9911796707
|
Home
Issues Involved:
1. Addition of telephone expenses on account of personal use. 2. Transfer pricing adjustment. Summary: Issue 1: Addition of telephone expenses on account of personal use The revenue challenged the deletion of Rs. 6,76,456/- out of telephone expenses by the Commissioner of Income Tax (Appeals). The Assessing Officer had disallowed 40% of the reimbursement of telephone expenses to employees, suspecting personal use. The Commissioner of Income Tax (Appeals) deleted this addition after examining the records and finding that only proportionate amounts were reimbursed for business purposes. The Tribunal upheld this decision, noting that the Commissioner of Income Tax (Appeals) had thoroughly examined the evidence and found no personal use by employees, who did not hold shares or managerial positions in the company. Issue 2: Transfer pricing adjustment The revenue contested the quashing of a Rs. 1,26,17,943/- adjustment made to the assessee's income on account of transfer pricing. The Transfer Pricing Officer (TPO) had determined the Arm's Length Price (ALP) using 102 comparables, resulting in a higher profit margin than the assessee's. The Commissioner of Income Tax (Appeals) deleted this adjustment, citing the absence of the list of comparables in the TPO's order and lack of opportunity for the assessee to object. The Tribunal found that the TPO had not explicitly rejected the assessee's comparables and had the jurisdiction to gather additional information. However, the Tribunal remanded the issue back to the Assessing Officer/TPO for fresh adjudication, ensuring the assessee's comparables are considered alongside any other proper comparables for determining the ALP. Conclusion: The appeal of the revenue was partly allowed for statistical purposes, with the issue of transfer pricing adjustment remanded for further examination. The Tribunal emphasized the need for a thorough review of comparables and adherence to procedural fairness in the determination of ALP.
|
