https://www.taxtmi.com/css/info/rss_sitemap/rss_feed.css?v=1746094055 https://www.taxtmi.com Business/Tax/Law/GST/India/Taxation/Policies/Legal/Corporate Tax/Personal Tax/Vat Law/Legal Information/Tax Information/Legal Services/Tax Services Tax Management India. Com / MS Knowledge Processing Pvt. Ltd. All rights reserved. One stop solution for Direct Taxes and Indirect Taxes https://www.taxtmi.com/caselaws?id=461890 https://www.taxtmi.com/caselaws?id=461890 TP Adjustment - international transaction relating to export of goods - MAM selection - HELD THAT:- As relying on own case [2018 (4) TMI 41 - ITAT MUMBAI] we hold that TNMM method as adopted by the Assessee was the most appropriate method for benchmarking the international transaction of sale/exports of goods. Accordingly, transfer pricing adjustment made by the AO is set aside, and the issue is remanded back to the file of AO for determination of ALP of the transaction of export of finished goods by the Appellant to its AE (i.e. Omni Active Health Technologies Inc., USA) as per TNMM method as adopted by the Appellant. It is clarified that no transfer pricing addition would be made in case the submission of the Appellant that the Appellant's margins in AE Segment are higher than the margins in non-AE Segment is found to be correct. In terms of the aforesaid, Ground No. 1 to 1.4 are allowed for statistical purposes. Disallowance of the weighted deduction claimed u/s 35(2AB) on Research & Development Expenses - HELD THAT:- The amendments made to the provisions of Section 35(2AB) and Rule 6 clearly being out the legislative intent to allow deduction for expenditure approved by the Prescribed Authority. Therefore, we reject the contention advanced on behalf of the Appellant that only Rule 6 was amended without making any amendment to the provisions contained in Section 35(2AB) of the Act. The conflict as perceived by the Appellant in the provisions contained in Section 35(2AB) of the Act and Rule 6, which in our view is non-existent, can, in any case, be resolved by way of harmonious interpretation of the provisions contained therein instead of adopting the interpretation as proposed by the Appellant which would render otiose the provisions contained in Rule 6 and Section 35(2AB) of the Act which were brought in effect by way of specific amendments. Judicial precedents relied upon by the Appellant also do not advance the case of the Appellant as the same are not applicable to the facts of the present case. In the judicial precedents cited by the Appellant there was repugnancy between the provisions of statute and the rules made thereunder, whereas in the case before us there is no such conflict. Absent any irreconcilable conflict between the applicable provisions contained in Section 35(2AB) and Rule 6, the judicial precedents cited by the Appellant have no application to the facts of the present case. No merit with the submissions advanced on behalf of the Appellant in this regard. Further, we find that the directions issued by the DRP are in line with the provisions of Section 144C(8) of the Act which provide that DRP may confirm, or enhance the variations proposed in the Draft Assessment Order. Accordingly, Ground No. 2 to 2.5 raised in the appeal are dismissed. Disallowance u/s 14A - HELD THAT:- As Appellant has not earned any exempt income and therefore, the addition made by the Assessing Officer u/s 14A of the Act read with Rule 8D of the Rules was not warranted as per the above decision of the Tribunal in the case of the Assessee. To same effect is the decision of Kohinoor Project Pvt. Ltd. [2020 (1) TMI 1161 - BOMBAY HIGH COURT]. Accordingly, disallowance u/s 14A made by AO is deleted. Ground raised by the Appellant are allowed. Book Profit under Section 115JB of the Act on account of disallowance u/s 14A - HELD THAT:-Since we have deleted the disallowance of INR 2,00,201/- made under Section 14A of the Act while computing income under the normal provisions of the Act, the question of making addition of the same while computing book profits under Section 115JB of the Act does not arise. Accordingly, addition made by the Assessing Officer while computing the Book Profits under Section 115JB of the Act is deleted. Assessing Officer directed to compute the amount of disallowance under Section 14A of the Act to be added to the Book Profits in terms of Section 115JB of the Act read with Explanation 1(f) thereto as per the decision of the Special Bench of the Tribunal in the case of Assistant Commissioner of Income Tax, Circle 17(1), Delhi vs. Vireet Investments Ltd. [2017 (6) TMI 1124 - ITAT DELHI] on the basis of audited financial statements of the Appellant. In terms of the aforesaid, Ground raised by the Appellant are allowed for statistical purposes. Addition to Book Profits u/s 115JB on account of disallowance of weighted deduction under Section 35(2AB) - HELD THAT:- Disallowance under Section 35(2AB) of the Act does not fall under any of the permissible addition specified in Explanation 1 to Section 115JB of the Act. Therefore, the Assessing Officer would not be entitled to tinker with the approved audited accounts as per the judgment of Apollo Tyres Limited reported [2002 (5) TMI 5 - SUPREME COURT]. Accordingly, the addition made by the Assessing Officer to Book Profits (as computed by the Appellant) under Section 115JB of the Act is deleted. Appeal preferred by the Assessee is partly allowed. Case-Laws Income Tax Wed, 19 Apr 2023 00:00:00 +0530