TaxTMI 
TaxTMI 
2019 (4) TMI 1769
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....erein. 3. That on the facts and in the circumstances of the case and in law, the learned AO has exceeded his jurisdiction by making the following additions to the returned income/loss and disregarding the provisions of section 44 of the act read with rule 1 and 2 of the 1st schedule of the act which is self-contained court for assessment of income of insurance company and specifically prohibits any adjustment u/s 28 to 43B of the act, with regard to determine the taxable income of a life insurance company i. Rs. 25575000/- on account of fringe benefit tax provision under section 40 (a) (IC) Page | 2 ii. INR 943000 on account of provision of that that is under section 36 (1) (Viia) iii. INR 2385358/- on account of donation expenditure u/s 37 (1) 4. that the learned AO erred in facts and in law in making the addition of INR 9 048000/- from sale of investments credited to the profit and loss account (nontechnical account) by separating income from sale of investments credited to profit and loss account (non-technical account) from income from the business of insurance and considered the same as income from nonlife insurance business without....
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....n of mind with the single-minded intention of making an addition to the returned income of the assessee d. making an apparent error of considering 31 days is the period for which the associated enterprise personnel provided short-term consultancy services thereby failing to appreciate that the actual corresponding number of days 143 (despite the said fact being duly furnished on record) e. not allowing the 5% range mentioned in proviso to section 90 2C (2) of the act while computing the arm's-length price for the consultation services provided by the associated enterprise. 6. The learned AO has erred in law and on facts in initiating penalty proceedings for furnishing inaccurate particulars u/s 271 (1) (c) of the act 3. Brief facts of the case shows that that assessee is a company engaged in the business of life insurance. It filed its return of income on 23/10/2006 declaring a loss of INR 580544350/-. It was found that assessee has entered into an international transaction and therefore reference was made to the transfer pricing officer on 27/10/2008. The learned transfer pricing officer examined the arm's-length price of the international transaction....
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....3) read with section 144C of the Act on 4/10/2010 wherein transfer pricing adjustment of Rs. 1183536/-, addition on account of sale of investment separately of INR 9048000/-, disallowance of fringe benefit tax provision of INR 25575000/- and disallowance of the provision of bad debt and donation paid of Rs. 3328358/- was made to the returned loss of Rs. 580544350/- making the assessed loss at INR 541409456/- . Assessee aggrieved with the order of the learned AO has preferred this appeal before us. 6. At the time of the commencement of the hearing the learned authorised representative submitted an application for admission of the additional ground vide letter dated 9/5/2018, wherein he proposed to raise following 2 additional grounds of appeal:- 1. That on the facts and circumstances of the case and in law, the DRP/AO erred in not allowing the exemption u/s 10 (34) of the act in respect of dividend income of INR 4 505772/- earned by the appellant during the previous year relevant to subject assessment year. 2. Without prejudice to ground of appeal number 3 relating to disallowance of donation of INR 2 385358/-, that on the facts and circumstances of the case and....
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....essing officer of the appellate authorities. He therefore stated that the tribunal had jurisdiction to permit additional grounds to be raised even though this did not arise out of the order of the appellate assistant Commissioner. He therefore submitted that the aforesaid additional grounds may kindly be admitted as they do not involve any fresh investigation of the facts and are legal in nature. 9. The learned departmental representative vehemently objected to the additional ground raised by the assessee and submitted that they have not been claimed in the original return of the income or before the learned assessing officer and 1st time raised before the coordinate bench and therefore they are not arising out of the order of the assessing officer or the learned DRP and therefore such ground cannot be raised before the tribunal for the 1st time. 10. The learned authorised representative vehemently referred to the order in case of the assessee's own case for assessment year 2010 - 11 wherein on identical facts and circumstances the assessee has raised ground of appeal regarding claim u/s 10 (34) of the act , which is recorded at para number 3 of the order of the coordinate be....
