction to tax under Chapter X has been challenged by the assessee. It was further expounded that in case no objection is raised by the assessee to the applicability under Chapter X, then the prima facie view of the Assessing Officer would be sufficient before referring the matter to the Transfer Pricing Officer for determination of the AMP. The additional ground raised by the assessee cannot be sustained. It is not at all the case of the assessee that there is any objection to the applicability of Chapter X of the I. T. Act. Hence, on the anvil of the above said Hon'ble jurisdictional High Court decision, this additional ground raised by the assessee deserves to be dismissed. Adjustment to the international transactions relating to export of goods - MAM selection - TNMM or CUP method - rejecting the TNMM method in the present year - Held that:- ransfer Pricing Officer has proceeded to examine the issue on the basis of TNMM method. He has ordered for updated data of comparable. Thereafter, when even on the basis of updated data, the international transaction was found to be at arm’s length, he laconically held that CUP method would be preferred. The DRP had summarily upheld the change from TNMM to CUP method without assigning any cogent reason whatsoever. By no means it is justified to keep on finding a method for addition by trial and error method. Accordingly, we hold that there was no justification in rejecting the TNMM method applied by the assessee as in the preceding year. Since as per the same computation the assessee’s margin was found to be at arm’s length, we set aside the order of authorities below and decide the issue in favour of the assessee. Adjustment to the international transaction relating to corporate guarantee - Held that:- DRP has carefully examined the issue and passed a reasonable order. A downward adjustment to the naked quotes of the rates of bank Guarantee has been done in this year, while benchmarking the transaction. It is seen that the bank guarantee rates vary generally between 1% to 3% giving an average of about 2.0%. Accordingly, it would be appropriate to charge a corporate guarantee of 1.5% from the AE. Disallowance u/s 14A - whether no exempt income has been earned? - Held that:- In the present case, the assessee’s contention is that it has not earned any dividend income from its subsidiary company in India. As regards the income from foreign subsidiary it has been submitted that the same is subject to tax u/s. 115BBD of the Act. We find that principally we are in agreement with the above said submissions of the ld. Counsel of the assessee. However, since the above requires factual examination of the contention that no dividend income has been received from the subsidiary companies in India and dividend income from foreign subsidiary are already subject to tax, the issue is remitted to the file of the Assessing Officer. The Assessing Officer shall examine the veracity of the above submissions and thereafter grant the assessee necessary relief, as per law. Disallowance u/s. 35(2AB) - benefit of weighted deduction - assessee submitted that the said certificate could not be produced before the authorities below as the same was received late - Held that:- As the assessee has made additional submissions, which needs to be verified at the Assessing Officer’s level. Hence, we remit this issue to the Assessing Officer to consider the same afresh in light of submission being made by the assessee.
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