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2015 (9) TMI 19 - AT - Income TaxTransfer pricing adjustment - Whether the AE has received intra group services ? - What are the economic and commercial benefits derived by the recipient of intra group services ? - Whether a comparable independent enterprise would have paid for the services in comparable circumstances? - Held that:- There is no whisper by lower authorities that the ALP work provided by the assessee suffers from any infirmity. It is not proper to go for an ALP ascertainment without finding any fault with the assessee’s working. The TP services provide that the AO himself first record its objections on the merits of the working of the assessee. Without doing so, the ALP determination becomes a questionable exercise. In the entirety of facts and circumstances we hold that the TP adjustment to the ALP as furnished by the assessee is without any justification. The same is deleted. Apropos the issue about the reimbursement of business services, an amount of ₹ 31,01,476/- has been disallowed as the assessee could not produce any evidence except ledger account. We find no infirmity in the orders of the lower authorities. Since assessee has failed to provide any corroborative evidence in this behalf, the adjustment of ₹ 31,01,476/-made by the lower authorities cannot be found fault with. The same is upheld. Addition on account of alleged suppressed sales of scrap - Held that:- In our considered view the approach adopted by DRP is unsustainable in as much as it has the power to issue necessary direction on the basis of material available on record. There is no gainsaying by shrugging off the decision on the pretext of not being an appellate authority. Adverting to AO’s observation, assesses books are upheld, no evidence at all has been indicated to form even a suspicion that assessee indulged in any type of suppression of sales. Thus the finding is nothing but an assumed allegation. Never in past or future the assess’s scrape sales have been question. The addition being presumptive and based on conjectures is deleted. This ground is allowed. Not allowing the claim of inventories written off - Held that:- We have heard the rival contentions and perused material on the record. ITAT in assesssee’s own case has allowed the similar claim of inventory write off in AYs 2003-4 to 06-07. Treating the revenue expenditure on account of restructuring as one time expenditure for enduring benefit, hence capital in nature - Held that:- Assessee incurred these expenses for shifting of Corporate office from Gurgaon to Mumbai wholly and exclusively for its business. Besides Hon’ble High Court gave the permission for charging of these expenses against amalgamation reserves. In assessment year 2006-07, similar expenditure of ₹ 11,12,24,780/- were allowed by the AO in assessment framed u/s 143(3) after considering the details of such expenditure reflected in the notes to the accounts. In view of the foregoing we are of the considered view that assessee’s claim falls in the category of revenue expenses and deserve to be allowed Disallowance u/s 40(a)(ia) - non deduction of TDS - Held that:- AO in A. Y 2008-09, raised similar issues in respect of Trade Inventive and Distributor Coverage Expenses. The AO himself accepted the same contentions of the assessee and made no disallowance qua these payments u/s 40(a)(ia). Since revenue itself has accepted no TDS liability on such trade incentive in AY 2008-09, the disallowance made u/s 40(a) (ia) for the year is unjustified. Adverting to advertisement issue represents purchases of articles like display units, wall units, floor stands, posters, banners etc., on which VAT was paid. The transactions being of purchase simpliciter and VAT being charged thereon, there is no justification in holding it as advertisement contract. Consequently the question of TDS liability thereon does not arise. Hence the impugned disallowance made u/s 40(a)(ia) is deleted Disallowance of advertisement payment made to Group M Media Pvt. Ltd. - Liability of deduction of tax at source arises u/s 195 - Held that:- Since the assessee has deducted TDS u/s 194C, it cannot be disallowed u/s 40(a)(ia). Consequently this ground of the assessee is also allowed.
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