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2020 (2) TMI 509 - AT - Income TaxTP Adjustment - Addition towards compensation for advertisement, marketing and promotion (AMP) expenses - HELD THAT:- As relying on assessee's own case [2019 (10) TMI 1070 - ITAT KOLKATA] we delete the addition made by AO/TPO on account of compensation for advertising, marketing and promotion expenses (AMP Expenses). Therefore, ground raised by the assessee is allowed. Determining arm’s length price of intra-group services in respect of support services received from its AEs as Nil - HELD THAT:- As relying on assessee's own case [2019 (10) TMI 1070 - ITAT KOLKATA] we restore this issue back to the file of the A.O/TPO. Therefore, grounds raised by the assessee is allowed for statistical purposes. Transfer pricing adjustment towards contract research and development services rendered to the AE - HELD THAT:- As decide on assessee's own case [2019 (10) TMI 1070 - ITAT KOLKATA] Adjustment made by TPO towards contract Research & Development Service (Contract R&D) rendered to the AE is erroneous for not taking into consideration the Tribunal’s decision in assessee’s sister concern M/s. Akzo Novel Car Refinishes India Pvt. Ltd. wherein the Tribunal while adjudicating similar issue has excluded Pharma Companies from the list of comparables and which action of Tribunal has been followed by the Ld. DRP in assessee’s own case for AY 2014-15. If that is the case, then we are inclined to set aside the impugned order and remand the issue back to the Ld. TPO for fresh consideration Transfer pricing adjustment towards research & training expenditure provided by the assessee to its AE for development and improvement of product of AEs - HELD THAT:- As relying on assessee's own case [2019 (10) TMI 1070 - ITAT KOLKATA] we delete the addition made by AO/TPO on account of transfer pricing adjustment towards research & training expenditure provided by the assessee to its AE for development and improvement of product of AEs. Therefore, ground raised by the assessee is allowed. Disallowance of expenses u/s 37(1) - said expenses are not in the nature of advertisement and publicity - HELD THAT:- Revenue submitted that since the assessee has failed to produce the evidence/documents relating to these expenses during the assessment stage therefore the Assessing Officer could not verify the nature of these expenses whether they are under the head of ‘advertisement and publicity’ or whether they will fall under the ceiling of distribution expenses. Therefore, we are of the view that one more opportunity should be given by the assessee to explain the nature of these expenses before the Assessing Officer and therefore we direct the Assessing Officer to examine these expenses and adjudicate the issue in accordance with law. The ld. DR has no objection if the issue is remitted back to the file of Assessing Officer. Therefore we set aside the order of ld. DRP/A.O on this particular issue and remit the issue back to the file of the Assessing Officer to examine these expenses and adjudicate the issue in accordance with law. For statistical purposes, this ground of the assessee is allowed. Disallowance of expenditure u/s 14A - HELD THAT:- ITAT Kolkata in the case of REI Agro Ltd. Vs. DCIT [2013 (9) TMI 156 - ITAT KOLKATA] has held that it is only the investments which yields dividend during the previous year that has to be considered while adopting the average value of investments for the purpose of Rule 8D(2)(ii) & (iii) of the Rules. The aforesaid view of the Tribunal has since been affirmed as correct by the Hon'ble Calcutta High Court in the case of REI Agro Ltd. [2014 (4) TMI 713 - CALCUTTA HIGH COURT] . Therefore, we direct the AO to compute the disallowance under rule 8D(2)(iii) of the rules by taking into account dividend bearing securities. Disallowance of expenditure u/s 14A of the Act while computing book profit u/s 115JB - HELD THAT:- The provisions of section 115JB relating to computation of book profit are amply clear and unambiguous. These provisions do not leave any room for adjustment by the assessing officer other than those mentioned in Explanation 1 to section 115JB to the net profit reflected in the accounts of any assessee and adjustment by way of disallowance u/s 14A is not included in the said explanation. This issue is also covered by the judgment of the Special Bench of Tribunal in the case of ACIT Vs. Vireet Investments (P) Ltd [2017 (6) TMI 1124 - ITAT DELHI] . Therefore, we direct the AO/TPO not to consider disallowance u/s 14A, while computing book profit u/s 115JB of the Act.
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