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2022 (8) TMI 1272 - AT - Income TaxTP Adjustment - payment of royalty @ 1% - HELD THAT:- As in assessee’s own case for assessment year 2012- 2013 [2022 (2) TMI 1279 - ITAT BANGALORE] we hold that payment of royalty at 4% on sale is to be treated at arm’s length. It is ordered accordingly. TP Adjustment being payments made towards fees for technical services - HELD THAT:- There is no merit in the finding of the TPO that the payment of technical services fees is already covered by the royalty payment. Similarly, the TPO has not explained on what basis and under which method of computation of ALP (CUP, TNMM etc) 1 % is to be determined as the ALP for the payment of engineering and technical services fees. The aggregation of these transactions with other transactions on account of close linkage to the manufacturing operations, thereby warranting the application of TNMM has not been found fault or disputed by the TPO. Having found that payment for fees for technical service is not duplication of payment of Royalty and the factum of assessee having received the services from the AEs for which the payments were made, the AO / TPO is directed to revisit the TP analysis of the assessee and determine whether payments are at ALP. TPO shall follow one of the prescribed methods to arrive at ALP of payments towards fees for technical service. TP Adjustment on payments of interest on Compulsory Convertible Debentures (CCDS) - HELD THAT:- Tribunal, in assessee’s own case [2022 (2) TMI 1279 - ITAT BANGALORE] the issue raised with regard to payment of interest on CCDs is decided in favour of the assessee. Disallowance u/s 14A in computation of total income under regular provisions and book profits - HELD THAT:- In the present case, the AO has recorded vague, stereotyped reasons de hors the accounts of the assessee for making the disallowance under section 14A. There is no satisfaction of the AO having regard to the accounts of the assessee - in the case of CIT v. Gokaldas Images P Ltd. [2020 (11) TMI 345 - KARNATAKA HIGH COURT] has held that disallowance u/s 14A cannot be added to book profits of assessee under section 115JB. We delete the disallowance made under section 14A in computing the total income under regular provisions and book profits under section 115JB. Disallowance u/s 37 - being foreign exchange fluctuation loss incurred in respect of loans availed - HELD THAT:- As in assessee’s own case AY 2012- 2013[2022 (2) TMI 1279 - ITAT BANGALORE] the issue raised in ground with regard to disallowance of loss incurred on fluctuation of foreign currency is decided in favour of the assessee.
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