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=770413 https://www.taxtmi.com/caselaws?id=770413 Deduction of bad debts u/s 36(1)(vii) - HELD THAT:- As it is a fact on record that assessee has rendered the services in FY 2017-18 and they reached a settlement in FY 2018-19 i.e. in AY 2019-20. The basic grievance of the AO was that assessee should have written off the bad debt in AY 2019-20. It is a fact on record that non-recovery of abovesaid amount has become bad debt and yes, no doubt, assessee should have claimed the same in AY 2019-20, however assessee has claimed as bad debt only in AY 2020-21. It does not change the character of the bad debt and considering the tax rate being same in both the FYs, it amounts to revenue neutral. Therefore, there is no bar in claiming the ascertained bad debt in the current assessment year. Accordingly, we are inclined to allow the claim of the assessee and ground no.4 is allowed. Allowability of 'Data Field Costs' - AO sustained the addition with the observation that the said expenditure represented regular expenditure incurred by the assessee from year to year which is clearly covered under the provisions of section 2(22)(e) and it is not any trade advance - HELD THAT:- We observed that AO has mentioned in his order that there is conflict between income received by the assessee, market research fee and the expenditure. After careful consideration, we are of the view that assessee is collecting fees after conducting data with the help of various agencies and the fees would be collected from its clients are regarded as market research fees and related expenditure on collection of data regarded as data fee cost expenditure. The data field expenditure are the related expenditure incurred by the assessee in support submitted the relevant agreements entered with various agencies and assessee incurs cost on collection of data, pays incentives to retailers for sharing their data and expenditure on deposits etc. and incurring of expenditure on data field cost is a direct business expenditure incurred by the assessee in collecting the information and directly correlates with the market research fees collected by the assessee. In our considered view, it is the running expenditure incurred by the assessee and it is also fact on record that the same is duly audited. Therefore, we are inclined to allow the grounds raised by the assessee. TP Adjustment - TPO rejected the economic analysis, functional profile of comparables and filters applied by the assessee in the TP documentation and proceeded to reject five comparables of the assessee and selected 13 new comparables proposed - HELD THAT:- We are inclined to allow the grounds raised by the assessee on the issue of persistent loss which cannot be applied in the case of Pratissad Communications Pvt. Ltd. which has registered profit in FY 2018-19. Accordingly, we direct the AO/TPO to include this comparable company as comparable with the assessee company. Not considering the other income in the case of the assessee which is in relation to liabilities - In the case laws relied on by the assessee in the case of Tetra Pak India Pvt. Ltd. [2023 (10) TMI 43 - BOMBAY HIGH COURT] we observed that the company normally made gross provisions towards doubtful debts and when it reverses the provisions it was treated as operating income. Similar view was expressed in other decisions as well. However, in the present case, no doubt assessee has written back the provisions no longer required as other income we observed that the assessee has only allocated the cost between the two divisions - AE and non-AE segment. They are not able to demonstrate how the provisions written back directly linked to the business of the AE rather they allocated the total written back of liabilities on the basis of revenue from the clients. The general allocation of right back between segments cannot be treated as operating income of the relevant segment i.e. AE segment. Therefore, we are not inclined to accept the submissions of the assessee. Therefore, the case law relied on by the assessee is distinguishable. Case-Laws Income Tax Wed, 26 Mar 2025 00:00:00 +0530