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2021 (8) TMI 1213 - AT - Income TaxRevision u/s 263 by CIT - Addition u/s 40(a)(ia) - assessee had claimed expenditure of Corporate Management Services paid to its AE - claim so made included 'year-end' provision made for an outstanding and assessee voluntarily disallowed above said amount u/s. 40(a)(i) - TPO determined ALP of Corporate Management services at NIL. and while computing TP adjustment, he reduced the amount voluntarily disallowed u/s. 40(a) - HELD THAT:- There should not be any dispute that the claim of the assessee is as per the provisions of sec. 40(a) of the Act - under Explanation to section 92(1) of the Act, the allowance for any expense shall also be determined having regard to arms length price - TPO has determined the arms length price at NIL in AY 2009-10, the entire claim made in the profit and loss account should have been considered as transfer pricing adjustment - TPO has reduced the amount disallowed u/s. 40(a) and made transfer pricing adjustment for the balance amount only in AY 2009-10 The question of making disallowance u/s. 40(a) shall apply, only if the relevant expenditure was found to be allowable, but for the provisions of sec. 40(a). Hence the action of TPO in reducing the T.P adjustment amount by the disallowance made u/s. 40(a) may not be right and in that case, the error lies in AY 2009-10. Having not done so, the Ld. CIT should not find fault with the claim of the assessee made u/s. 40(a) of the Act on the reasoning that the TDS has been made in this year, i.e., in AY 2010-11. the order passed by Ld. CIT(A) on this issue cannot be sustained. Foreign services Employees expenses - TPO had determined ALP of intra group services at NIL - AR also took us through the query posed by the TPO during the course of TP proceedings. TPO has specifically asked whether the assessee is claiming any reimbursements as expenses without routing though the Profit and Loss account? - The assessee has also furnished reply to the same stating that reimbursement claims have been routed through the Profit and Loss account, meaning thereby, the TPO has specifically applied his mind on this issue. Hence the TPO has examined this issue and has taken a possible view, in which case, the revision order passed by Ld. CIT on this issue is also liable to be quashed. In the case of Malabar Industrial Co Ltd. as [2000 (2) TMI 10 - SUPREME COURT] as expressed the view that the assessment order cannot be considered to be prejudicial to the interests of revenue, if the AO has taken a plausible view - impugned revision order is not sustainable in law. - Decided in favour of assessee.
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