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....er the question of law so as to determine the correct tax liability of an assessee in accordance with law.‖ In the impugned case, the fact that the assessee has earned dividend income is apparent from the material available on record of authorities below. In view of this fact the only question before us in the additional ground relates as to whether the provisions of section 10 (34) are applicable in the case of the assessee or not. Therefore, in our view, the recent decision of the honourable Bombay High Court in the case of Ultratech cement Ltd (supra), as relied upon by the learned departmental representative will not assist the revenue. We therefore admit the additional ground.‖ 12. In view of the above judicial precedent in assessee's own case for assessment year 2010 - 11, respectfully following the decision of the coordinate bench, we also admit the additional ground raised by the assessee with respect to the exemption under section 10 (34) of the act in respect of dividend income of INR 4 505772/-. 13. In the application for the additional ground of appeal, 2nd ground raised is with respect to the allowability of deduction u/s 80 G of the income tax act. T....
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....tative submitted that i. impugned disallowance have been made by the learned AO holding that under the commercial accounting principles deduction cannot be allowed for these items. He submitted that appellant is engaged in the business of life insurance business, its taxable profit is to be computed as per the provisions of section 44 read with provisions of rule 1 and 2 of the 1st schedule of the Act. Provision of section 44 starts with a non obstante clause which forbids any adjustment to the total income as provided u/s 28 to Section 43B of the Act, All these disallowances falls in that subset of sections, hence disallowances/ adjustment made by ld AO is not correct. He further stated that unlike rule 5 of schedule 1 which is applicable to general insurance companies which specifically disallows expenses not allowable under the provisions of section 30 to 43B there is no such specific mandate in provisions of rule 2 which applies to Life Insurance business as amended by Finance act, 1976. He further stated that prior to that amendment it specifically provided that expenditure not allowable u/s 30 to section 43B shall be added back. However there is no such provision in ....
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....he previous year at the rate of 30% on the value of such fringe benefits. Therefore, he stated that on plain reading of the provisions, it is apparent that nature of fringe benefit tax [FBT] is an additional income tax. It was further stated that FBT is payable by an employer and thus it is clear that the provisions of chapter XIIH regarding fringe benefit constitute a self-contained code in itself and does not have any relation with the tax payable under the other provisions of the act. He otherwise stated that fringe benefit tax is not an allowable deduction but is an additional income tax and therefore even the income tax paid by the insurance company under section 44 of the act, the above sum is not deductible. Hence he stated that the addition has been rightly made by the learned assessing officer. He further stated that the non-obstante clause mentioned in the section 44 of the income tax act does not override the provisions of fringe benefit tax as it overrides only the provisions of the act relating to the computation of income chargeable under the head 'interest on securities',' income from property', ‗capital gains' or 'income from other sources'. In view of this he....
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....vision for doubtful debts but on the other side has taken the provision to the extent there is increase in value of investment other than temporary decline, as part of the income. This implies that CIT(A) has just taken the contrary view. We have also examined the contention of the learned DR that the assessee himself added back the royalty while computing the shareholders income. This implies that the assessee has accepted the view of the Revenue that the income in the shareholders a/c has to be computed under the normal provisions of the computation of income in Income Tax Act. Royalty paid by the assessee in our view cannot be regarded to be an expense relating to the life insurance business. Therefore there is nothing wrong caused to the Revenue as Royalty cannot be regarded to be liability incurred for life insurance business. We therefore set aside order of CIT(A) on this issue and delete the enhancement made by CIT(A) by Rs. 2,41,83,000/-. Thus this ground stands allowed.‖ 19. Further with respect to donation the coordinate bench in assessee's own case ( supra) in para no 94 has held as under :- "94. Ground Nos. 7 & 8 relates to the sustenance of disallowan....
