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2021 (10) TMI 1283 - AT - Income TaxTP Adjustment - TPO determined ALP at NIL by applying CUP - HELD THAT - TPO held that, as there is no benefit from services rendered by AE s, he determined ALP of international transaction at Nil, without carrying out any FAR analysis of intra-group services. This approach of Ld.TPO is not acceptable, as it is necessary to determine ALP of such transaction as per law. Further these services are more or less intangible in nature as the AE s are helping assessee to set up, run the store s and other related matters as per the company standards. In our view the Ld.TPO ignored the evidences filed by assessee. TPO cannot consider ALP at NIL and value of transaction has to be computed as per law. We therefore remand this issue back to the Ld.TPO/AO - TPO to consider all the evidences filed by assessee in the light of observations by the Ld.TPO in preceding and subsequent assessment years. The Ld.TPO/AO shall analyses issue in the light of observations by coordinate bench of this Tribunal in assessee s own case for assessment year 2008-09 and 2010-11 2021 (4) TMI 778 - ITAT BANGALORE and compute the ALP of international transactions with AE s in accordance with law. Disallowance u/s. 40A(2) in respect of payment made to Home center LLC towards consultance/professional fees - HELD THAT - We note that on one hand the CIT(A) is observing the casual manner in which the disallowance is made, and on the other hand he is confirming disallowance to the extent of 50% on adhoc basis. We are not in agreement with such ways of the CIT(A) and the TPO. We have remanded identical issue to the Ld.TPO/AO while considering assessee s appeal for assessment year 2009-10. The facts for year under consideration is same and the issue of disallowance being identical, we remand this issue to the Ld.TPO/AO. The Ld.TPO/AO shall verify the details mutatis mutandis as observed by us for assessment year 2009-10. Bogus purchases - AO disallowed the expenses based on information received from the Maharashtra VAT department regarding non genuine/bogus bills being issued by a person under the name and style Mahavir Corporation - HELD THAT - CIT(A) upheld the addition only for the reason that the proof of physical delivery including transportation receipt were not produced by assessee. It is also a admitted position that assessee could not have undertake any basic verification of its trading partner before entering into a transaction. Merely because Maharashtra bat department has identified Mahavira Corporation to be issuing non-genuine/ bogus bills, the present transaction cannot be doubted. It is not the case of revenue that the goods were not received by assessee and that payments were not made by assessee on such purchases. There is nothing to corroborate the information received from Maharashtra VAT department. Under such circumstances the purchases made by assessee cannot be treated to be bogus on surprises - We direct the Ld.AO to delete the addition in the hand of assessee. Addition u/s 43(5) r.w.section 73 - As submitted that assessee imported certain trade merchandise from parties located outside India and the payments were to be made to in foreign currencies on specified dates - HELD THAT - Admittedly, this is a recurring issue and facts have not been disputed by the revenue for year under consideration - nothing contradictory is placed on record by the revenue, to deviate form the above view. Respectfully following the same, we do not find any infirmity in the view taken by the Ld.CIT(A), and the same is upheld. Employees contribution to provident fund and employees State insurance after the date - HELD THAT - As decided in Hon ble Karnataka High Court in case of Sabri Enterprises and Ors. 2007 (7) TMI 169 - KARNATAKA HIGH COURT and Essea Teraoka(P.) Ltd 2014 (3) TMI 386 - KARNATAKA HIGH COURT has held that contributions made by assessee to provident fund and employees State insurance are allowable deductions to assessee even though it is not made in the stipulated period as contemplated under the provisions of section 36(1)(va) of the act, but the same has been paid on or before the due date for punishing the return of income as per section 139(1) - we do not find any infirmity in the view taken by the Ld.CIT(A) and the same is upheld. Claims not made in the return allowed by the Ld.CIT(A) - HELD THAT - The restriction of considering fresh claim except by way of filing a revised return is cast only on and assessing officer. However there is no such embargo to consider the claim made by the assessee for the first time before the appellate authorities. We note that the CIT(A) directed the AO to consider the claim of assesssee which is in accordance with the ratio laid down by Hon ble Supreme Court in case of Goetz India Ltd 2006 (3) TMI 75 - SUPREME COURT - Similar is the view by various other decisions of Hon ble Supreme Court and High Courts. We therefore do not find any infirmity in the decision of the Ld.CIT(A).
Issues Involved:
1. Transfer Pricing Adjustment for Consultancy Fees. 2. Disallowance of Speculative Loss on Forward Contracts. 3. Disallowance of Purchases as Bogus. 4. Disallowance of Employee Contributions to PF/ESI. 5. Consideration of Fresh Claims Not Made in Original Return. Detailed Analysis: 1. Transfer Pricing Adjustment for Consultancy Fees: The primary issue was the disallowance of consultancy fees paid to RNA Resources Group Ltd. and Home Centre LLC, which the TPO considered to be at arm's length price (ALP) of 'nil'. The TPO's rationale was that the assessee failed to substantiate the actual receipt and benefit of services. The Tribunal noted that similar transactions in preceding and succeeding years were accepted as being at arm's length without adjustments. The Tribunal remanded the matter back to the TPO/AO for fresh consideration, directing them to evaluate all submitted evidence and determine the ALP in accordance with law, referencing the Tribunal's decisions for assessment years 2008-09 and 2010-11. 2. Disallowance of Speculative Loss on Forward Contracts: The AO disallowed the premium on forward contracts treating it as speculative loss under section 43(5) read with section 73. The Tribunal, referencing previous decisions, held that such forward contracts were entered to hedge import payments and working capital loans, which are part of routine business activities. The Tribunal upheld the CIT(A)'s decision to delete the disallowance, noting that foreign currency does not fall within the purview of "commodity" under section 43(5). 3. Disallowance of Purchases as Bogus: The AO disallowed purchases from Mahavir Corporation based on information from the Maharashtra VAT department, labeling them as bogus. The CIT(A) upheld the disallowance, citing the lack of proof of physical delivery. However, the Tribunal directed the AO to delete the addition, emphasizing that the transactions were undertaken in good faith, and there was no evidence that the goods were not received or payments not made. 4. Disallowance of Employee Contributions to PF/ESI: The AO disallowed delayed remittances of employee contributions to PF/ESI. The CIT(A) deleted the disallowance, noting that the payments were made within the due date under section 139. The Tribunal upheld the CIT(A)'s decision, referencing the Karnataka High Court's rulings that contributions paid before the due date for filing returns are allowable. 5. Consideration of Fresh Claims Not Made in Original Return: The AO rejected claims for ESOP expenses and finance lease expenses not included in the original or revised return. The CIT(A) allowed these claims, stating that fresh claims can be made at the appellate stage. The Tribunal upheld the CIT(A)'s decision, referencing the Supreme Court ruling in Goetz India Ltd., which permits appellate authorities to consider fresh claims. Conclusion: The Tribunal allowed the assessee's appeals for the assessment years 2009-10, 2011-12, and 2012-13 for statistical purposes, remanded certain issues back to the TPO/AO for fresh consideration, and dismissed the cross objections as infructuous. The revenue's appeals were partly allowed for statistical purposes, with directions to the AO to reconsider specific claims in accordance with the law.
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