Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2022 (12) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2022 (12) TMI 168 - AT - Income TaxTP adjustment in relation to security support services provided to AE - Comparable selection - HELD THAT:- We observe that the comparables selected by the TPO i.e., Rites Ltd, Vapi Waste and Wapcos are government owned entities and the companies are held to be functionally different to the assessee by the Coordinate Bench in the group concern of the assessee in Novartis Healthcare Pvt. Ltd. [2015 (7) TMI 42 - ITAT MUMBAI] We direct the TPO/AO to recompute/determine the arms length price after exclusion of three companies as discussed in the above decision. The assessee has claimed that after the exclusion of these three companies the mean margin of the remaining comparables comes to 17.92% in comparison to the segmental level margin of the assessee at 15% which is in the tolerance range of + 5%, therefore it is claimed that no adjustment is called for. The TPO/Assessing Officer is directed to consider this aspect at the time of recomputation of the arms length price. Accordingly, ground raised by the assessee is allowed for statistical purpose. Disallowance of depreciation claimed on assets vested to CIBA Specialty Chemicals (India) Ltd pursuant to Demerger - HELD THAT:- As the assets in the block has to be evaluated every assessment year and as per provision 43(6)(C)(B), it clearly indicates that the value has to be reduced of the moneys payable in respective of any assets falling within that block which is sold/discarded/demolished or destroyed. In the given case, the block does not consist the assets, which are transferred in the demerger in the A.Y. 1997-98. However, these particular assets are not in existence in the beginning of the year and it can be considered as discarded in the provisions with “NIL” value. This issue needs to end some point of time. In that case, the value of the assets has to be written off this year and to be claimed as loss in the statement of income (instead of depreciation). Therefore, we are inclined to direct the Assessing Officer to treat the opening balance of the assets to the extent of assets, which was already transferred to the demerged company as loss of assets or discarded. Accordingly, this ground of appeal filed by the assessee is partly allowed. Disallowance of expenditure on incurred on production of advertisement films - HELD THAT:- On a careful reading of the above order of the Tribunal, we observe that Coordinate Bench decided the issue in favour of the assessee by following the decision of the Hon'ble Bombay High Court in the case of Geoffrey Manners & Co. Ltd. [2009 (2) TMI 13 - BOMBAY HIGH COURT] Since the issue is exactly similar and grounds as well as the facts are also identical, respectfully following the above decision in assessee’s own case for the A.Y. 2001-02, we allow the ground raised by the assessee. Disallowance of expenditure incurred on computer software/license fees - HELD THAT:- We further observe that on identical issue Coordinate Bench decided the issue in favour of the assessee in assessee’s own case for the A.Y. 2001-02 [2021 (4) TMI 1346 - ITAT MUMBAI] Addition of secondary freight to the closing stock - Adhoc disallowance of 25% of foreign travel expenses, Disallowance of incremental liability on account of pension payable under the erstwhile Voluntary Retirement Scheme - HELD THAT:- Since the issue is exactly similar and grounds as well as the facts are also identical, respectfully following the above decision in assessee’s own case for the A.Y. 2001-02 [2021 (4) TMI 1346 - ITAT MUMBAI] and also following consistent stand of the Tribunal, we allow the ground raised by the assessee. Adjustment of excess and short year-end provision - AR submitted that the assessee makes provisions in its books of accounts based on various services/benefits received by it - HELD THAT:- We observe that there are two types of provisions accounted at the year end, first is the related expenses for the year under consideration without ascertaining the portion/head of expenses or the actual value. In the second type of provisions, the portion/head of expenses are ascertained but the actual value of the expenses are estimated. The assessee regularly follows the procedure of creating provisions and suomoto disallows the expenditure which are excessive in the next assessment year. The historical data shows that the assessee makes the adjustment every year which are in the range of 7-8% and it consistently follows the same and if there is short, it accounts the same in the with next assessment year. It will have tax neutral effect considering the fact that the same rate of tax are applicable. We observe that in the case of Rotork Controls India (P) Limited [2009 (5) TMI 16 - SUPREME COURT] the ground raised by the assessee is allowed. Disallowance under section 14A read with rule 8D - AR submitted that Assessing Officer has not recorded satisfaction even though assessee has suomoto disallowed certain expenditure - HELD THAT:- We observe from the Assessment Order that Assessing Officer has clearly considered the submissions of the assessee relating to the 14A. AO has clearly discussed the issue relating to 14A disallowance and discussed specifically why he has imposed 14A in this case. There is no specific format for recording satisfaction. In the case of Mak Data P. Ltd. [2013 (11) TMI 14 - SUPREME COURT] held that Assessing Officer is not required to record his satisfaction in a particular manner or reduce it with writing (even though on the issue of section 271(1)(c) of the Act). In our considered view, as per the Assessment Order, the reasons recorded by the Assessing Officer for invoking Rule 8D are proper satisfaction and the cases relied by the assessee are distinguishable. Accordingly, this ground is dismissed. Short grant of TDS Credit - assessee has filed rectification application under section 154 [against the assessment order under section 143(3) read with section 144C(13) and [against intimation under section 143(1) of the Act - HELD THAT:- We observe that AO has completed Assessment under section 143(3) r.w.s 144C(13) of the Act. Therefore, certain informations were not available with him at the time of completion of the final Assessment Order. Assessee has filed rectification application u/s. 154 of the Act and it is the duty imposed on the Assessing Officer to complete the rectification process within six months. Even otherwise the Assessing Officer should have intimated the same. Therefore, we are inclined to remit this issue back to the file of the Assessing Officer to verify the claim of the assessee as per the Act after giving them a proper opportunity of being heard and we direct the Assessing Officer to complete the rectification within one month on receipt of this order. Accordingly, ground raised by the assessee is allowed for statistical purpose.
|