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....t while computing the income under the head "Income from business or profession" had it not been the question of determining the profit and gains of business of life insurance. We, therefore, dismiss ground no. 7 taken by the assessee and confirm the disallowance of Rs. 2,50,00,000/- as there is no submission or argument made on behalf of the assesee that the assessee is eligible for deduction under section 80G of the Income tax Act and the assessee had complied with the conditions as stipulated under section 80G. It is also not the case of the assessee that the assessee has incurred these expenses eligible for deduction under section 35CCA, 35CCB, 35CCC or 35CCD so that we have taken a view that while computing the income from insurance business, in view of specific provisions of section 44 no disallowance could have been made.' 20. While deciding on issue in case of general insurance Corp of India vs CIT in 240 ITR 139 the honourable Supreme Court while interpreting the provisions of section 44 of the income tax act has held that section 44 is a special provision governing computation of taxable income earned from business of insurance. It opens with a non-obstante clause and,....
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....s and gains from any other business. That means if an assessee carries on business of life insurance along with any other business then the profits earned gains of the life insurance business shall be computed separately. Therefore an assessee may have more than one business and 1 of them may be of the life insurance business and to the business of the life insurance the provisions of these rules will apply. Rule 2 provides the computation of income of the life insurance business. According to that rule profits and gains of life insurance business shall be taken to be the annual average of the surplus arrived at by adjusting the surplus or deficit disclosed by the actuarial valuation made in accordance with the Insurance Act, 1938 in respect of the last inter-valuation period ending before the commencement of the assessment year, so as to exclude from it any surplus or deficit included therein which was made in any earlier inter-valuation period. Rule 3 has been omitted w.e.f. 1-4-1977 which provides for certain deductions from the income. Rule 4 provides the mechanism for granting the credit of tax deducted at source against the income as computed in rule 2. Therefore, there is no....
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.... also supports the view that any adjustment mentioned in the provisions of section 28 to 43B of the income tax act are not required to added/reduced from the income of the assessee from life insurance business. In view of this, we do not find any merit in the addition made by the learned assessing officer of fringe benefit tax. Accordingly ground number 3 of the appeal of the assessee is allowed. 23. Now we come to ground number 4 of the appeal wherein the addition of INR 9 048000/- from sale of investments credited to the profit and loss account separated from income from the business of insurance by the learned assessing officer and taxed as a non-life insurance business income. Thereby denying the benefit of provisions of section 44 of the act on the above sum. During the course of assessment proceedings the learned assessing officer noted that assessee has earned income of INR 9 048000/- on account of sale of investments. The learned AO was of the view that nature of income emanating from sale of investment partakes the character of income not from insurance business of the assessee however assessee has considered it is part of business of insurance. The main reason given by....
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....f advance ruling in case of potential. It was therefore submitted that provisions of income tax act relating to computing the taxability of income of a life insurance company as provided under section 44 read with 4 schedule are harmonious with the above requirements as they preclude the application for other chapters of the income tax act. It was further argued by the assessee that the above petition has been accepted by the revenue in earlier years and also consistent with the various decisions of the honourable Supreme Court. The learned AO considered the explanation of the assessee and rejected it as according to him the provisions of section 44 of the income tax act restricts only to the extent of income derived from life insurance business and in respect of other sources of income the normal charging sections are mandatorily applicable. Hence profit from sale of investment does not qualify to be income from life insurance business. With respect to the fact that in earlier year no such treatment has been given by the learned assessing officer and in past such profit on sale of investments has been considered as part of the insurance business, the learned AO stated that princip....
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....sment year 2010 - 11 wherein the coordinate bench has held that investment are integral part of the insurance business and inexplicable to the business of life insurance. He therefore submitted that the claim of the AO is patently wrong that profits arising to the assessee on sale of investment are altogether a separate business. v. He further stated that identical issue has been considered by authority of advance ruling in petition number 445 of 98 dated 30/04/2001 with squarely covers the issue in favour of the assessee. In view of this is submitted that the order of the learned assessing officer is not correct in treating the profits and gains of investment as separate business income. Alternatively in ground number 4.1 he raised the plea and stated that if this issue as per ground number 4 is decided against the assessee the assessee is eligible for relief as claimed in the ground number 4.1. 25. The learned departmental representative vehemently supported the order of the learned AO. The learned departmental representative mostly reiterated the argument that has been raised by the assessing officer in his order. 26. We have carefully considered the rival cont....
