TaxTMI 
TaxTMI 
2021 (8) TMI 1213
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...., respirators, 3D graphics for automotive industry and corrosion protection products. The A.O. passed the assessment order for the year under consideration u/s. 143(3) r.w.s. 144C of the Act on 21.5.2014. 3. The Ld. CIT initiated revision proceedings u/s. 263 of the Act, after examining the assessment record and coming to the conclusion that the assessment order passed is erroneous and prejudicial to the interest on the revenue on the following points: 1. The scrutiny of the assessment record reveals that the income computation statement furnished by the assessee an amount of Rs. 12,42,49,381/- being disallowance u/s. 40(a) in earlier years was claimed in the AY 2010-11 on payment basis. The above amount includes Rs. 2,80,00,000/- being ....
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....ration is erroneous and prejudicial to the interest of the revenue. Accordingly, he set aside the issues and remitted the matter to the file of the A.O. for considering them afresh. Aggrieved, the assessee has filed this appeal before us. 5. Point no. 1 & 2 mentioned in paragraph 3 supra relate to single issue. The facts relating to the same are that the assessee had claimed expenditure of Corporate Management Services paid to its AE in the preceding year, i.e., AY 2009-10. The claim so made included 'year-end' provision made for an outstanding amount of Rs. 2.80 crores. The assessee voluntarily disallowed above said amount u/s. 40(a)(i) of the Act, since no tax was deducted at source from the provision for expenses so made. The TP....
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.... voluntarily disallowed the above said amount u/s. 40(a) while computing returned income. The A.R submitted that the TPO/AO has nowhere stated that the addition of Rs. 2.80 crores was made on account of T.P adjustment, i.e., the AO has accepted the disallowance of the above said amount made by the assessee u/s. 40(a) of the Act. The Ld. A.R submitted that the assessee has claimed the above said amount of Rs. 2.80 crores in this year, since the Tax was deducted at source while making payment this year. The claim of the assessee is in accordance with the provisions of sec. 40(a) of the Act. Accordingly, he submitted that there was no error in the claim made by the assessee in this year, i.e., in AY 2010-11. 8. The Ld. A.R further submitted t....
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....voluntarily disallowed the year end provision u/s. 40(a), since no tax was deducted at source from the provision for Administrative and management support services made by the assessee. Under accounting principles also, when the actual payment is fully debited to the Expenditure account, the provision made in the preceding year shall be credited, so that actual payment is offset against the provision so created in the preceding year. The provision for expenses so created is allowable as deduction in the normal course. However, due to non-deduction of tax at source, the assessee has voluntarily disallowed the same u/s. 40(a) of the Act in AY 2009-10. When the TDS was deducted on the actual payments made during the year under consideration, t....
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....icular view on the assessment order passed for AY 2009-10, meaning thereby, he is finding fault with the assessment order passed for AY 2009-10. After observing so, he is revising the assessment order passed for AY 2010-11. These aspects clearly show that the Ld. CIT has not actually pointed out any error in the assessment order passed for AY 2010-11. There should not be any dispute that the claim of the assessee is as per the provisions of sec. 40(a) of the Act. 13. We notice that, under Explanation to section 92(1) of the Act, the allowance for any expense shall also be determined having regard to arms length price. Since the TPO has determined the arms length price at NIL in AY 2009-10, the entire claim made in the profit and loss accou....
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.... employees have drawn full/part of salary in their home country and the assessee has reimbursed the same to the AE. Hence those payments, in effect, are salary only and accordingly included in the Salary expenses. The Ld. AR submitted that the assessee had adopted TNM method to benchmark other international transactions and the same has been accepted to be at arms length by the TPO. During the course of TP proceedings, the TPO had asked query on the reimbursement of expenses, i.e., whether any of reimbursements have been claimed without routing the same through Profit and Loss account and it was duly replied. Hence the TPO has applied his mind on this issue, accepted the same as part of TNM method exercise and found the same to be at arms l....