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2023 (2) TMI 553 - AT - Income TaxTP Adjustment - export of finished goods to the associated enterprises wherein an upward TP adjustment was made - AR submitted that the products sold to the AE was one time export and did not constitute and a regular business activity of the assessee - HELD THAT:- We appreciate the argument advanced by the Ld.DR however there are various documents filed by the assessee in support of the products that are submitted to be remodified and was made to be fit for consumption. However, such modification did not fit into the strict criteria of verification as per the FDA norms and therefore stood rejected and destroyed. We note that these details and evidences filed by assessee the summary of which are reproduced hereinabove in a tabulated form has not been considered by the Ld.AO/TPO. It is also admitted fact that margin of assessee at 12% was compared with the comparables being 4% for the year under consideration and therefore some value has been received by assessee as submitted by the Ld.AR against such destroyed products by the US customs which deserves to be bench marked. We direct the Ld.AO to reconsider the claim of assessee in the light of the evidences filed and to compute the margin of assessee in accordance with law by following the principles of transfer pricing regulations. Administrative service fee paid by the assessee - assessee has also furnished the total cost incurred by the AE towards the common group services and the basis of allocating some among various group entities - HELD THAT:- As decided in assessee own case [2015 (10) TMI 2794 - ITAT BANGALORE] There is no dispute that the transaction has been reported by the assessee as international transaction which was also accepted by the AO and the TPO as an international transaction. Thus, once a particular transaction is admitted as international transaction then the same falls in the ambit of the provisions of X chapter of the Act which are specific provisions to deal with such transactions between the assessee and its AE. Therefore, once the transaction is undisputedly subject matter of Chapter X of the IT Act, then the other general provisions of the Act cannot be applied simultaneously. The AO, having considered the transaction being international transaction and making a reference to the TPO for determination of the ALP cannot go back to the provisions of sec.40A(2) for determining the reasonableness of the price paid by the assessee. Our attention was invited by the learned authorised representative of the assessee that for the assessment year 2001-02 to 2002-03 the payment in question was subjected to MAP and only 25% is charged to tax. Therefore, it was accepted by the department that the services were rendered by the AE to the assessee in India. We further note that the AO has not conducted any inquiry or investigation to find out the excessiveness of the payment made by the assessee to its AE. Disallowance of inventory written off - HELD THAT:- The Tribunal for A.Y. 2002-03 in assessee’s own case [2022 (2) TMI 284 - ITAT BANGALORE] observed AO took the view that the inventory has been actually written off in the succeeding year and not during the year under consideration. Accordingly, the AO expressed the view that the assessee, if at all is required to write off the inventory, should have written off in the succeeding year, i.e., in the financial year 2002-03 relevant to the assessment year 2003-04. Accordingly, the AO held that the claim of the assessee is not allowable. Accordingly he disallowed the claim of write off of inventory - Based on the above submission, we deem it fit and proper to remand this issue to the Ld.AO for verification and to consider it in accordance with law. Appeal filed by assessee stands allowed for statistical purposes.
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