TaxTMI 
TaxTMI 
2015 (6) TMI 667
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....of learned CIT(A). He also submitted that as per a decision of Hon'ble Bombay High Court rendered in the case of Godrej And Boyce Mfg. Co. Ltd. vs. DCIT And Another [2010] 328 ITR 81 (Bom), Rule 8D is not applicable prior to assessment year 2008-09. 4. We have considered the rival submissions. We find that this is admitted position of law as per the judgment of Hon'ble Bombay High Court in the case of Godrej And Boyce Mfg. Co. Ltd. vs. DCIT (supra) that Rule 8D is prospective and therefore, applicable from assessment year 2008-09 and afterwards. Therefore, Rule 8D is not applicable in the present year. At the same time, even prior to assessment year 2008-09 from when Rule 8D is applicable, some reasonable disallowance has to be made u/s 14A of the Act. The learned CIT(A) has confirmed the disallowance of Rs. 12,000/- . In our considered opinion, the disallowance of Rs. 12,000/- for average investment of Rs. 491.08 lac is not reasonable and therefore, we hold that disallowance should be made of Rs. 50,000/- on account of administrative expenses. Regarding deletion of disallowance of interest expenditure u/s 14A, it is held by CIT(A) that as per the judgment of Hon'ble B....
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....Hon'ble Supreme Court in the case of Radhaswami Satsang. Accordingly, in absence of any specific finding given by the TPO as to why he was not in agreement with the method adopted by the assessee for all these years and which had not been adversely commented upon by the earlier TPOs, the rejection of method and adjustments as proposed by the TPO is liable to be struck down as being in violation of "Principle of Consistency." 6.2.3 Notwithstanding the aforesaid, on Going through the provisions of transfer pricing as defined in the Income Tax Act, 1961, it is very clear that Resale Price Method does not apply to the assessee as Resale Price Method applies to imports into the country. Thus, the resale price method as adopted by the TPO, per-se is not correct. However, after going through the order of the TPO, it is seen that the TPO has actually applied internal CUP method, but wrongly nomenclated it as Resale Price Method. The TPO has adopted the gross margin of the A.Es. @ 5%, which as per the TPO was the commission available to a commission agent. This assumption of 5% is by itself incorrect as the records shows that the average commission paid by the appellant to the AEs/non....
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....ment. 3. The Commission of (mention the percentage of commission mutually agreed) 8 to 12.5% (EIGHT to TWELVE & HALF) on Nett FOB will be payable to KERAC (mention name of the commission agent) in case of price agreement settlement with any customer, the agency commission percentage for KERAC (mentioned the name of commission agent) can be discussed upon to help conclude the business. 4. The payment of Commission will be made to the KERAC in form of the DD/TT within the 30 days of receipt of full payment from the customer by the Principal. 5. The Agent will take care that all the consignment against order booked by them are immediately taken by the respective customers as per terms & conditions of the contract / order. Complaints dispute, if any, may be settled by them to the best of immediately the intelligence on behalf and approval of the principal. 6. The Principal agrees that all the customers by KERAC will be regarded as exclusive to them. 7. This agreement it mutually agreed by both 'the commission agent" KERAC (mention the name of commission agent) and "the Principal" M/s. Superhouse Ltd. India for a period of 05 (five) years only). The Agreement may further b....
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....or to an unrelated enterprise from the purchase and resale of the same or similar property or from obtaining and providing the same or similar services, in a comparable uncontrolled transaction, or a number of such transactions; (iii) the price so arrived at is further reduced by the expenses incurred by the enterprise in connection with the purchase of property or obtaining of services; (iv) the price so arrived at is adjusted to take into account the functional and other differences, including differences in accounting practices, if any, between the international transaction [ or the specified domestic transaction] and the comparable uncontrolled transactions, or between the enterprises entering into such transactions, which could materially affect the amount of gross profit margin in the open market; (v) the adjusted price arrived at under sub-clause (iv) is taken to be an arm's length price in respect of the purchase of the property or obtaining of the services by the enterprise from the associated enterprise." 7.2 From the above provisions of clause (b) of sub Rule 1 of Rule 10B of Income-tax Rules, it is seen that resale price method is applicable where there is p....