TMI Blog2012 (5) TMI 632X X X X Extracts X X X X X X X X Extracts X X X X ..... t in this ground of appeal. It is rejected. Cessation of liability - Held that:- Once it is factually established by the assessee that liability has not ceased, no addition can be made. Learned CIT(Appeals) has considered this aspect and we do not see any reason to interfere in his order. With regard to the two other creditors, we find that the Learned CIT(Appeals) has deleted the addition on the ground that these amounts have been written off by the assessee in the subsequent years and offered for tax. Assessing Officer has made the addition of these amounts in the present years on the ground that assessee failed to file the confirmation from these two entities. The case of the assessee was that a dispute was pending between the assessee and these parties and it was not possible for it to ask for a confirmation. The assessee has not written off these amounts in its books of account. Assessing Officer has not brought any positive evidence on the record indicating the liability to pay these amounts has ceased. On due consideration of the order of the Learned CIT(Appeals), we do not find any merit in the ground of appeal raised by the revenue. Hence, it is rejected. Addition on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome-tax Act, 1961 was issued and served upon the assessee. On an analysis of the record, it reveled to the Assessing Officer that assessee had entered into an international transaction with M/s. Maharishi Technology Corporation BV, The Netherlands which is an associate enterprises of the assessee. It took a loan of ₹ 12,95,000 US dollars, based on certain guidelines of External Commercial Borrowings (ECB), during the accounting year. The assessee has claimed an amount of ₹ 32,19,503 payable towards interest as on 31.3.2002. Learned Assessing Officer made a reference under sec. 92CA(i) of the Income-tax Act, 1961 to the Learned Transfer Pricing Officer for determining whether the interest shown by the assessee as payable to the associate enterprises is at arm s length or not. Learned TPO after giving an opportunity to the assessee recording a finding that assessee paid interest @ 8.5% whereas as per the comparable instances, the interest ought to have been paid @ 4.934%. He worked out a disallowance of ₹ 13,52,191.. On the basis of the recommendation of the learned TPO, learned Assessing Officer has made the disallowance. 4. Dissatisfied with the disallowances, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taken loan which is much bigger then the loan taken by the assessee. He also found that the learned TPO has not made any comparison with the contractual terms governing the loan agreement of all the comparables vis- -vis that of the assessee. He accordingly deleted the disallowance. 7. With the assistance of learned representatives, we have gone through the record carefully. Learned DR relied upon the order of the Assessing Officer. He pointed out that the learned TPO has recommended the adjustment in respect to the transaction entered by the assessee with its associate enterprises. We find that learned TPO while working out the alleged excess amount of interest paid by the assessee has considered the average LIBOR (London Inter-Bank Offered Rate) between the period of April 2001 to March 2002 plus arithmetic mean of the interest rate paid by the comparables in addition to LIBOR. Learned TPO has committed two errors. He considered the arithmetic mean of LIBOR between April 2001 to March 2002. The assessee entered into an agreement for the loan on 25.12.2000. What was the rate of LIBOR at that particular time has not been considered. Similarly, we concur with the finding of the L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e present years on the ground that assessee failed to file the confirmation from these two entities. The case of the assessee was that a dispute was pending between the assessee and these parties and it was not possible for it to ask for a confirmation. The assessee has not written off these amounts in its books of account. Assessing Officer has not brought any positive evidence on the record indicating the liability to pay these amounts has ceased. On due consideration of the order of the Learned CIT(Appeals), we do not find any merit in the ground of appeal raised by the revenue. Hence, it is rejected. 11. In the next ground of appeal, grievance of the revenue is that Learned CIT(Appeals) has erred in deleting the addition of ₹ 17,738 which represents the employees contribution towards EPF and it was paid after the expiry of the due date provided in the EPF Act. Learned CIT(Appeals) has deleted this disallowance on the ground that the amount was paid before the due date of the filing of the return and the issue is squarely covered in favour of the assessee by the decision of Hon'ble Delhi High Court in the case of CIT vs. PM Electronics Ltd. reported in 177 Taxman 1. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e expenses or it cannot be said that they are not for business purpose, because learned Assessing Officer himself allowed 90% of expenses. On the other hand, Learned DR relied upon the order of Learned CIT(Appeals). 16. We have duly considered the rival contentions and gone through the record carefully. Since the assessee failed to submit the requisite details at the time of assessment proceedings, therefore, learned Assessing Officer has rightly made ad hoc disallowance out of expenses on the ground that genuineness of such expenses could not be verified. But we agree with the submissions made by the learned counsel for the assessee that out of certain expenses, there cannot be any disallowance. The nature of the expenses is such that no doubt on their quantification can be raised. Now, as far as difference in foreign exchange is concerned, it is to be computed based on straight formula. Similarly, depreciation could also be verified from details available on the record. Considering all these aspects, we set aside this issue to the file of the Assessing Officer for readjudication. The observations made by us will not impair or injure the case of the Assessing Officer and would ..... X X X X Extracts X X X X X X X X Extracts X X X X
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