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2020 (8) TMI 173 - AT - Income TaxDisallowance u/s 14A r.w.r 8D - HELD THAT:- As the investments from which the tax-free income is earned were made from the appellant’s own surplus funds/accumulated profits, following the decision RELIANCE UTILITIES & POWER LTD. [2009 (1) TMI 4 - BOMBAY HIGH COURT] AND HDFC BANK LTD. [2016 (3) TMI 755 - BOMBAY HIGH COURT] we delete the disallowance made under Rule 8D(2)(ii). Disallowance under Rule 8D(2)(iii) - In the instant case, the appellant has not maintained separate books of accounts in respect of exempt income. It is relevant to mention here that Rule 8D was notified by Central Board of Direct Taxes (CBDT) by the IT (5th Amdt) Rules, 2008 w.e.f. 24.03.2008.Thus it is applicable for the impugned assessment year. The reliance placed by the Ld. counsel for AY 2007-08 stands on a different pedestal from AY 2008- 09. Considerig the case of GODREJ AND BOYCE MFG. CO. LTD. VERSUS DEPUTY COMMISSIONER OF INCOME-TAX AND ANOTHER [2010 (8) TMI 77 - BOMBAY HIGH COURT] addition confirmed - Decided partly in favour of assessee. Nature of expenditure - reduction of share capital of the company - revenue or capital expenditure - HELD THAT:- In the instant case, as recorded by the AO, the assessee incurred mainly of professional charges, legal charges, postage, printing etc. Herein there is a reduction of share capital which has resulted in decrease in fund. The appellant has neither acquired any benefit of enduring nature nor has such expenditure resulted into any asset. We are of the considered view that the ratio laid down in Selan Exploration Technology Ltd. [2009 (9) TMI 989 - DELHI HIGH COURT] after considering the decision in Brooke Bond India Ltd. [1997 (2) TMI 11 - SUPREME COURT] squarely applies to the present case. Following the same, we delete the disallowance. TP Adjustment - upward adjustment in respect of advertisement, marketing and sales promotion ('AMP') expenses - HELD THAT:- In the absence of agreement between the assessee and its AE obliging the assessee to incur AMP expenditure on behalf of its AE, no international transaction can be presumed. Even if some indirect benefit has accrued to the AE by aforesaid expenditure, it could not be held that the same was incurred to promote the brand of foreign AE. - As relying on own case we delete the upward adjustment TP Adjustment - comparability - HELD THAT:- Under Rule 10C(2)(b) in selecting the most appropriate method, among other factors, the class or classes of associated enterprises entering into the transaction and the functions performed by them taking into account assets employed or to be employed and risks assumed by such enterprises, shall be taken into account. And under Rule 10B(2)(b), the comparability of an international transaction with an uncontrolled transaction shall be judged, among other factors, with reference to the functions performed, taking into account assets employed or to be employed and risks assumed by the respective parties to the transactions. Comparability of Dolphin Medical Services Ltd. and Medinova Diagnostic Services Ltd. need to be re-examined by the AO/TPO.
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