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TMI Blog2023 (9) TMI 1210X X X X Extracts X X X X X X X X Extracts X X X X ..... direction of DRP. After inclusion of Quadrant Communication Limited, the list of comparables to benchmark the transactions of marketing service would have two comparables i.e. Quadrant Communication Limited and Marketing Consultant and Agencies Limited. The TPO is directed to give effect to the order of DRP and recompute ALP for provision of marketing service with the revised set of comparables. The additional ground of appeal is thus, allowed. TP adjustment on the premise that the assessee has recovered less marketing service fee from its AE - AO made adjustment to make good the short fall - HELD THAT:- As decided in own case DRP was not justified in disallowing the same There is no doubt about incurring of expenditure by the assessee, as stated earlier The assessee had introduced an incentive scheme and had incurred the expenses - Whether the money received from AE was at arm's length or not is a separate issue But, incurring of expenditure was never in doubt. So, in our opinion, the alternate argument raised by the assessee has to allowed. Disallowance of foreign exchange loss - HELD THAT:- We find that this is a perennial issue. The assessee has been claiming fore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2.2017 rejected all the comparables selected by the assessee and introduced fresh set of five comparables as under: Sr. No. Name of the Company OP/OC (%) 1 Marketing Consultants and Agencies Limited 8.75% 2 Killick Agencies and Marketing Limited 23.02% 3 Axis Integrated System Ltd. 17.32% 4 B V G India Limited 19.80% 5 Apitco Limited 8.84% Average 15.51% With the introduction of fresh comparables and taking average margin of the comparables against margin of the assessee-11.22% (OP/OC), the TPO made adjustment of Rs. 323,911,745/-. The TPO further made adjustment of Rs. 2 crores in respect of marketing service fee, rejecting assessee s entity level TNMM approach. The assessee filed objections before the Dispute Resolution Panel (DRP) assailing the adjustments made by the TPO. The DRP uphel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the tax authorities in the past. The addition on account of foreign exchange loss was made in assessee s own case for AY 2009-10 and 2012-13. For identical reasons foreign exchange loss has been disallowed in AY 2014-15. The Tribunal in appeal of the assessee for AY 2013-14 (supra) deleted the disallowance. 4.3 No submissions were made by the Ld. Counsel for the assessee with respect to ground no. 2.1 to 2.6 and 2.8 to 2.10. 5. Per contra, Shri Vinod Tanwani representing the Department vehemently defended the impugned order. The Ld. Departmental Representative (DR) submitted that the assessee s objections with respect to selection of comparables were considered by the DRP and the same were rejected by passing a reasoned directions. In respect of other additions/adjustments, the Ld. DR strongly supported the assessment order and prayed for dismissing appeal of the assessee. However, the Ld. DR fairly stated that the issues raised by the Counsel in present appeal are similar to the one adjudicated by the Tribunal in assessee s own case in AY 2013-14. 6. We have heard the submissions made by rival sides and have examined the orders of authorities below. We have also conside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Limited, B V G India Limited, Axis Integrated Systems Limited and Killick Agencies and Marketing Limited from the list of comparables. Hence, ground no. 2.7 of the appeal is allowed, pro-tanto . 10. The assessee has raised additional grounds of appeal seeking direction to the AO for including Quadrant Communication Limited in the list of comparables as per the directions of DRP. We find that the DRP while deciding the issue of inclusion/exclusion of comparables has accepted assessee s comparable i.e. Quadrant Communication Limited to be valid comparable for assessment year 2014-15 as well. However, while passing the impugned assessment order, the AO has failed to give effect to the said direction of DRP. After inclusion of Quadrant Communication Limited, the list of comparables to benchmark the transactions of marketing service would have two comparables i.e. Quadrant Communication Limited and Marketing Consultant and Agencies Limited. The TPO is directed to give effect to the order of DRP and recompute ALP for provision of marketing service with the revised set of comparables. The additional ground of appeal is thus, allowed. 11. In ground no. 2.11 of appeal, the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ought on record by the Departmental Authorities to demonstrate that the assessee has actually received the amount of 2 crore from the AE The Department has also not disputed or doubted the payment of incentives of Rs. 56,13,02,874 to the travel agents. That being the case, the addition made purely on presumption and surmises cannot be sustained. Moreover, it is evident from the order of the DRP that relying upon their own decision in assessee's case for assessment year 2010-11, they have upheld the disallowance Notably, while deciding the appeal of the assessee on identical addition of Rs. 2 crore on account of difference payment of incentives to travel agents and marketing service fee received from the AE, the Tribunal in assessment year 2009-10 in ITA no. 1402/Mum./2014, dated 5 th January 2018, has deleted the addition with the following observations:- As far as disallowing the expenditure of Rs. 2 crores, while computing the taxable income of the assessee, is concerned, we would like to hold that the DRP was not justified in disallowing the same There is no doubt about incurring of expenditure by the assessee, as stated earlier The assessee had introduced an incenti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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