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2022 (11) TMI 179 - AT - Income TaxTP adjustment - Validity of direction of DRP after the assessment order was passed - DRP has revised the TP adjustment - As argued final assessment order is not in accordance with the directions of the DRP - HELD THAT:- We notice that the DRP gave clear directions to the TPO to re-examine the inclusion of M/s. Archroma India Pvt Ltd and M/s. Tarak Chemicals Limited and has also directed for the exclusion of M/s. Sirea India Private Ltd. This would mean that the TP adjustment should be recomputed and thus should undergo change. This is supported by the fact that the jurisdictional AO in the OGE to the directions of the DRP has revised the TP adjustment - However, in the final assessment order passed by NFAC hich is passed prior to TPO’s order revising the TP adjustment, the AO has retained the same TP adjustment amount as in the draft assessment order by observing that the DRP has confirmed the addition made by the TPO. From these facts, it becomes clear that the final assessment order passed by the NFAC to the extent of TP adjustment is not in accordance with the directions of the DRP and to this extent, the TP adjustment is quashed. We see merit in the contention that the jurisdictional AO has become functus officio once the final assessment order is passed and that there is no authority for him to pass any order modifying the final assessment order. We therefore hold that the order passed by the jurisdictional AO giving effect to the revised TP adjustment is not sustainable in law and is infructuous. TP adjustment is quashed on the basis that the final assessment order is not in accordance with the directions of the DRP - This ground of the assessee is allowed. Disallowance u/s. 14A - assessee is contending the disallowance as assessee has not earned any exempt income, investments are out of own funds and assessee has not incurred any specific expenditure towards investments - HELD THAT:- Considering the fact that the assessee has not earned any exempt income during the year under consideration and respectfully following the decision of the Hon’ble Delhi High Court in the case of Era Infrastructure India Ltd. [2022 (7) TMI 1093 - DELHI HIGH COURT]. we hold that no disallowance is warranted u/s.14A and delete the disallowance made in this regard.
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