9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2024 (9) TMI 1516 - AT - Income TaxTP Adjustment - disallowance of payment made for technical services received from the Associated Enterprise (AE) - assessee could not be able to fetch that project for which the biddings were made and hence the TPO as well as Ld. DRP took a view of the assessee failed to derive any benefit from the technical services and hence the expenses attributable to these bids are not allowable to the assessee - HELD THAT - We observe that so far as the receipt of services by the assessee from its AE, vis- -vis the project bidding is concerned, there is no quarrel between the assessee and the Department. However, the main averment of the Department is that the assessee failed to derive any benefit from these expenses. We find force in the argument of assessee that the TPO is not empowered to apply benefit test while computing the ALP. It is settled position of law as held by apex court in SA builder 2006 (12) TMI 82 - SUPREME COURT that revenue authorities could not sit in the Arm Chair of the an assessee, when it comes to the business decisions to be taken by an assessee in the interest of business. Thus we direct the AO to delete the addition. Regional support services provided by the assessee - assessee has filed certain additional evidences to rebut the observations made by the DRP - HELD THAT - After considering the rival submissions, we are of the view that one more opportunity shall be granted to the assessee in the interest of justice to prove his case in respect of regional support services. Therefore, this ground of appeal(number 3) is allowed for statistical purposes. Interest on receivables - We are of the view that the for bench marking the loan transactions rate of LIBOR 200 points is correct adjustment, in view of the recent decision of this Tribunal in the case of S P Capital (IQ) 2024 (9) TMI 1372 - ITAT HYDERABAD we direct the AO to apply LIBOR 200 points in this set of transaction. We also observe that the assessee had not disputed the interest receivable transaction as international transaction per se. Therefore, we affirm the view of the Ld. DRP wherein it was held that the impugned transaction is of international transaction and has to be computed having regard to the ALP. Taxability of interest income - case of the TPO that the assessee could not be able to reconcile the mismatch between the 26AS reflecting interest income as well as the profit and loss account showing interest income - We remit this issue to the file of TPO for examining afresh in the light of the new facts brought on record before the bench and decide the issue accordingly. Loans and advances given to employees by the assessee and later written off by the assessee - Assessee fairly agreed that out of Rs. 10.95 Lakhs an amount Rs. 4,15,190/- has been wrongly debited to the profit and loss account and hence the same may kindly be disallowed and for the balance advance the matter may kindly be restored to the file of AO as the assessee is now in possession of the details of the employees with PAN Card and Aadhar Card to prove the identity of the genuineness of the transactions - We are of the view that in the interest of justice, this issue would also go back to the file of TPO for examining afresh. Ground number 8 is allowed for statistical purposes. Security deposit given by the assessee for rental accommodation at the project site - main contention of the learned counsel for the assessee is that the assessee failed to provide the copies of agreements and other related documents before the lower authorities, and hence this disallowance has been made - HELD THAT - We are of the view that heavens are not going to fall if one more opportunity would be given to the assessee to prove the genuineness of expenses in the shape of security advances given for the purpose of business. Therefore, in the interest of justice, we remit this issue also to the file of TPO for fresh adjudication.
Issues:
Transfer pricing adjustments made by TPO, Dispute Resolution Panel's decision, Taxability of interest income, Disallowance of employee advances, Disallowance of security deposits, Penalty proceedings under section 270A of the Income-Tax Act. Transfer Pricing Adjustments: The assessee's appeal arose from the Assessing Officer's order related to the Assessment Year 2017-18. The case involved international transactions, leading to a reference to the Transfer Pricing Officer (TPO) for determining the Arm's Length Price (ALP). The TPO made adjustments, which were partly allowed by the Dispute Resolution Panel (DRP). The assessee challenged the adjustments, leading to the current appeal. Technical Services Adjustment: The main contention was regarding technical services received by the assessee for project bidding support from its Associated Entity (AE). The TPO and DRP disallowed the expenses, stating the assessee derived no benefit. However, the Tribunal held that the benefit test should not be applied by the TPO, citing relevant judgments. Consequently, the Tribunal directed the AO to delete the addition related to technical services. Regional Support Services Adjustment: The assessee provided additional evidence to contest the regional support services adjustment. The Tribunal granted the assessee another opportunity to prove its case regarding regional support services, allowing this ground of appeal for statistical purposes. Interest on Receivables Adjustment: Regarding interest on receivables, the Tribunal directed the AO to apply LIBOR + 200 points for loan transactions, citing recent decisions. The Tribunal affirmed the view that the transaction was international and should be computed considering the ALP. Taxability of Interest Income: The issue of taxability of interest income was remitted to the TPO for fresh adjudication due to discrepancies in reconciliation between the 26AS statement and the profit and loss account. Disallowed Employee Advances and Security Deposits: The Tribunal allowed the disallowance of employee advances and security deposits to go back to the TPO for re-examination, providing the assessee with an opportunity to substantiate the genuineness of these transactions. Conclusion: The Tribunal partly allowed the assessee's appeal, directing various issues back to the TPO for fresh adjudication in the interest of justice. The order was pronounced on 9th Sept., 2024.
|
