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2015 (1) TMI 922 - ITAT MUMBAITransfer pricing adjustment - markup of 9% on the entire cost of high value services as the payment to Jeena cannot be a pass through cost as stated by the assessee as held by TPO - Held that:- The compensation paid to the assessee is based on functions performed by it, i.e. rendering of custom clearance services to the AE on the operation costs incurred by it and not on the cost of services sourced from the third party in India. Thus, TP adjustment by applying 9% mark-up on the cost of customs clearance service rendering through Jeena cannot be made for bench marking the ALP of the assessee and accordingly such adjustments stands deleted. - Decided in favour of assessee. Disallowance of bad debts written off a business loss - Held that:- Once, the assessee was unable to recover the amount, then it has to be allowed as bad debts. Even if such amount is not allowed as bad debts then the same has to be allowed as business loss as held by the Hon’ble Bombay High Court in the case of Harshad J Choksi (2012 (8) TMI 710 - BOMBAY HIGH COURT). Further, in CIT V/s Shreyas S Morakhia (2012 (3) TMI 103 - BOMBAY HIGH COURT), in the context of share broker, it was held that unrealized value of shares from the clients can be claimed as bad debts u/s 36(1)(vii) of the Act, as the brokerage from the clients is taken to the profit and loss account, therefore, the same is to be allowed as bad debts. Here in this case also, the assessee is earning services fees for rendering such services and if any such amount paid by the assessee on behalf of the parties remained unrecoverable, then the same can be allowed as bad debts. Thus, from both the angles, we do not find any reason to confirm the disallowance of ₹ 28,76,102, and accordingly, the same is deleted.- Decided in favour of assessee.
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