2018 (5) TMI 1640 - ITAT AHMEDABAD

Addition on account of TPO order u/s 92CA(3) by rejecting the TNMM selected by the assessee - Held that:- TNMM is not applicable on the given set of facts has nowhere been discussed by the TPO in the impugned order. Therefore, the ld.DR cannot improve the case of the TPO at this level. More so when, consistently from the Asstt.Year 2002-03, it has been held that method adopted by the assessee is an appropriate method. In the assessee’s own case, this aspect has been accepted upto the level of ITAT. There is no justification for disturbing of that method by taking different opinion from order of the ITAT passed in similar facts of the same assessees. Taking into consideration earlier orders of ITAT passed in assessee’s case for the Asstt.Year 2002-03 to 2004-05, we are of the opinion that the ld.CIT(A) has based his finding on the orders of predecessor. There is no independent discussion in this order. Thus, the findings have been upheld by the ITAT, and therefore, we do not see any reasons to deviate ourselves from those finding.

Misc. expenses to be written off - Held that:-After taking into consideration the finding of the ld.CIT(A), we are of the view that lump-sum addition confirmed by the ld.CIT(A) is little on the higher side, because the assessee has contended that if written off is not allowable, then actual expenses incurred during the year ought to be allowed. In other words, case of the assessee is that by following mercantile system of accounting, it has incurred various expenses, which has been written off in this year. Therefore, to meet ends of justice, assessee deserves a further relief of ₹ 5,00,000/-. In other words, addition confirmed by the ld.CIT(A) of ₹ 15,00,000/- is restricted to ₹ 10,00,000/- (Ten Lakhs) only, and thus the assessee gets a further part relief. Accordingly, this interconnected ground raised in the appeal of the Revenue and CO of the assessee is partly allowed.

Deemed dividend u/s 22(22)(e) - Held that:- When the CIT(Appeals) as well as Tribunal concurrently held that looking to large number of adjustment entries in the accounts between two entities, the amounts were not in the nature of loan or deposit, but merely adjustments, application of section 2(22)(e) of the Act would not arise. Consequently, no question of law arises.

Disallowance under section 40(a)(ia) - Held that:- If TDS has been deposited prior to the due date of filing of return, then no disallowance has to be made. The ld.CIT(A) has rightly deleted the disallowance, and we do not find any error in this ground of appeal. It is rejected.

Gratuity provision - Held that:- While filing return of income the assessee has included an amount for additions in the total income. When it realized the provision made for gratuity for the year under consideration, then it had filed an application and submitted to the AO that current year’s claim only ₹ 20,69,905/-. This amount could be disallowed. The ld.CIT(A) has rightly appreciated the controversy and has rightly directed that AO that only for the provision made in the current year could be disallowed and not opening balance. Therefore, after looking into the finding of the ld.CIT(A), we do not find any error in it. This ground of appeal is rejected

Correct figure of depreciation - Held that:- CIT(A) has rightly observed that the claim of the depreciation as made by the assessee, and it was for the AO to compute the correct figure of depreciation admissible to the assessee. The ld.CIT(A) has directed the AO to grant correct amount of depreciation. There could not be any fault to this finding, hence this ground of appeal is rejected.

Direct the AO to include other income in the eligible profit for the purpose of grant of deduction under section 10B of the Act.

Allow set off prior period expenditure against prior period income and only net income is to be added to the total income of the assessee.

Addition u/s 14A - Held that:- We are of the view that the ld.CIT(A) though changed reasoning, but confirmed disallowance of same amount. Once investment was made by the assessee, then it was not required to be continuously monitor it and administrative expenditure could not be estimated at this magnitude which has been worked out by the AO with help of Rule 8D. To our mind, ends of justice would be met, if an adhoc disallowance of ₹ 3,00,000/- be sustained for earning of tax free income. We allow this ground of appeal partly and confirm the addition to the extent of ₹ 3,00,000/-.