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....e commencement of the Insurance Laws (Amendment) Act, 2015; (b) in which the aggregate holdings of equity shares by foreign investors, including portfolio investors, do not exceed forty-nine per cent of the paid-up equity capital of such Indian insurance company, which is Indian owned and controlled, in such manner as may be prescribed. Explanation.-For the purposes of this sub-clause, the expression "control" shall include the right to appoint a majority of the directors or to control the management or policy decisions including by virtue of their shareholding or management rights or shareholders agreements or voting agreements; (c) whose sole purpose is to carry on life insurance business or general insurance business or re-insurance business or health insurancebusiness; ] (11) "life insurance business" means the business of effecting contracts of insurance upon human life, including any contract whereby the payment of money is assured on death (except death by accident only) or the happening of any contingency dependent on human life, and any contract which is subject to payment of premiums for a term dependent on human life and shall be deemed to incl....
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.... 7. loans on policies of life insurance within their surrender values issued by him or by an insurer whose business he has acquired and in respect of which business he has assumed liability; 8. Fixed Deposits with banks included for the time being in the Second Schedule to the Reserve Bank of India Act, 1934 (2 of 1934) and; such other investments as the Authority may, by notification in the Official Gazette, declare to be Approved Investments. (b) In addition the following investments shall be deemed as Approved Investments 1. All rated debentures (including bonds) and other rated & secured debt instruments as per Note appended to Regulations 4 to 9. Equity shares, preference shares and debt instruments issued by All India Financial Institutions recognized as such by Reserve Bank of India - investments shall be made in terms of investment policy guidelines, benchmarks and exposure norms, limits approved by the Board of Directors of the insurer. 2. Bonds or debentures issued by companies, rated not less than AA or its equivalent and A1 or equivalent ratings for short term bonds, debentures, certificate of deposits and commercial papers by a ....
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....mpanies in India and in any private limited company or one person company or a company formed under section 8 of the Companies Act, 2013 or erstwhile Section 25 of the Companies Act, 1956. 30. As provided under the insurance act 1938 any company carrying on the life insurance business shall invest or keep invested any part of his controlled fund in a specified securities as under:- Further provisions regarding investments. 27A. (1) No insurer carrying on life insurance business shall invest or keep invested any part of his controlled fund and no insurer carrying on general business shall invest or keep invested any part of his assets otherwise than in any of the approved investments as may be specified by the regulations subject to such limitations, conditions and restrictions therein 31. On Conjoint reading of all these provisions it is apparent that insurance companies are required to invest according to the rules provided by the IRDA of all its controlled funds. It is not the case of the assessee that assessee has invested funds other than its controlled funds. To get out of the provisions of section 44 of the income tax act it is the duty of the assessin....
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.... assessee's own case in [2017] 86 taxmann.com 239 (Delhi - Trib.)/[2017] 167 ITD 540 (Delhi - Trib.)/[2017] 190 TTJ 137 (Delhi - Trib.) in AY 2002-03 held as under :- "12. We have heard the rival submissions and perused the relevant material on record. In order to decide this controversy, it would be apt to consider the mandate of section 44 as under :- 'Notwithstanding anything to the contrary contained in the provisions of this Act relating to the computation of income chargeable under the head "Interest on securities", "Income from house property", "Capital gains" or "Income from other sources", or in section 199 or in sections 28 to 43B, the profits and gains of any business of insurance, including any such business carried on by a mutual insurance company or by a co operative society, shall be computed in accordance with the rules contained in the First Schedule.' (emphasis supplied by us) 13. On circumspection of the prescription of section 44, it emerges that this section starts with a non-obstante clause (bold part) qua the computation of income chargeable under the head "interest on securities", "Income from house property", "Capital g....
