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2023 (11) TMI 279 - AT - Income TaxDetermination of transfer price - deduction of excise duty - international transactions of sale of goods with the Associated Enterprises - HELD THAT - We note that the excise duty is not to be deducted from the export turnover for determining the Arm's Length Price of the goods supplied by the assessee to its AEs abroad. As submitted before us the issue needs examination at the end of the AO and accordingly, we restore this issue to the file of the AO with the direction to re-adjudicate it - Ground allowed for statistical purposes. TP Adjustment of international transactions of payment of royalty to the AEs - HELD THAT - We note that the issue is squarely covered by the decision of the Coordinate Benches wherein the issue of transfer pricing has been decided in favour of the assessee by deleting the adjustment to transfer price of the assessee with the AEs abroad. We have specifically perused the decision of the Coordinate Bench 2018 (6) TMI 1843 - ITAT KOLKATA and find that the transfer pricing adjustment on account of royalty payment has been deleted. Accordingly, we direct the AO to delete the addition. Disallowance of leave encashment u/s 43B - assessee submitted before us that out of the said amount the assessee has paid on account of provisions for leave encashment on accrual basis following the decision of Exide Industries Ltd. Vs. Union of India 2007 (6) TMI 175 - CALCUTTA HIGH COURT - HELD THAT - We note that during the year the assessee has made certain payments in respect of leave encashment which apparently has to be allowed to the assessee on the basis of actual payment during the year. Accordingly, we restore this issue to the file of the AO to verify this amount. Needless to say that the amount paid against the provisions for leave encashment has to be allowed as deduction. Hence, ground is allowed for statistical purposes. Disallowance of club expenses made for the welfare of the employers u/s 40A(9) - HELD THAT - The issue is squarely covered by the decision in assessee's own case 2018 (9) TMI 2130 - ITAT KOLKATA for AY 2013-14 and 2018 (6) TMI 1843 - ITAT KOLKATA for AY 2010-11 2011-12 wherein held that the provisions of Section 40A(9) of the Act are not attracted where the claim is made u/s 37(1) of the Act pertaining to the club expenses. As these are the expenses which are wholly and exclusively made for the purpose of business of the assessee, we direct the AO to allow the deduction in respect of club expenses. Decided in favour of assessee. Disallowance of commission expenditure u/s 69C - As submitted that though the issue has been decided in favour of the assessee by the DRP by giving a specific direction - HELD THAT - As DRP has given specific direction to the AO however, the same has not been given effect to by the AO, we direct the AO to give effect to and decide the same in terms of the DRP direction. Ground allowed for statistical purposes. Disallowance of interest income - difference in interest income as per books of accounts and as per Form 26AS - HELD THAT - We are of the view that the issue needs to be examined at the level of the AO and accordingly, we restore the issue to the file of the AO with the direction to decide the same after providing sufficient opportunity to the assessee of being heard. Therefore, this ground is allowed for statistical purposes. Wrong calculation done by the AO of business loss available for set off - HELD THAT - We are of the view that the issue needs to be examined at the level of the AO and the AO is directed to decide the same and compute the business loss available for set off correctly. Therefore, ground raised by the assessee is allowed for statistical purposes.
Issues involved:
The issues involved in this judgment include the exclusion of time for filing appeal during the COVID-19 pandemic, deduction of excise duty for determining transfer price, adjustment of transfer price for royalty payment, disallowance of leave encashment, disallowance of club expenses, disallowance of commission expenditure, difference in interest income as per books and Form 26AS, and calculation error in business loss available for set off. Exclusion of time for filing appeal during COVID-19 pandemic: The appeal was treated as filed within the limitation period due to the decision of the Hon'ble Supreme Court regarding the exclusion of time for filing appeal during the COVID-19 pandemic. Deduction of excise duty for determining transfer price: The Tribunal held that excise duty should not be deducted from the export turnover for determining the Arm's Length Price (ALP) of goods supplied by the assessee to its Associated Enterprises (AEs) abroad. The issue was restored to the file of the Assessing Officer (AO) for re-adjudication. Adjustment of transfer price for royalty payment: The Tribunal directed the AO to delete the addition of royalty payment amounting to Rs. 1,70,19,072/- as the issue was covered by decisions of the Coordinate Benches in favor of the assessee. Disallowance of leave encashment: The Tribunal directed the AO to allow the deduction of Rs. 63,13,289/- paid by the assessee towards leave encashment during the year, as it was an actual payment made by the assessee. Disallowance of club expenses: The Tribunal allowed the deduction of club expenses of Rs. 17,38,319/- as the issue was covered by the decision of the Coordinate Bench in favor of the assessee. Disallowance of commission expenditure: The Tribunal directed the AO to give effect to the direction of the Dispute Resolution Panel (DRP) regarding the disallowance of commission expenditure amounting to Rs. 1,93,98,230/-. Difference in interest income: The Tribunal restored the issue of disallowance of interest income of Rs. 39,491/- to the file of the AO for further examination and decision. Calculation error in business loss available for set off: The Tribunal directed the AO to correctly compute the business loss available for set off, as there was a calculation error in the assessment order. In conclusion, the appeal filed by the assessee was allowed for statistical purposes, and the issues were either decided in favor of the assessee or restored to the file of the AO for further examination and decision.
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