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TMI Blog2018 (10) TMI 1793X X X X Extracts X X X X X X X X Extracts X X X X ..... onsidered the details filed for the sum of ₹ 71 lakhs odd and find that they contain details with regard to person who incurred the expenses, place, details of ticket, details of hotel etc. The A.O has not pointed out any specific instance of unsubstantiated claim of expenditure. The disallowance is, therefore, uncalled for and is correctly deleted - CIT-A correctly deleted the addition Disallowance of Legal and Professional Charges - allowable business expenses - HELD THAT:- A.O has not brought on record any evidence to prove that the expenses were not incurred in relation to business nor any specific instance of unsubstantiated claim has been pointed out by the A.O. No reason to sustain the disallowance made by the AO on adhoc basis - CIT-A correctly deleted the addition - Decided in favour of assessee. - I.T.A .No. 387/BIL/2014, C.O No. 90/BIL/2015 - - - Dated:- 11-10-2018 - Shri R. K. Panda, Accountant Member And Ms Suchitra Kamble, Judicial Member Respondent by Shri Sanjay Kumar, DR Appellant by Sh. G. S. Agrawal, CA ORDER Suchitra Kamble, The appeal is filed by the Revenue and the Cross Objection i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 04,29,90,919/-; reimbursement of expenses of ₹ 6,41,193/- and recovery of expenses of ₹ 5,43,228/-. 4. The Arm s length price (ALP) of international transaction for vessel freight was bench marked using Transaction Net Margin Method (TNMM). The results were accepted by AO/TPO as within ALP. In respect of export of Iron Ore Fines, the uncontrolled comparable transactions were identified in TP Study using internal export instances in case of assessee as well as import instances by AE. Further, the external comparable instances were identified using data from Trade Steel Index (TSI) and U-Metal database. All the comparable instances found for each export transaction were averaged and the average price was compared with the export price charged by the assessee. The average price was also adjusted on account of various elements such as grade of Fines, freight, insurance, port adjustment etc. The TPO, in those cases where the internal transactions were available, did not accept the external comparables. Accordingly the TPO found that in 14 instances internal comparables were available and in remaining 7 instances external comparables could have been used. In case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al Charges. 7. The Ld. AR relied upon the order of the CIT(A) and submitted that the CIT(A) has taken all the cognizance of the evidences provided before him as well as before the TPO and the Assessing Officer. 8. We have heard both the parties and perused the material available on record. As regards Ground No 1, the CIT(A) held as under:- 9. I have carefully gone through the assessment order, submissions of the appellant, order of the TPO, comments of the TPO and the AO and the material available. It is seen that the TPO/AO has accepted the Transactional Net Margin Method (TNMM) with regard to freight charges paid by the appellant to the Associated Enterprise (AE) as within arm s length price. The TPO/AO has also accepted the comparable uncontrolled price method in case of Iron Ore Fines as adopted by the appellant, barring in following two vessels out of 21 vessels: S.No. Name of Vessel Rate FOB/MT Comparable rate per MT Difference in FOB/MT Weight in dry/MT Amount of adjustment (USD) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be the arm s length price find that provisos to Sec. 92C(2) have been amended as below: First proviso was inserted by Finance Act, 2001, w.e.f. 1/04/2002 which reads as below:- Provided that where more than one price may be determined by the most appropriate method, the arm s length price shall be taken to be the arithmetical mean of such prices. 2. However, the above proviso was substituted by Finance Act 2002, w.e.f. 01/04/2002 as below:- Provided that where more than one price is determined by the most appropriate method, the arm s length price shall be taken to the arithmetical mean of such prices, or, at the option of the assessee, a price which may vary from the arithmetical mean by an amount not exceeding five percent of such arithmetical mean. Thus, the proviso inserted by Finance Act 2001, in fact, did not become operative. 3. Thereafter, Finance Act, 2009 enjoined that in Section 92C, for the proviso, the following provisos shall be substituted with effect from the 1st day of October, 2009, namely:- Provided that where more than One price is determined by the most appropriate method, the arm& ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d under sub-section (2) consisting of the main provision and also the first proviso. Resultantly, the option of deemed ALP shall extend not only to a situation where more than one price is determined as ALP by the most appropriate method but also where only one price is determined as ALP. The net result is that the option to the assessee shall be available in both the situations, covered under main sub-section (2) and also the first proviso. 12. The issue of prices quoted by LIBOR whether average of various rates was also dealt-in by the Hon ble Members in the aforesaid Order of Hon ble ITAT, Mumbai Bench-K, Mumbai in case of The Development Bank of Singapore. In the said case, LIBOR was comparable uncontrolled interest rate which the assessee relied upon. In that case, the Hon ble Members observed as below: Since the LIBOR is not a rate in itself at which some bank is willing to borrow or lend, but an average of rates at which various panel banks offer to borrow or lend inter-bank offers, the same cannot be characterized as one price determined under the comparable uncontrolled price method. It is required tobe considered as arithmetical mean of such price ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mean has not been explained by the appellant cannot be accepted and appellant has sufficiently demonstrated above. The case laws referred by the TPO in the TP Order as well as in the comments filed by TPO pertain to earlier year i.e., prior to substitution of first proviso in Sec. 92C(2) by Finance Act, 2009. However, in case of UV Trade Corporation India - (2011) T-II04 ITAT - Del.-TP the Hon ble Members have taken different view as taken in case of Development Bank of Singapore supra by the Hon ble Members of Mumbai Bench. There being difference of opinion in the decision of two different Benches of ITAT, I am convinced with the decision in case of Development Bank of Singapore, Mumbai Bench and also for the reasons that in case of different view, view beneficial to the appellant be taken. The other judgement in case of General Atlantic Pte. Ltd. supra quoted by the TPO is of Mumbai ITAT which is prior to the judgement of the same bench of ITAT in Development Bank of Singapore supra. The later judgement is preferred. Therefore, the upward adjustment is deleted. The appellant gets relief of ₹ 81,44,959/- Thus, the CIT(A) after verifying all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the appellant. The appellant incurred ₹ 65 lakhs odd towards Legal and Professional Charges. Details with regard to above were filed before me, I have carefully gone through the same, the A.O has not brought on record any evidence to prove that the expenses were not incurred in relation to business nor any specific instance of unsubstantiated claim has been pointed out by the A.O. I do not find any reason to sustain the disallowance made by the AO on adhoc basis. Hence, the disallowance is deleted. The assessee incurred ₹ 65 lakhs approximately towards the legal and professional charges and for which the assessee submitted the details which was ignored by the Assessing Officer. However, we find that the CIT(A) after proper appreciation of the facts of the case deleted the disallowance. The order of the CIT(A) on this issue is a reasoned one, therefore, there is no need to interfere with the findings of the CIT(A). Ground No. 3 of the Revenue s appeal is dismissed. 11. In respect of the Cross objection the same is in support of the order of the CIT(A). Since, all the grounds raised by the Revenue are dismissed, the cross objection becomes infruc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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