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2019 (2) TMI 796 - AT - Income TaxTPA - transaction of freight forwarding and cargo handling services - TPO held that since the freight cost is a key driver as such, same should be used as diagnostic tool for selection of the comparable and therefore he applied a filter of freight cost/freight income - Held that:- TPO held that since the freight cost/freight income of the assessee is 80.90% as such, he applied a range of 75%-85% (freight cost/freight income) for selection of the comparables. While doing so, the TPO has not looked into the functions of the comparable i.e. Balmer, Lawrie & Co. Ltd. In fact, the TPO’s own filters are not in proportionate with the range of 75%-85% (freight cost/freight income) for selection of the said comparable. Therefore, we direct the TPO/AO to exclude this comparable from the list of the comparables. Addition u/s 14A - Held that:- The assessee claimed that no expenditure was incurred to earn the exempt income. In fact, assessee could not establish that it has not claimed any expenditure on exempt income. Therefore, we do not see any valid ground to interfere in the findings given by the Assessing Officer. Ground No. 2 is dismissed. Tansfer pricing relating to intra group services - Held that:- TPO accepted that services were rendered and received by the assessee. Once the rendering and receiving of the services were not disputed which is supported by the evidences, the TPO is not correct in holding that arms length value of the management fee is Nil and accordingly making an upward adjustment. Therefore, the finding of the TPO is not correct and this addition does not sustain. Ground No. 1 is allowed. Disallowance u/s 14A - AR submitted that no further investment has been made and therefore no expense incurred. The change in investment balance is on account of re-investment of dividend income - Held that:- It is pertinent to note that no further investment has been made and therefore no expense incurred. The change in investment balance is on account of re-investment of dividend income, since the “ABN AMRO Cash Mutual Fund” plan was a Dividend Reinvestment Plan. Thus, Ground No. 2 is allowed.
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