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.... out in section 24, providing that the : 'Income chargeable under the head "Income from house property" shall be computed after making the following deductions.............'. Similarly, for the income under the head 'Capital gains', charging section is 45, which provides that : 'Any profits or gains arising from the transfer of a capital asset effected in the previous year shall, ....be chargeable ....' and the computation provision is contained in section 48, which provides that : 'The income chargeable under the head "Capital gains" shall be computed, by ....'. In the like manner, chargeability under the head 'Income from other sources' is contained in section 56(1) and the computation provision is contained in section 57. Coming to the income under the head 'Profits and gains of business or profession', the chargeability is enshrined in section 28, which provides that : 'The following income shall be chargeable to income-tax under the head "Profits and gains of business or profession".....' and the computation is contained in section 29, which mandates that :'The income referred to in section 28 shall be computed in acc....
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....first is the computation of income under respective heads, which exercise is undertaken by the AO and second is the computation of income from international transaction by determining its ALP, which exercise is done by the TPO and given effect by the AO in his order. Thereafter a final assessment order is passed in compliance with the directions given by the Dispute Resolution Panel. Here it is relevant to take note of the mandate of sub-section (3) of section 92, which states that the provisions of this section shall not apply in a case where the computation of income under sub-section (1) has the effect of reducing the income chargeable to tax computed on the basis of entries made in the books of account in respect of the previous year in which the international transaction was entered into. 16. This shows that when an assessee enters into an international transaction, second computation has to be necessarily made u/s 92. If the second computation results into a transfer pricing addition, such an addition is made to the income computed under the first computation. If on the other hand, the second computation results in reduction of the income computed under the first com....
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....which are specifically referred to in the provision containing a non obstante clause. When there is a specific reference to certain sections, then other unmentioned provisions of the statute remain applicable and alive. A bare perusal of the language of section 44 transpires that only the provisions : 'relating to the computation of income chargeable under the head "Interest on securities", "Income from house property", "Capital gains" or "Income from other sources", or in section 199 or in sections 28 to 43B' have been made inoperative. The legislature in its wisdom did not specifically mention the second computation of income envisaged u/s 92 in relation to international transactions. If the intention had been to cover section 92 as well, then either a specific reference to section 92 would have been made or the italicized bold portion of the provision starting with 'relating to the computation of income' and ending with 'sections 28 to 43B' would have been omitted, in which case, section 44 would have read as : ''Notwithstanding anything to the contrary contained in the provisions of this Act, the profits and gains of any business of insurance, in....
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....nternational transaction. If there is no income chargeable to tax in the first instance, there can be no question of determining the ALP of the international transaction. There cannot be any dispute on the proposition that section 92 is a computation provision and not a charging provision. This provision in itself cannot create a charge. For the applicability of this section, it is sine qua non that there must be some existing income chargeable to tax which is processed under Chapter - X to find out its ALP and the resultant transfer pricing adjustment, if any. Adverting to the facts of the instant case, we find that the assessee undoubtedly has an income chargeable to tax which has been computed as per the first computation available under section 44 of the Act and the international transaction concerns with such income alone. It is not a case of starting the second computation u/s 92 without there being any first computation. 20. The reliance of the ld. AR on the judgments in the case of LIC v. CIT [1964] 51 ITR 773 (SC) and CIT v. Oriental Fire and General Insurance Co. Ltd., [2007] 291 ITR 370/161 Taxman 181 (SC), etc. is again not germane to the issue under considerat....
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....ion 92 of the Act, by making addition on account of transfer pricing adjustment, if warranted. The additional ground raised under Rule 27 of the ITAT Rules, 1963, is, therefore, dismissed.‖ 36. On the merits of the addition which is identical on the facts in this year too the coordinate bench held as under :- 21. Now we take up the issue on merits. It is essential to mention that Sh. M.S. Syali, the ld. Sr Advocate argued the additional ground raised under rule 27 on 18.9.2017, which was responded by the ld. DR on the same day. When the Bench expressed its non-concurrence with the additional ground argued by the ld. Senior counsel and asked the parties to go ahead with the appeal on merits, Sh. Tarnadeep Singh, the ld. counsel took up the proceedings for further arguments. During the course of such hearing, it was prima facie noticed that the ld. CIT(A) failed to deal with all the points raised in the order passed by the TPO. As such, it was considered expedient to properly examine the matter. It was accordingly directed to both the sides to file a copy of the Agreement pursuant to which the services were received by the assessee and also a copy of the Transfer pr....
