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2018 (6) TMI 1501 - AT - Income TaxTransfer pricing adjustment to the international transaction of intragroup services - Held that:- Intragroup services involved in the year under consideration are identical to the facts and circumstances and the intragroup services availed in assessment year 2012-13 it is expected from the assessee for proper benchmarking to lead evidence with respect to each of the nature of services with respect to each class of services mentioned in the above chart with corresponding manner of rendering of the services, the time lag of initiation of services and closure of the services. The evidences produced are apparently very general and do not show the rendering of the services. We set aside the appeal of the assessee to the file of TPO/AO for verifying the evidence of rendering of the services by the AE with respect to nature of each of the services listed in the agreement. The assessee is also further directed to lead proper and credible evidence with respect to nature of services and how and when those services have been rendered by the AE. It is also made clear that AO shall not question the need and benefit arising out of these services as the same have been conclusively decided by the order of the coordinate bench for earlier years in the case of the assessee itself. Appeal of the assessee with respect to ground No. 1, 2, and 3 are allowed with above direction accordingly. Addition made on account of fall in gross profit of the assessee - Held that:- It is evident that the Assessing Officer has neither invoked section 145 (3) nor rejected books of accounts of the assessee. In such circumstances, we do not understand as how the Assessing Officer has made addition for decrease in gross profit rate during the year under consideration. In the normal business, it is not necessary that always the gross profit rate will be steady and it may increase or decrease depending on the prevailing business atmosphere. Without rejecting books of accounts of the assessee, the Assessing Officer cannot tweak with the gross profit rate declared by the assessee. We direct the Assessing Officer to delete the said addition. Disallowance of expenditure in respect of intra-group services made under section 37(1) - Held that:- We find that though the transfer pricing addition for intra-group services has been made, but no disallowance under section 37(1) has been made on protective or otherwise basis in those years. Thus, the Revenue has in earlier and subsequent year accepted this position that no such disallowance is required. The facts and circumstances in the year under consideration on the issue in dispute are identical to the earlier and subsequent assessment years and the Revenue has accepted that no disallowance under section 37(1) is required, in such circumstances, the Revenue cannot insist for sustaining the addition in view of the rule of consistency - Appeal of the assessee is partly allowed for the statistical purposes.
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