Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2021 (11) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2021 (11) TMI 678 - AT - Income TaxTP Adjustment managerial fees paid by the assessee to its AE - selection of MAM - HELD THAT:- No doubt, once aggregate transactions of the assessee with its AEs has been tested by applying TNMM as most appropriate method, then the Assessing Officer/TPO cannot pick few transactions and apply different method to determine arm's length price. We are fully in agreement with said proposition. Whether payment made by the assessee to its AE for managerial services is in fact, incurred wholly and exclusively for the purpose of business and further said expenditure is supported by necessary evidence or not? - On perusal of facts available on record and on the basis of facts brought out by authorities below, we are of the considered view that the assessee has failed to bring on record any evidences to justify payment of management fees. Therefore, we are of the considered view that case laws relied upon by the assessee on the issue of necessity of availing services and question of cost benefit analysis of said expenditure has no application to present issue on hand. There is no error in reasons given by ld. TPO/DRP in making TP adjustments for payment of managerial services fee to its AE. Therefore, we are inclined to uphold findings of the learned DRP and reject grounds taken by the assessee. TDS deducted on interest paid to AE on External Commercial Borrowings - disallowance of grossed up portion of TDS on payment of interest on external commercial borrowings - HELD THAT:- From the conditions of agreement between parties, it is very clear that tax liability, if any, on interest paid to lender is responsibility of lender. However, the assessee should deduct applicable tax deducted at source as per law, remit the same to Govt. treasury and furnish proof to lender. In this case, the assessee has deducted TDS on interest payment. But, instead of reducing it from payment made to the AE, has grossed up TDS portion to interest paid to AE and claimed as deduction. In our view, procedure followed by the assessee for grossing up of interest is contrary to agreement between the parties and also contrary to provisions of law. Therefore, we are of the considered view that there is no error in the reasons given by the learned TPO/DRP in disallowing grossed up portion of TDS deducted on interest paid to AE on External Commercial Borrowings. Hence, we are inclined to uphold findings of the learned DRP and reject ground taken by the assessee.
|