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2019 (2) TMI 1873 - AT - Income TaxTP Adjustment - expenses claimed to have reimbursed to its AEs during the year under consideration - disallowance of claim of administrative expenses claimed by the assessee to have been reimbursed to its AE i.e. UTi- USA - HELD THAT:- As the contractual liability of the assessee to reimburse its share of cost and expenses for the intra-group services to its AE i.e UTi-USA was not dependant merely on the availing of the services of the AE, therefore, the determination of the ALP of the administrative expenses reimbursed to the said AE at Nil by the TPO/DRP for the reason that the assessee had failed to satisfy the benefit test as well as failed to justify the quantity of the services utilized and their commensurate cost etc. cannot be sustained and on the said count itself is liable to be vacated. Alternatively, we are also not impressed with the observations of the lower authorities that as the assessee had failed to satisfy the “benefit test‟ in the course of the transfer pricing proceedings, hence the ALP of the administrative expenses reimbursed by the assessee to its AE i.e UTi-USA was to be taken at Nil. Whether the assessee was benefited by availing the services of the AE? - the said aspect does not fall with the realm of the TPO. In our considered view as per Chapter X of the IT Act r.w Rule 10A to 10E of the Income-tax Rules, the jurisdiction of the TPO is specific and limited i.e to determine the ALP of an International transaction. It is not for the TPO to consider whether or not the expenditure incurred by the assessee passed the test of Sec. 37 of the IT Act and/or the genuineness of the expenditure. This exercise has to be done, if at all, by the A.O in exercise of his jurisdiction to determine the income of the assessee in accordance with the IT Act - adoption of the ALP of the administrative expenses reimbursed by the assessee to its AE i.e UTiUSA at Nil by the TPO for the reason that the assessee had failed to satisfy the “benefit test‟ also fails on the said ground. As averred by the ld. A.R the TPO in the assesses own case for the immediately succeeding year i.e. A.Y. 2010-11 had accepted that the reimbursement of the administrative expenses by the assessee to its AE was at ALP. We find ourselves to be in agreement with the contention advanced by the ld. A.R that now when there is no shift in the facts of the case, thus it was not permissible for the TPO to have adopted an inconsistent approach and taken the ALP of the administrative expenses for the year under consideration at Nil. Our aforesaid view that the principle of consistency ought to be followed by the department is fortified by the judgments of Radhasoami Satsang Vs. CIT [1991 (11) TMI 2 - SUPREME COURT] AND M/S EXCEL INDUSTRIES LTD. AND MAFATLAL INDUSTRIES P. LTD. [2013 (10) TMI 324 - SUPREME COURT] Disallowance on account of delay involved on the part of the assessee in depositing the amount of employees contribution to the Provident fund and the Employees State Insurance Scheme - HELD THAT:- Decided in the case of Commissioner of Income-tax (Central), Pune Vs. Ghatge Patil Transports Ltd. [2014 (10) TMI 402 - BOMBAY HIGH COURT] both the employers and the employees contributions to the various employees welfare funds are covered under Section 43B - as the employees contribution towards the Provident Fund and Employees State Insurance was deposited by the assessee prior to the “due date‟ of filing of its return of income, hence the same was not liable to be disallowed. Reimbursement of expenses by the assessee to its AE viz. UTi-Network Inc. as being at ALP on the basis of “additional evidence‟ as admitted without affording an opportunity to the TPO to examine the same - HELD THAT:- Power of the DRP to suo motto call upon the eligible assessee to produce any document or examine any witness or file any affidavit is neither qualified by any restriction nor any obligation is cast upon the panel to afford any opportunity to the TPO to examine the same. We thus are of the considered view that in the backdrop of the aforesaid powers vested with the DRP to call upon the eligible assessee to produce any document or examine any witness or file any affidavit to enable it to issue proper directions, no infirmity arises from the order of the DRP in the case before us, who we find had on its own called for and considered certain documents in the course of the proceedings in order to enable it to issue proper directions. As the admission of the documents by the DRP is well in conformity with the powers vested with the panel, hence the appeal of the revenue does not merit acceptance and dismissed.
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