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....its of the appeal are concerned. 22. It is noticed that the ld. CIT(A) deleted the addition by holding that it was a case of receiving consultancy services and not secondment of employees on short assignments; and the CUP was the most appropriate method in the given circumstances since the uncontrolled comparable rates shown by the assessee represented arm' s length price as the services provided by NYLI consultants were functionally comparable. 23. Let us examine if the assessee received consultancy services or secondment of employees on short term assignments for which the payment in question was made and whether the companies chosen by the assessee are, in fact, comparable under the CUP method. 24. We have noted above that the ld. DR placed on record a copy of agreement dated 31.01.2003 effective from 01.01.2002 (hereinafter also called 'the Agreement'). The same is accompanied by a letter dated 22.09.2017 from ACIT addressed to the CIT, DR. The Agreement has been entered into between the assessee and New York Life International, LLC, (NYLI) a company incorporated in the USA. 25. Article 1 of the Agreement containing 'Scope of ....
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....amount of any bill received by MNYL shall be due for payment only after verification of the bill and the supports provided with the bill (hereinafter referred to as Due Date) by NYLI to MNYL." 27. On going through the above clauses of the Agreement, effective from 01.01.2002, i.e., covering three months of the previous year relevant to the assessment year under consideration, it becomes clear that NYLI agreed to 'advise and assist MNYL in devising Training Programmes for MNYL Agent Advisors.' This was to be done by NYLI by sending: 'trained personnel to the designated MNYL sites in India or abroad.' It is further evident that NYLI deputed its employees as independent contractor who: "shall not be considered to be the employees of MNYL." It is further clear that the employees were to be paid on per day basis and even the time spent by NYLI personnel on travel etc. was to be paid by the assessee. Such payment was supposed to be made: 'within one month of the completion of the project or ......, whichever is later.' An overview of the above clauses makes it manifest that NYLI deputed its personnel to the assessee for devising Training Programme for the....
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....g to life insurance and financial services companies, health care organisation, reinsurance organisations, etc., including consulting in respect of mergers, acquisitions and restructuring, product development and management, market entry, analysis and positioning, distribution economics and strategy, risk management, etc. US $ 300 (this is a blended rate) Buck Consultants and Actuaries Consultancy in the field of human resources, including health and welfare consulting and consultancy services also in respect of compensation and benefits, human resource effectiveness and technologies, and benefits administration. US$ 370 for a Principal and for an Actuary US$ 305 for a Consultant Mercer Human Resource Consultancy Consultancy in the field of human resources, including consultancy services provided in respect of health care, retirement benefits, human capital strategy, HR risk management, HR function strategy, performance management, etc US$ 440 for a Senior Health and Welfare Consultant and for an Actuary US$ 250 for a Consultant Rael & Letson Consultants and Actuaries Consultancy in the field of human resources, including health and welfare consulting. ....
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....ince we had access to a range of hourly charge-out rates, which indicated that the lower value of the range would possibly be for their junior level employees which may not be equitable to either an AVP, VP or SVP at NYLI. However, the upper value would possibly be for their very senior employee who could be equated to an SVP at NYLI. (c) The Partners and Senior Lawyers at Milliman Asia, Hongkong could be equated to VP and AVP at NYLI, respectively. (d) The Principal/Actuary and Consultant employed at Buck Consultants and Actuaries could be equated to SVP and AVP at NYLI, respectively. However, since no level of employee specified in case of Buck Consultants and Actuaries could be equated to VP at NYLI, an average of the hourly charge-out rates for a Principal/ Actuary and of a Consultant was considered to be appropriate for a level at Buck Consultants and Actuaries, which could be equated to VP at NYLI. (e) The Senior Health and Welfare Consultant/Actuary and Consultant employed at Mercer Human Resource Consulting could be equated to SVP and AVP at NYLI, respectively. However, since no .level of employee specified in case of Mercer Human Resource Consult....
