Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2020 (1) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2020 (1) TMI 1031 - AT - Income TaxTP Adjustment - comparable selection - HELD THAT:- Referring to Engineering services rendered by the assessee to its AE companies functionally dissimilar with that of assessee need to be deselected from final list. ALP adjustment in relation to Reimbursement of management fees expenses - HELD THAT:- As decided in ow case [2020 (1) TMI 1008 - ITAT AHMEDABAD] Section 92C prescribes the manner of determination of the arm's length price and sub-section (1) thereof specifically lays down various methods by which the determination of arm's length price has to be made. It is quite clear that there is no adhocism permissible in the manner of computation of arm's length price of an international transaction, whereas the action of the Transfer Pricing Officer in considering the arm's length price @10% of the expenses recovered is not only adhoc but it also does not conform to any of the methods prescribed in section 92C(1) of the Act. On this count itself, the action of the TPO is suspect, even if, it is to be understood that the impugned transaction was an international transaction requiring computation of income having regard to its arm's length price. TPO has erred by making the disallowance on ad hoc basis. Arm length price of the insurance expenses claimed by the assessee has disallowed such expenses by observing that the same is prohibited under the insurance Act - HELD THAT:- There is no power available to the TPO to verify the allowability of any business expense. As such the role of the TPO is limited to the extent of determining the arm length price of the transaction carried out by the assessee with the AE. However in the case on hand, the TPO without determining the arm length price of the insurance expenses claimed by the assessee has disallowed such expenses by observing that the same is prohibited under the insurance that. Admittedly, such expenses are prohibited under the insurance Act. But the controversy arises whether such expenses can be disallowed by the TPO in the given facts and circumstances. In this regard we note that the role of the TPO is to determine the arm length price of the transactions of insurance premium as the impugned payment was prohibited, therefore the TPO has made the disallowance after considering the fact that there was no benefit derived by the assessee out of such expenses. AR also before us has not brought anything on record suggesting that the assessee has derived any benefit against such expenses. Thus, we feel that the assessee fails in the benefit test for such expenses. Hence, we do not find any reason to interfere in the order of the authorities below. Thus the ground of appeal of the assessee is dismissed. Denying the benefit of range (+/-5%) - HELD THAT:- As decided in own case [2020 (1) TMI 1008 - ITAT AHMEDABAD] assessee made a specific ground of appeal for the benefit of adjustment of + 5% to be given while determining the Arm Length Price, the ld. counsel for the assessee has not been point out as to how and in what manner, the order of ld. DRP in rejecting this claim of the assessee is improper and unjustified. Since both the parties have not been able to controvert the findings recorded by the ld DRP or point out any material to enable us to take a view other than view taken by the ld. DRP, we do not want to interfere in the order of the ld. DRP. Benefit to the assessee for the deduction under section 10B allowed.
|