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2023 (1) TMI 1197 - AT - Income TaxTP Adjustment - International transaction involving AMP expenses - difference in the arms length price (ALP) of advertisement, marketing and promotion (AMP) expenses allegedly incurred on behalf of AE - HELD THAT:- After hearing the parties at length, the Hon'ble Delhi High Court including the decision in case of Maruti Suzuki India Ltd. [2015 (12) TMI 634 - DELHI HIGH COURT] and held that the Revenue was unable to make out a case that there is an international transaction involving AMP expenses between the assessee and its AE. As observed, following the aforesaid decision of the Hon'ble Delhi High Court, the Tribunal held that AMP expenses incurred by the assessee cannot be treated as international transaction. Considering the fact that the issue is pending before the Hon'ble Supreme Court by way of an SLP filed by the Revenue, the Tribunal restored the issue back to the AO to decide afresh after considering the decision of the Hon'ble Supreme Court. In the context of the aforesaid decision of the Tribunal, learned Departmental Representative has submitted before us to remit the issue to the Assessing Officer. However, we have observed, while deciding identical issue in assessee’s own case in assessment year 2015-16 [2020 (1) TMI 861 - ITAT DELHI] the Tribunal has decided the issue in favour of the assessee. Disallowance Being expenditure incurred on credit card - HELD THAT:- It is evident, in compliance with the directions of learned DRP, the AO has accepted major part of the expenditure incurred by the assessee. However, he disallowed an amount alleging a difference between the payment actually made as per the assessee and payment as per AIR information, which the assessee failed to reconcile. Before us, it is the contention of the learned counsel for the assessee that the actual difference would work out to an amount. Keeping the assessee, we restore the issue back to the AO for verifying the factual details filed by the assessee and thereafter restrict the disallowance to the actual difference which the assessee will be unable to reconcile. This ground is allowed for statistical purposes. Disallowance being expenditure on account of daughter’s marriage fund - HELD THAT:- It is a common point between the parties that the Tribunal has decided identical issue in favour of the assessee in assessment year 2015-16. As could be seen from the facts on record, the assessee incurs certain expenditure, being payment made to employees to meet some part of the marriage expenditure of their daughter. It is observed while deciding identical issue in assessee’s own case in assessment year 2015-16, the Tribunal has restored the issue back to the Assessing Officer. Disallowance of loss claimed - AO noticed that the assessee has claimed expenditure under the head “extraordinary item” in the statement of profit and loss account - Being of the view that such claim is not allowable, the Assessing Officer disallowed it and the disallowance was also upheld by the learned DRP - HELD THAT:- The facts on record clearly reveal that the loss claimed by the assessee is only in the nature of a provision and is a projected figure. No material has been placed on record before us to demonstrate that the insurer has settled the claim in the financial year relevant to assessment year under dispute. On a specific query from the bench, learned counsel for the assessee has submitted that the insurance claim was settled in the next financial year relevant to assessment year 2017-18. Learned counsel was not able to furnish any documentary evidence, being any communication received from the insurer to demonstrate that the claim was settled at a particular amount in the impugned assessment year. This being the factual position emerging on record, it cannot be said that loss, if any, has crystallized in the impugned assessment year. In view of the aforesaid, we do not find any reason to interfere with the decision of the departmental authorities. Ground raised is dismissed. Disallowance being credit balance written back and treated as income under Section 41(1) - HELD THAT:- we restore the issue to the assessing officer for factually verifying assessee’s claim that amount in dispute has already been offered to tax as part of other income. In case, assessee’s claim is found to be correct, addition should be deleted. This ground is allowed for statistical purposes. Disallowance of the expenditure claimed towards travelling and conveyance - HELD THAT:- It is evident, the assessing officer has rejected a part of the expenditure incurred on conveyance and traveling purely on ad hoc basis. He has not pointed out any deficiency either in the accounts maintained by the assessee or the evidence furnished. When assessee’s books of account are under statutory audit, such ad hoc disallowance in absence of any valid reasoning is unsustainable. Accordingly, we delete the disallowance. This ground is allowed. Disallowance being expenses on account of presents/gifts and personnel compensation cost and personnel relocation expenses - HELD THAT:- The relocation expenses are incurred by the assessee at the time of relocation/transfer of the employees from one state to another. The expenditure on account of gifts and presents are incurred by assessee towards gifts given to employees, trade partners, distributors etc. at the time of festivals or office celebrations or at the time of marriage of the employees. Thus, considering the nature of expenditure incurred by assessee, it cannot be said that they are not wholly and exclusively for the purpose of business. After all, from the nature of expenditure incurred, it is very much clear that they are for the benefit of employees. That being the factual position emerging from record, disallowance made is unsustainable. Accordingly, we delete them. This ground is allowed. Double taxation under Section 90/91 - HELD THAT:- Considering the submissions of the parties and also the fact that similar nature of dispute arising in assessment year 2015-16 [2020 (1) TMI 861 - ITAT DELHI] was restored back to the Assessing Officer by the Tribunal, we are inclined to restore the issue back to Assessing Officer for fresh adjudication after factual verification. Needless to mention, assessee must be provided reasonable opportunity of being heard before deciding the issue. Deduction of education cess as business expenditure - HELD THAT:- After insertion of Explanation 3 to Section 40(a)(ii) of the Act, as noted above, education cess, being part of income-tax, cannot be allowed as expenditure. Admittedly, the decisions relied upon by learned counsel for the assessee are prior to the amendment made to section 40(a)(ii) of the Act by insertion of Explanation 3 - Thus assessee’s claim of deduction of education cess has to be disallowed. Accordingly, we do so. This ground is dismissed.
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