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2021 (2) TMI 456 - AT - Income TaxTP Adjustment - Most Appropriate Method (MAM) of determining Arm's Length Price (ALP) in respect of international transaction of import of finished goods for trading purposes by the Assessee from its Associate Enterprise - assessee adopted Resale Price Method (RPM) as the Most Appropriate Method (MAM) for determining ALP - DRP excluded certain comparables selected by the TPO under the TNMM method against which the Revenue has filed appeal before the Tribunal - whether RPM should have been adopted as MAM? - HELD THAT:- We are of the view that the approach of the Revenue authorities in rejecting the RPM as the MAM and the reasons given by them for doing so cannot be sustained. It would be appropriate to set aside the order of DRP on the issue of ALP and remand the question of determination of ALP to the TPO/AO for consideration afresh adopting RPM as the MAM. As pointed in the decision cited by learned DR in the case of Kohler India Corporation Pvt. Ltd. [2016 (3) TMI 826 - ITAT BANGALORE], the assessee is directed to furnish all the required information necessary for determination of ALP in the set aside proceedings. In view of the decision and the MAM, we are of the view that the grounds raised by the Revenue in its appeal viz., grounds 1 to 4 on the exclusion of comparable companies by the DRP under the TNMM does not require any adjudication. Addition made u/s. 40A(7) - assessee company had incorporated certain changes for which no approval from the CIT was acquired and the contribution to fund is only a provision not an actual expense under the purview of section 37(1) - HELD THAT:- Gratuity fund had been approved by the CIT vide approval dated 12.02.1993. The assessee was previously known as Krone Communications Ltd. Since the name of the assessee at the time of assessment had been changed to M/s. ADC India Communications Ltd., the AO took the view that the approval on which the assessee sought to place reliance was not valid and accordingly he disallowed the claim for deduction of the aforesaid sum by relying on the provisions of section 40A(7) of the Act. On objections by the assessee, the DRP deleted the addition made by the AO by following the decision of the IT AT, Hyderabad Bench in the case of Capital IQ Information Systems (India) Pvt. Ltd., Vs. ACIT [2014 (9) TMI 125 - ITAT HYDERABAD] wherein it was held that even if the payment is made to an unapproved gratuity fund, the same has to be allowed as a deduction under section 37(1). We are also of the view that the approval in the erstwhile name of the assessee will hold good and the action of the AO in this regard cannot be sustained. Accordingly, ground No. 5 raised by the Revenue is dismissed.
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