TMI Blog2010 (1) TMI 921X X X X Extracts X X X X X X X X Extracts X X X X ..... t aborted - As there is no controversy on the issue whether the assessee has incurred this expenditure or not and as the nature of expenditure reflect that they are revenue in nature and as the assessee has not got any enduring benefit - Decided in favor of the assessee Regarding disallowance of expenditure of Rs. 1,92,27,929 - Held that: assessee in his paper book, has submitted minute details of the expenditure incurred, statement of accounts, copy of invoices, etc - ssessee admits that some of the vouchers are self-made vouchers, there can be an element of personal expenditure as well as inflation of expenditure - AO is directed to restrict the same to 10 per cent - Appeal is partly allowed - IT Appeal No. 2361 (Mum.) of 2007, - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nterest that should have been charged from an Associated Enterprise on outstanding balance. (3) The learned CIT(A) failed to appreciate that there is no case for charging any interest when the appellant is not charging any interest on outstanding balance of any international party or even domestic party nor did he pay any interest nor any credit balance. (4) The learned CIT(A) erred in holding that appellant's billing the Associated Enterprise at 212.34 per cent of the cost, include implicit interest element and, hence, interest had to be charged whereas it is a case for not charging any interest at all, since admittedly implicit interest has already been charged in the billing. (5) The learned CIT(A) erred in wrongly holding th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied therein and that the Act mandates that the arm's length price in relation to an international transaction shall be determined by any of the following method. He submitted that by not following methods prescribed in the section, the TPO has not followed the provisions of the Act and, thus, the entire addition is foreign to the provisions of the Act. He further submitted that the addition has been made on an ad hoc basis. He further took this Bench through the facts of the case and submitted that the assessee had not charged any interest on amount due to it in respect of trade transactions. He submits that this is because of the senergies operation that the assessee seeks to achieve. He pointed out that only in a case where loan has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er associated NCWN and that rate of interest was applied by the TPO to the transactions entered into by the assessee with M/s. Words Sports Nimbus (P.) Ltd. (WSN). Thus, he submits that the Assessing Officer as well as the TPO was right in coming to a conclusion that the assessee had granted a credit facility to the AE beyond 180 days without charging interest and in such circumstances, non-levy of interest beyond 180 days, effect the arm's length price and, thus, the adjustment. As regards an allowability of expenditure incurred on public issue which was aborted, the learned DR submits that the argument that the claim is allowable under section 37 is a new argument and this cannot be admitted. He pointed out that such a claim was not made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... od; (e) transactional net margin method; (f) such other method as may be prescribed by the Board." 8. The TPO in this case has not followed the mandate of the Act. No method has been specified. Under these circumstances, the adjustment made on the basis of the Transfer Pricing Officer under section 92CA(3) of the Act cannot be sustained. Even on merits, we find that the assessee has not charged interest on fees receivable by it from WSN and whereas it has charged interest on a loan granted to NCWL, the rate of interest charged was at 2.262 per cent per annum. This rate of interest is used by the Assessing Officer to hold that the assessee not charging interest on fees receivable from AE, requires an adjustment under the Transfer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... blic issue got aborted, we are of the humble opinion that the expenditure is in the revenue field. For an expenditure to be considered for amortisation under section 35D, it should be in the capital field. An expenditure which is incurred in the revenue field is allowable under section 37 of the Act. The Assessing Officer at para 6 of the assessment order has not come to a conclusion that the expenditure in question has not been incurred. After collecting the details from the assessee, he concluded that there being no change in the subscribed share capital and as the expenditure was not incurred prior to incorporation and as it could not be substantiated that the issue is in connection with the extension of business or setting up of new ind ..... X X X X Extracts X X X X X X X X Extracts X X X X
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