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2024 (1) TMI 997 - AT - Income TaxTP Adjustment - MAM - Considering brokerage rate of all Non-AEs for the comparability purposes - Arm's Length Price (ALP) of broking commissions - assessee has rendered broking services both to the associate enterprise and non-associate enterprises in different geographical locations and used TNMM as most appropriate method for benchmarking the broking services - TPO has rejected the TNMM method since the assesse has provided broking services to non- associate enterprise along with its associate enterprises, therefore, CUP method was selected to be the most appropriate method - HELD THAT:- We have perused the decision of ITAT for assessment year 2003-04 [2023 (6) TMI 1357 - ITAT MUMBAI] wherein the ITAT held that to consider both overseas and domestic independent clients while applying CUP method in the case the assessee. Accordingly we direct the TPO to consider both overseas and domestic clients while applying CUP method as directed in the above referred decision in the case of the assesse itself. Therefore, this ground of appeal of the assessee is allowed for statistical purposes. No adjustment of marketing cost while applying CUP method & not granting adjustment of research cost and 50% of volume while applying CUP method - We have perused the decision of ITAT in the case of the assessee itself for assessment year 2003-04 [2023 (6) TMI 1357 - ITAT MUMBAI] wherein the ITAT held that adjustment of 40% will be allowed on marketing cost adjustments and research cost. Thus we direct TPO to give adjustment of 40% to the assessee while determining the arm’s length of international transactions of brokerage and commission as directed in the finding of the ITAT referred supra, therefore these ground of appeal the assessee are partly allowed. Computing upward adjustment by considering addition instead of rectified amount - HELD THAT:- The assessee submitted that TPO had suo moto rectified the addition vide Rectification order therefore, we restore this issue to the file of the assessing officer for giving effect to the claim of the assessee after verification as per the Rectification order passed by the TPO. This ground of appeal of the assessee is allowed for statistical purposes. Disallowance of net loss incurred on error trading transactions - HELD THAT:- Assessee had submitted the details like client name, reason for error trades, date of transactions, script name internal e-mail etc. The assessee also explained that error trades are the clerical & other errors of the assessee in execution of the transactions for the clients. The error trades are basically trades generated by the clients, however, due to error inter alia in punching of the trade, etc. these trades are not executed as per the trading order of the clients. The error could be in the name of wrong punching of quantity, rate, security, system error and error in punching the type of order etc. As decided in CLSA India Pvt. Ltd. [2020 (12) TMI 815 - ITAT MUMBAI] certain client for whom the assessee was working as a broker had not owned up certain share transactions then the assessee had no other alternative but to accept those transactions as its own transactions because of its relation with the clients from whom it was accepting good earnings. After considering the volume of transactions undertaken by the assessee company as broker for various clients we observe that such marginal error in share trading is incidental to the business of the assessee, therefore, we don’t find any reason to that assessee has wrongly claimed such loss, therefore, AO is directed to allow the claim of the assessee. Disallowance u/s 14A - expenditure incurred in relation to earning of exempt income - assessee has received dividend and also had made investment which yielded exempt income - HELD THAT:- With the assistance of ld. Representative we have perused the decision of ITAT, Mumbai in the case of the assessee itself for assessment year [2023 (6) TMI 1357 - ITAT MUMBAI] wherein on identical issue and similar facts the issue was remanded back to the file of the assessing officer to examine the disallowance u/s 14A and assessee was also direct to substantiate its claim as to why no disallowance should be made. Thus we restore this issue to the file of the AO for deciding afresh.
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