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2017 (4) TMI 712 - AT - Income TaxTPA - selection of MAM - Held that - In case of international transaction relating to purchase of goods from A.E. and resale to unrelated parties, RPM is the most appropriate method. Therefore, in our considered opinion, the Assessing Officer / Transfer Pricing Officer must examine assessee s bench marking under RPM in an objective manner. If the Assessing Officer / Transfer Pricing Officer are of the view that necessary / relevant data relating to gross profit margin of the comparables selected by the assessee are not available, it is open for the Assessing Officer / Transfer Pricing Officer to call for necessary / relevant materials from the assessee or else the Assessing Officer / Transfer Pricing Officer is free to independently proceed for selection of comparables under RPM after obtaining necessary information. As far as the contention of the learned Departmental Representative in relation to the issue whether license fee / addition license fee should form the cost based, in our view, it does not merit consideration at this stage as this is not an issue arising out of the order of the Transfer Pricing Officer or learned Commissioner (Appeals). It is open for the parties concerned to dwell upon all the issues while determining the arm s length price of the international transaction with the A.E. The grounds raised are allowed for statistical purposes. TDS u/s 194H - disallowance u/s 40(a)(ia) - Held that - As far as payment to bank towards credit card charges is concerned, as per the decision relied upon by the learned Authorised Representative cited supra, provisions of section 194H are not applicable as the bank makes payments to the assessee after deducting certain fees and it is not a commission. In view of the aforesaid, no disallowance under section 40(a)(ia) can be made in respect of payments made to bank towards credit card charges. As far as the amount paid towards charges for conversion of forex into cash, we are of the view that the matter needs re examination in view of assessee s submissions that there is no principal agent relationship between the assessee and Thomas Cook, therefore, provisions of section 194H is not applicable. We have noticed, though, in the course of the proceedings before the DRP, the assessee had submitted copies of agreement with bank as well as with Thomas Cook India Ltd., the authorities concerned have not properly examined the issue to ascertain the fact whether there is any principal agent relationship between the assessee and Thomas Cook India Ltd. We, therefore, set aside the issue to the file of the Assessing Officer for fresh consideration after providing adequate opportunity of hearing to the assessee. Addition being the difference between Form no.26AS (TDS certificates) and returned income - Held that - As could be seen, in the course of proceedings before the DRP, assessee has submitted a revised Form no.26AS. Further, a letter from HDFC Bank has also been submitted, wherein they have admitted of reporting excess interest income. Thus, prima facie, it appears that the assessee has reconciled the difference, except, for an amount of ₹ 33,638. Therefore, we direct the Assessing Officer to verify the revised Form no.26AS and restrict disallowance, if any, to the un reconciled amount. Ground partly allowed for statistical purposes.
Issues Involved:
1. Transfer Pricing Adjustment (Assessment Year 2008-09 and 2009-10) 2. Disallowance under Section 40(a)(ia) for non-deduction of TDS (Assessment Year 2009-10) 3. Addition based on discrepancy between Form 26AS and returned income (Assessment Year 2009-10) 4. Credit for TDS, TCS, and advance tax (Assessment Year 2009-10) 5. Levy of interest under sections 234B, 234C, and 234D (Assessment Year 2009-10) Issue-wise Detailed Analysis: 1. Transfer Pricing Adjustment (Assessment Year 2008-09 and 2009-10): The primary dispute was the addition made on account of transfer pricing adjustment. The assessee, involved in reselling products like tobacco, confectionary, perfume, and liquor at duty-free shops, had adopted the Resale Price Method (RPM) for benchmarking its international transactions with its Associated Enterprises (A.E.). The Transfer Pricing Officer (TPO) rejected RPM, suggesting the Transactional Net Margin Method (TNMM) instead, leading to a proposed adjustment. The assessee contended that RPM was the most appropriate method given its business model of reselling without value addition. The Tribunal noted that RPM is generally suitable for such transactions and criticized the TPO for not making a genuine effort to apply RPM. The Tribunal directed the TPO to reconsider the benchmarking using RPM, providing the assessee with an opportunity to submit relevant data and comparables. 2. Disallowance under Section 40(a)(ia) for non-deduction of TDS (Assessment Year 2009-10): The assessee faced disallowance for not deducting TDS on payments towards bank charges for credit card transactions and charges for conversion of forex into cash. The Tribunal noted that payments to banks for credit card charges do not attract TDS under Section 194H, citing precedents. However, the matter of charges for forex conversion required re-examination to ascertain whether there was a principal-agent relationship between the assessee and Thomas Cook India Ltd. The Tribunal remanded this issue to the Assessing Officer for fresh consideration. 3. Addition based on discrepancy between Form 26AS and returned income (Assessment Year 2009-10): The Assessing Officer added an amount due to a discrepancy between Form 26AS and the returned income. The assessee submitted a revised Form 26AS and a letter from HDFC Bank acknowledging an error. The Tribunal directed the Assessing Officer to verify the revised Form 26AS and restrict any disallowance to the unreconciled amount. 4. Credit for TDS, TCS, and advance tax (Assessment Year 2009-10): The Tribunal directed the Assessing Officer to verify the assessee's claims for credit of TDS, TCS, and advance tax payments and to give due credit accordingly. 5. Levy of interest under sections 234B, 234C, and 234D (Assessment Year 2009-10): The Tribunal noted that the levy of interest under these sections is consequential and does not require separate adjudication, dismissing these grounds as infructuous. Conclusion: The Tribunal allowed the appeals for statistical purposes, directing the Assessing Officer and TPO to re-examine the transfer pricing adjustments using RPM, verify the claims regarding TDS, TCS, and advance tax credits, and reconsider the disallowance for forex conversion charges. The issues related to interest levy were dismissed as consequential.
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