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TMI Blog2021 (8) TMI 1213X X X X Extracts X X X X X X X X Extracts X X X X ..... found to be allowable, but for the provisions of sec. 40(a). Hence the action of TPO in reducing the T.P adjustment amount by the disallowance made u/s. 40(a) may not be right and in that case, the error lies in AY 2009-10. Having not done so, the Ld. CIT should not find fault with the claim of the assessee made u/s. 40(a) of the Act on the reasoning that the TDS has been made in this year, i.e., in AY 2010-11. the order passed by Ld. CIT(A) on this issue cannot be sustained. Foreign services Employees expenses - TPO had determined ALP of intra group services at NIL - AR also took us through the query posed by the TPO during the course of TP proceedings. TPO has specifically asked whether the assessee is claiming any reimbursements as expenses without routing though the Profit and Loss account? - The assessee has also furnished reply to the same stating that reimbursement claims have been routed through the Profit and Loss account, meaning thereby, the TPO has specifically applied his mind on this issue. Hence the TPO has examined this issue and has taken a possible view, in which case, the revision order passed by Ld. CIT on this issue is also liable to be quashed. In the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt and not u/s. 40(a), the allowance of the same on payment basis in AY 2010-11 is not in order and resulted in short computation of income by ₹ 2,80,00,000/- and there is a short levy of tax to the extent of ₹ 1,42,75,800/-. 3. Foreign Service Employee expense which was an internal part of the supporting services should have been considered while computing ALP. This has resulted in short computation of TP adjustment by ₹ 2,56,46,834/- and short levy of tax to the extent of ₹ 1,30,76,547/-. 4. The assessee objected to the revision proceedings by contending that there is no error in the order passed by the A.O. After considering the replies given by the assessee, the Ld. CIT passed the impugned revision order holding that the assessment order dated 21.5.2014 passed for the year under consideration is erroneous and prejudicial to the interest of the revenue. Accordingly, he set aside the issues and remitted the matter to the file of the A.O. for considering them afresh. Aggrieved, the assessee has filed this appeal before us. 5. Point no. 1 2 mentioned in paragraph 3 supra relate to single issue. The facts relating to the same are that the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... making payment this year. The claim of the assessee is in accordance with the provisions of sec. 40(a) of the Act. Accordingly, he submitted that there was no error in the claim made by the assessee in this year, i.e., in AY 2010-11. 8. The Ld. A.R further submitted that the T.P adjustment made by the TPO determining ALP of management charges at NIL in respect of remaining amount has been challenged by the assessee and the appeal is pending before the Tribunal. He submitted that in AY 2005-06, the TPO has allowed partial relief on management cross charges, meaning thereby, ALP was not determined at NIL in that year. Accordingly, he submitted that there is no error in the assessment order on this issue and hence the Ld. CIT was not justified in passing revision order on this issue. 9. On the contrary, the Ld. DR supported the order passed by Ld. CIT. 10. We heard rival contentions and perused the record. The details relating to computation of administrative and business support services are given in page 287 of the paper book as under:- Table-A Breakup of Administrative and Business Support Services Particulars Exchange rate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... We are afraid that the view expressed by Ld. CIT on this issue may not be correct. While computing total income, the disallowance made u/s. 40(a) has been accepted by the AO in AY 2009-10. The view of Ld. CIT is stated as under in the revision order passed for AY 2010-11:- While computing TP additions for the AY 2009-10 an amount of ₹ 2,80,00,000/- was not included to the TP adjustment considering the fact that the same was already disallowed u/s. 40(a) of the IT Act which is specified in TPOs order. The said amount should have been added back to income as TP adjustment and not u/s. 40(a) of the IT Act. After making the above said observations, the Ld. CIT has held as under:- Accordingly, the allowance of this amount on payment basis in AY 2010-11 is not in order and resulted in short computation of income of ₹ 2,80,00,000/- resulted in short levy of tax to the extent of ₹ 1,42,75,800/-. It can be noticed that the Ld. CIT is taking a particular view on the assessment order passed for AY 2009-10, meaning thereby, he is finding fault with the assessment order passed for AY 2009-10. After observing so, he is revising the assessment order passed fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accepted to be at arms length by the TPO. During the course of TP proceedings, the TPO had asked query on the reimbursement of expenses, i.e., whether any of reimbursements have been claimed without routing the same through Profit and Loss account and it was duly replied. Hence the TPO has applied his mind on this issue, accepted the same as part of TNM method exercise and found the same to be at arms length. Accordingly, he contended that the Ld. CIT was not justified in passing revision order on this issue also. 17. We heard Ld. D.R on this issue and perused the record. The Ld. AR also took us through the query posed by the TPO during the course of TP proceedings. The TPO has specifically asked whether the assessee is claiming any reimbursements as expenses without routing though the Profit and Loss account? The assessee has also furnished reply to the same stating that reimbursement claims have been routed through the Profit and Loss account, meaning thereby, the TPO has specifically applied his mind on this issue. Hence the TPO has examined this issue and has taken a possible view, in which case, the revision order passed by Ld. CIT on this issue is also liable to be quashed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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