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2019 (7) TMI 1314 - AT - Income TaxTP Adjustment - in relation to export of finished goods - HELD THAT:- In assessee’s own case for AY 2013-14 in [2019 (2) TMI 1666 - ITAT MUMBAI] had an occasion to consider an identical issue in light of the facts brought out by the AO and rule 10B of I.T. Rules, 1962 and held that while considering the issue of comparability with an uncontrolled transaction, the condition prevailing in the market for which the respective parties to the transaction operate, including the geographical location alongwith other factors relevant to decide which method is suitable for benchmarking transaction. We are of the considered view that the TPO as well as the Ld.DRP were erred in applying CUP as most appropriate method to determine the arm’s length price of transactions of the assessee with its AEs for sale of finished goods. Accordingly, we direct the AO / TPO to delete TP adjustment of ₹ 3,18,81,702 in relation to export of finished goods. Payment of royalties for use of technical know how - HELD THAT:- We find that the Tribunal had an occasion to consider an identical issue in assessee’s own case for AY 2013-14 [2019 (2) TMI 1666 - ITAT MUMBAI] and after considering relevant submissions of the assessee and also by following its earlier order in assessee’s own case for AY 2012-13 held that CUP is not most appropriate method for benchmarking royalty payment for use of technical know how because of geographical differences. We direct the AO / TPO to delete TP adjustment in relation to payment of royalty for use of technical know how. Payment of interest on external commercial borrowings (ECB) loan - HELD THAT:- As in assessee’s own case for AY 2013-14 [2019 (2) TMI 1666 - ITAT MUMBAI] had considered an identical issue and by following its earlier decision in the case of ION Exchange India Ltd vs ADIT [2014 (2) TMI 1331 - ITAT MUMBAI] held that arm’s length price of the interest to be charged on the ECB loan availed from the AE has to be determined at six months USD LIBOR rate (+) 300 points. We direct the AO / TPO to delete TP adjustment made in relation to payment of interest on external commercial borrowing loan. TP adjustment in relation to availing of information systems (IS) services - HELD THAT:- We find that the coordinate bench of the ITAT, Mumbai Bench “K” in assessee’s own case for AY 2012-13 [2018 (9) TMI 1007 - ITAT MUMBAI] had considered an identical issue. We further noted that the Tribunal in assessee’s own case for AY 2013-14, after considering relevant facts, held that the TPO was erred in not following any one of the most appropriate method prescribed under the statute to determine arm’s length price of international transactions of the assessee with its AE, but made adjustment on an adhoc or estimate basis without any valid reasons. We direct the AO / TPO to delete TP adjustment in relation to availing of information system services. Disallowance in respect of employees contribution to provident fund - not paid within the due dates specified under the respective Act u/s 2(24)(x) r.w. Explanation to section 36(1)(viia) - HELD THAT:- This legal proposition is supported by the decision of Hon’ble Bombay High Court in the case of CIT vs Ghatge Patil Transport [2014 (10) TMI 402 - BOMBAY HIGH COURT] . This legal proposition is further supported by the decision in the case of CIT vs Jaipur Vidyut Vitran Nigam Ltd [2018 (7) TMI 1327 - SC ORDER] where the Hon’ble Supreme Court has dismissed SLP filed by the revenue against the decision of Hon’ble Rajasthan High Court [2014 (1) TMI 1085 - RAJASTHAN HIGH COURT] by holding that amount claimed on payment of PF & ESI having been deposited on or before due date of filing of return, same cannot be disallowed u/s 43B or u/s 36(1)(viia). In this view of the matter and respectfully following the case laws discussed hereinabove, we are of the considered view that the AO was erred in disallowing employees contribution to PF u/s 43B, even though such payment has been made on or before due date of filing return of income u/s 139(1) . Hence, we direct the AO to delete addition made towards disallowance of employees contribution to PF.
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