The ITAT held that the common expenditure of the head office ...

Allocation of common expenses, transfer pricing, prior period expenses, and treaty analysis in cross-border transactions.

December 4, 2024

Case Laws Income Tax AT

The ITAT held that the common expenditure of the head office needs to be allocated on a reasonable and scientific basis to the eligible unit for correctly determining its profit. The ITAT upheld the allocation of expenses like commission to directors, audit fees, and bank charges to the MEPZ units. Regarding goods transferred to the MEPZ unit, the issue was remitted back to the Assessing Officer to ascertain the fair market value. The disallowance of prior period expenses was upheld due to lack of substantiation. The payment made to ESG International, USA for warehouse services was held not taxable in India as it did not constitute fees for technical services under the India-USA tax treaty. The "make available" condition was not fulfilled. The disallowances of foreign travel expenditure of directors and irrecoverable taxes were deleted. The additions for travel, gifts, and garden expenses were also directed to be deleted. The penalty imposed for the ESG International payment was cancelled as the primary addition was deleted.

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The ITAT held that the common expenditure of the head office ...

Allocation of common expenses, transfer pricing, prior period expenses, and treaty analysis in cross-border transactions.

December 4, 2024

Case Laws Income Tax AT

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