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2019 (8) TMI 922 - AT - Income TaxTP Adjustment to ALP in relation to Intra Group Services - as per assessee TPO had failed to apply any method while determining the ALP at nil for GIS services and on adhoc basis towards MSF services @ 20% and MNC services @ 50% - HELD THAT:- We find that provisions of Section 92C(1) mandates adoption of one of the prescribed method mentioned therein for determining the ALP of international transactions. It is not in dispute that the disallowances/ adjustments made by the ld. TPO to ALP were made without following any of the prescribed methods as per law. Once a reference is received by the TPO u/s.92CA(1) from the ld. AO, the ld. TPO is required to determine the ALP of the international transaction as per the provisions contained in Section 92C and 92CA read with relevant rules thereon. Duty of the TPO is restricted only to the determination of the arm’s length price of an international transaction between two related parties by applying any of the methods prescribed u/s.92C of the Act read with rule 10B of the rules. Thus, there is no provision made in the statute empowering ld. TPO for determining the ALP on a particular international transaction on an estimation basis / adhoc basis. As relying on M/S. JOHNSON & JOHNSON LTD. [2017 (3) TMI 1520 - BOMBAY HIGH COURT] we have no hesitation in directing the ld. TPO to delete adjustment made to ALP in respect of aforesaid three services viz., GIS services (₹ 62,95,226/-), MSF Services (₹ 7,88,90,157/-) and MNC Services (₹ 19,29,008/-). Accordingly, grounds raised by the assessee are allowed on this technical aspect and grounds raised by the revenue are dismissed on this technical aspect. Addition on account of non-reconciliation of Form 26AS with the return of income - business of advertisement agency - HELD THAT:- We find that the details of reconciliation statement submitted by the assessee are enclosed in pages 1053,1055,1071 of the paper book wherein we find that assessee had reconciled certain specific client balances such as ITC Limited, Tata Global Beverages Limited etc., The ld. AR contended before us that assessee is an advertisement agency and is engaged in activities of releasing advertisements on behalf of clients and production of advertisement for clients. The assessee earns revenue either in the form of commission or fees. The income in the case of commission is only a specified percentage of the gross billing, accordingly, the assessee reports only the commission portion as its income in its P & L account and not the gross receipts. Hence, there is always bound to be difference with regard to the amounts reflected in the Form 26AS vis-à-vis books of accounts of the assessee with regard to this aspect of the transaction. Assessee had identified the difference in amounts with respect to various parties which are detailed in pages 84 & 85 of the appeal set. The assessee does not deny having transactions with these parties. It is only the amount which is reflected in Form 26AS against the names of said parties which the assessee was not able to reconcile. We find that the explanation given by the assessee is reasonable and it is highly impracticable for reconciling the same in this scenario. We are inclined to accept argument of the ld. AR that income offered by the assessee is much more than what is reflected in Form 26AS. Thus we direct the ld. AO to delete the addition made in the sum of ₹ 8,25,869/-. Accordingly, ground No.3 raised by the assessee is allowed. Chargeability of interest u/s.234D is consequential in nature. We also direct the ld. AO to verify whether at all any refund was actually granted to the assessee or adjusted with tax arrears with due intimation to the assessee before deciding the levy of interest u/s.234D of the Act. Accordingly, the ground No.4 raised by the assessee is allowed for statistical purpose.
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