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TMI Blog2018 (6) TMI 363X X X X Extracts X X X X X X X X Extracts X X X X ..... istical purposes. Disallowance of employer’s contribution to provident fund and ESI - Held that:- By virtue of the amendment made to section 43B employer’s contribution to provident fund / ESI is allowable as deduction if they are paid before the due date of return of income to be filed for the relevant assessment year. The Hon'ble Jurisdictional High Court has expressed such view in case of Hindustan Organics Ltd.[2014 (7) TMI 477 - BOMBAY HIGH COURT]. We direct the Assessing Officer to allow assessee’s claim of deduction in respect of employer’s contribution to provident fund and ESI if they have been made before the due date of filing of return of income for the impugned assessment year. - ITA no.3094/Mum./2014 - - - Dated:- 1-6-201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of ` 4,98,20,772, was paid to ICICI One Source, U.S., and ` 7,87,62,366, were paid to ICICI One Source, U.K. towards provisions of market support service. While the Transfer Pricing Officer accepted the rest of the international transactions, he picked up payment of marketing support service fee to the A.Es, as noted above, to find out whether they were at arm s length. After issuing a show cause notice to the assessee and examining assessee s objections / submissions, the Transfer Pricing Officer proceeded to determine the arm's length price of the marketing support service fees paid to the A.Es by selecting transactional net margin method (TNMM) as the most appropriate method. In fact, in this respect, the Transfer Pricing Officer ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... missioner (Appeals), inter alia, on the ground of adoption of net margin / marketing cost as the PLI. 3. The learned Commissioner (Appeals) having not found merit in any of the grounds raised by the assessee upheld the transfer pricing adjustment made by the Transfer Pricing Officer. Notably, with regard to selection of net profit / marketing cost as PLI by the Transfer Pricing Officer, the learned Commissioner (Appeals) agreed with the reasoning of the Transfer Pricing Officer. Being aggrieved with the aforesaid decision of the learned Commissioner (Appeals), the assessee is in appeal before the Tribunal. 4. Though, in the memorandum of appeal the assessee has raised a number of grounds on transfer pricing issues (grounds no.1 to 11) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Shri Pradeep Dinodia. Moreover, the base should be independent from controlled transaction. This is so because if the base is tainted as it is on the control of the assessee, then, the purpose to justify the arm s length principle is defeated. For instance, to justify the purchase price of the goods from the associated enterprise using cost of goods sold [opening cost (+) purchase ( ) closing stock] as the base would not be justifiable since it is this cost which is controlled and can distort the analysis . 5. The learned Authorised Representative submitted, PLI adopted by the Transfer Pricing Officer by dividing the net margin by value of international transaction itself is patently wrong. He submitted, considering the fact that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n record that both the assessee as well as the Transfer Pricing Officer have no quarrel that TNMM is the most appropriate method to determine the arm's length price of the marketing cost. Rule 10B of the Income tax Rules provides the methodology of computing the arm's length price of international transaction under different prescribed methods. Rule 10B(1)(e) prescribes the methodology for computation of arm's length price of international transaction under TNMM. As per clause (i) of rule 10(B)(1)(e), the net profit margin realised by the enterprise from an international transaction with the A.E. is to be computed in relation to either cost incurred or sales effected or assets employed. PLI is a measure of company s profitabilit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore the learned Commissioner (Appeals), he has also completely ignored them and simply adopted the reasoning of the Transfer Pricing Officer without any deliberation on the issue. In view of the aforesaid, we are inclined to restore the issue to the file of the Assessing Officer for deciding afresh after considering assessee s claim of adopting the PLI of net margin / operating revenue and also examining working of margins submitted by the assessee at Page 182 and 183 of the paper book. The Assessing Officer shall decide the issue keeping in view our observations hereinabove and only after extending reasonable opportunity of being heard to the assessee. Grounds raised by the assessee are partly allowed for statistical purposes. 8. In gro ..... X X X X Extracts X X X X X X X X Extracts X X X X
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