Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2019 (2) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2019 (2) TMI 351 - AT - Income TaxTP adjustment for payment of commission to Associate Enterprises (AEs) - TPO has not accepted the international transaction of the assessee to be at arm’s length - Held that:- The facts on record shows that there is a commission agreement dated 01.12.2007 between the assessee and TTPL. That on examining the clauses contained therein and after giving considerable thought on those clauses, it is crystal clear that TTPL was facilitating the purchases in respect of the assessee from Dassault UK. It was the responsibility of TTPL to undertake marketing efforts through telemarketing and inbound inquiries through its dedicated support. TTPL also worked towards maintenance of relationship with the key global customers of the assessee. The agreement also specifies that the said service through TTPL was at arm’s length commission @6%. Before us, it is demonstrated by the Ld. AR through a series of emails exchanges between the assessee, TTPL and Dassault UK. This evidence demonstrates that purchases of software licenses were done by the assessee from Dassault UK and TTPL was facilitating the entire process and ensuring the smooth selling of the transaction. These are sufficient evidence to demonstrate the services rendered by the TTPL for which commission payment was made to the AE. Taking the practicability of the business in to consideration, these are the tangible evidence that can be placed on record which the assessee has done in order to justify the commission payment. There is copy of commission agreement. There is also no objection letter and series of emails exchanged involving all the concerned parties. We are of considered view that arm’s length commission @6% to TTPL is justified and we direct the TPO to determine the arm’s length commission of the international transaction accordingly. Thus, grounds of appeal No. 1 to 5 and 8 raised by the assessee are allowed. Disallowance u/s.14A r.w. Rule 8D - Held that:- With regard to the interest income part as contemplated under Rule 8D(ii) and with regard to the investment which yielded exempt income which are to be considered while calculating disallowance under Rule 8D(2)(iii). These aspects have to be verified in detailed. Therefore, we are of considered view that this issue is restored back to the file of Assessing Officer for verification and re-adjudication of the same after providing reasonable opportunity of hearing to the assessee. Accordingly, ground No.11 raised in appeal by the assessee is allowed for statistical purposes. Provision for written back for Mediclaim Insurance Scheme (Medicare) for employees not to be considered as taxable income - Held that:- Assessing Officer has already disallowed such provision for those years, then in the present year when the assessee has specifically offered this to tax in return of income, the same should not be taxed again by the Assessing Officer. Therefore, this issue needs to be verified. Accordingly, this matter is restored back to the file of Assessing Officer for verification and re-adjudication after following the principles of natural justice. The Assessing Officer shall grant reasonable opportunity of hearing to the assessee. Enhanced deduction u/s.10A - Held that:- We are inclined to go with the view of the DRP on this issue. We observe that within the parameter of Income Tax Act, 1961, as per Section 92C(4) of the Act, TP addition has to be separately done, whatever may be the addition in respect of other aspects but that cannot be brought together with TP adjustment or addition. Therefore, it does not qualify for enhanced deduction u/s.10A of the Act - decided against assessee.
|