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2020 (12) TMI 1060 - AT - Income TaxDisallowance of advertisement expenditure - AO noticed that the assessee firm has contributed a sum to a School for the purpose of construction of a swimming pool in that school - HELD THAT:- AO has given identical reasoning for disallowing 20% of the expenses on gifts and promotional aids given to doctors. Accordingly, following the decision rendered by the co-ordinate bench in AY 2013-14, we direct the AO to delete the impugned disallowance. TP adjustment made in respect of goods sold to Associated Enterprises (AEs) - MAM selection - HELD THAT:- We have earlier rejected the methodology adopted by the TPO and we have upheld the assessee's stand on TNMM and Net profit margin. As in the segmental Profit and Loss account prepared by TPO, certain items of expenses have not been correctly considered, since the aggregate amount of Net profit worked out by the Transfer Pricing Officer did not match with that of the assessee. There should not be any dispute that the methodology consistently followed to work out net profit year after year should be followed in this year also. It should not be tinkered with, unless proper reasons are given. The TPO has not given any reason as to why he altered the aggregate amount of Net profit. Hence the workings made by TPO is liable to rejected. We have noticed that the net profit margin worked out by the assessee in "Domestic - Personal care division" was 12.31%. The net profit margin worked out for "Exports to AEs" was 24.03%. Hence the net profit margin earned in the exports to AEs division is higher than its comparable "Domestic - Personal care division". Hence it has to be held that the international transactions of making exports to AEs are at arms length and hence no T.P adjustment is called for. Accordingly, we direct deletion of Transfer pricing adjustment made in respect of Exports to AEs. TP adjustment made in respect of Advertisement and Marketing expenses - HELD THAT:- Following the decision rendered by the Tribunal in AY 2013-14 and 2011-12 [2018 (7) TMI 1964 - ITAT BANGALORE], we direct the AO to delete the transfer pricing adjustment made in respect of Selling and Marketing expenses. Transfer pricing adjustment made in respect of royalty - TPO noticed that the assessee has got "Research and Development" unit and accordingly developing all its products - HELD THAT:- We direct the AO to delete the T.P adjustment made by way of royalty.
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