9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2014 (1) TMI 1700 - AT - Income TaxTransfer pricing adjustment - Held that - In view of the evidence submitted by the assessee in the shape of letters invoices and submissions we are of the opinion that TPO was wrong in taking the ALP of this transaction at nil. The assessee had added appropriate mark up of 14.5% which is in line with the over all margin of the assessee. Proper replies were given to Ld. TPO which have not been properly appreciated by the TPO. Therefore we see no justification in the TP adjustment. The same is deleted - Decided in favour of assessee TDS on payment of professional fees to a non resident - professional fees has been suo-moto disallowed by the appellant under section 40(a)(ia)- Held that - In view of addition of 1, 96, 050/- to the income of the assessee the separate addition made by AO of a sum of 33, 319/- is required to be deleted. Therefore we delete this addition and this ground of the assessee is allowed. Not granting credit of Minimum Alternate Tax - Held that - There is no discussion in the assessment order regarding this adjustment. However the contention of the Ld. AR has force. In the facts and circumstances of the case we restore this issue to the file of AO with a direction to verify the claim of the assessee after giving the assessee a reasonable opportunity of hearing the appropriate relief should be granted to the assessee as per provisions of law. We direct accordingly. This ground is considered as allowed for statistical purposes in the manner aforesaid.
Issues Involved:
1. Transfer pricing adjustment of Rs. 18,39,718/- 2. Arm's Length Price (ALP) of professional fees paid towards availing managerial services 3. Addition of Rs. 33,319 for tax deducted at source on payment to a non-resident 4. Credit of Minimum Alternate Tax (MAT) of Rs. 2,12,141/- paid in A.Y 2007-08 Issue-wise Detailed Analysis: 1. Transfer Pricing Adjustment of Rs. 18,39,718/-: The assessee challenged the transfer pricing adjustment, focusing on Grounds No. 11, 12, and 16. The primary contention was that if Grounds No. 11 and 12 were accepted, the assessee's margin would fall within the safe harbor, negating the need for an adjustment of Rs. 13,16,756/-. The TPO had adopted a mean margin of 20.04% from 13 comparables, whereas the assessee's margin was 14.25%. The TPO's rejection of certain comparables and inclusion of others led to the adjustment. The assessee argued that in the subsequent year, the TPO accepted the exclusion of several comparables, which should apply to the current year as well. The tribunal restored the issue to the TPO to verify the exclusion of certain comparables and determine if the assessee's margin falls within the safe harbor, potentially negating the adjustment. 2. Arm's Length Price (ALP) of Professional Fees Paid Towards Availing Managerial Services: The TPO determined the ALP of professional fees paid for managerial services as NIL, adding Rs. 5,22,962/-. The assessee argued that it had provided evidence of services rendered and had applied a 14.5% markup, which was in line with its overall margin. The tribunal found that the TPO had not properly appreciated the evidence and submissions provided by the assessee, including invoices and letters detailing the services. Consequently, the tribunal deleted the TP adjustment of Rs. 5,22,962/-. 3. Addition of Rs. 33,319 for Tax Deducted at Source on Payment to a Non-resident: The assessee contended that the addition of Rs. 33,319 was a double addition since the entire sum of Rs. 1,96,050/- had already been disallowed in the computation of income. The tribunal agreed with the assessee, noting that the sum had been added to the income in the computation filed by the assessee. Thus, the tribunal deleted the separate addition of Rs. 33,319. 4. Credit of Minimum Alternate Tax (MAT) of Rs. 2,12,141/- Paid in A.Y 2007-08: The assessee sought credit for MAT paid in A.Y 2007-08, amounting to Rs. 2,28,410/-. The tribunal found merit in the assessee's contention and restored the issue to the AO for verification. The AO was directed to grant appropriate relief after giving the assessee a reasonable opportunity of hearing. Conclusion: The appeal was partly allowed for statistical purposes, with specific issues restored to the TPO and AO for further verification and appropriate relief. The tribunal's decision emphasized the need for proper appreciation of evidence and adherence to safe harbor provisions in transfer pricing adjustments.
|