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.... the appellant has entered into a separate Expatriate Salary Reimbursement Agreement with NYLI during the relevant period one employee by the name of Paul Colgan was on deputation to India under the said agreement. In the present case, the consultants came to India on short visits from time to time pursuant to the service agreement and worked under the supervision and control of NYLI. In my view it was not correct on the part of the A.O. to re-characterize the consultancy as secondment. 10.2 Considering the above, in my view the rates prevailing in the international market for such services as evidenced by rates actually charged by reputed international service providers from NYLI, the tested party, fairly represent the arms length price for such services during the relevant period. I have already observed that the services provided by NYLI consultants are functionally comparable. I also find that the rates actually paid to NYLI by the appellant were lower than the rates determined by the modified CUP established by using only such rates as were actually charged from NYLI, the tested party, during the relevant period by independent service providers. 10.3 I accord....
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....CIT(A) cannot be countenanced, it remains to be seen if the action of the TPO is sustainable. After rejecting the application of the CUP method, the TPO invoked the TNMM as the most appropriate method. Let us find out the prescription of working out the ALP under the TNMM under rule 10B(1)(e), reading as under : - (e) transactional net margin method, by which,- (i) the net profit margin realised by the enterprise from an international transaction entered into with an associated enterprise is computed in relation to costs incurred or sales effected or assets employed or to be employed by the enterprise or having regard to any other relevant base; (ii) the net profit margin realised by the enterprise or by an unrelated enterprise from a comparable uncontrolled transaction or a number of such transactions is computed having regard to the same base; (iii) the net profit margin referred to in sub-clause (ii) arising in comparable uncontrolled transactions is adjusted to take into account the differences, if any, between the international transaction and the comparable uncontrolled transactions, or between the enterprises entering into such transaction....
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....eleting the transfer pricing addition cannot be upheld and equally the view of the TPO in applying the TNMM also cannot be approved for the reasons assigned supra, albeit his exercise of rejecting the assessee's determination of ALP is correct. Under such circumstances, we are of the considered opinion that the ends of justice would adequately meet if, the impugned order is set aside and matter is restored to the file of the AO/TPO with a direction to determine the ALP of the international transaction afresh as per law after allowing a reasonable opportunity of being heard to the assessee. 37. Therefore respectfully following the decision of the coordinate bench in assessee's own case, with similar direction we also set aside ground number 5 of the appeal of the assessee back to the file of the learned transfer pricing officer for fresh adjudication. Accordingly ground number 5 of the appeal is adjudicated in the same manner as adjudicated in earlier years. 38. Ground number 6 of the appeal is against the initiation of penalty proceedings u/s 271 (1)( C ) of the act. At the time of hearing the learned authorised representative did not press it and therefore same are dismi....
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....rded. Second stage comes after computation of income u/s 44, computation as per provision of S. 92 by making addition on a/c of transfer pricing adjustment. 98. This decision in our view will not apply w.r.t. the applicability of S. 14A as the applicability or inapplicability of S 14A has to be considered at the stage of making computation of income u/s 44. We also do not agree with submissionof learned DR since the only activity in shareholders a/c is of investment, it cannot be said that no expenditure was incurred for earning dividend. In this regard, we may state question before us is not whether any expenditure has been incurred or not for earning of dividend but the question relates to the applicability of S. 14A, which issue has already been decided by co-ordinate Bench against Revenue in view of discussion under para 46 of the order of this Tribunal Mumbai Bench in case of ICICI Prudential Insurance Co. Ltd. (Supra), in which they have followed the decision of Delhi Bench in case of Oriental Insurance Co. Ltd. v Asstt. CIT [2010] 40 SOT 19 (URO). No contrary decision for applicability of S. 10(34) & S. 14A was brought to our knowledge. We accordingly allow the addi....