TaxTMI 
TaxTMI 
2023 (6) TMI 577
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....spute Resolution Panel - 1 ('learned DRP) on the following grounds: 1. Erred in making an adjustment in respect of reimbursement of expenses 1.1 The learned Transfer Pricing Officer ("TPO")/ Assessing Officer ("AO")/ DRP has erred in computing the Arm's Length Price ("ALP") of the international transaction pertaining to "Reimbursement of expenses" amounting to INR 32,51,464 at NIL without appreciating the fact that such expenses are third party costs which are reimbursed to Associated Enterprises (AES") on cost-to-cost basis, without any mark-up. 1.2 Without prejudice the reimbursement of expenses should be allowed, the learned TPO/ AO/ DRP erred in not appreciating the fact that the Assessee had applied Transactional Net Margin Method at whole entity level and therefore the same is also benchmarked under the same. 1.3 The learned TPO/ AO/ DRP erred in not appreciating the fact that the AES of the Assessee incurred certain expenses pertaining to travelling, SAP related charges, advertising, etc. which were initially borne by the AES and then cross-charged to the Assessee. The Assessee subsequently reimbursed these expenses incurred by its AES on cost-to-cost basis, ....
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....he foreign exchange loss incurred during the year under consideration has not been allowed. 2.9 The learned AO/learned DRP ought to have appreciated that out of the realized foreign exchange loss of Rs. 3,65,84,150, the appellant has disallowed loss of Rs. 1,02,05,646 pertaining to capital assets in the return of income filed by the appellant for AY 2018-19. The appellant therefore submits that there is a double disallowance to the extent of Rs. 1,02,05,646. 3. Penalty proceedings 3.1 The learned AO/ learned DRP erred in initiating penalty proceedings under section 270A of the Act. 3.2 The appellant submits that the learned AO/learned DRP ought to have appreciated that the appellant has disclosed all the material facts to substantiate the explanation offered during the course of the assessment proceedings. In view thereof, the appellant has not under-reported/ misreported income as per section 270A of the Act. 3.3 The appellant prays that the learned AO be directed to drop the penalty proceedings initiated under section 270A of the Act. 4. The appellant craves leave to add to, amend, alter, vary, omit or substitute the aforesaid grounds of appeal or add a new ground or ....
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....Enterprises on the assessee and the narration of expenses stated in the above debit notes is corporate licensing and maintenance including Microsoft and ASAP for three quarters whereas the transfer pricing study report it was mentioned that the reimbursement pertain to travelling consulting and advertisement expenses. Therefore the learned TPO was of the view that assessee has failed to furnish the documentary evidences such as back to back invoices to substantiate the reimbursement of expenses claim and further as no other details are provided by the assessee company to verify the correctness of the claim and the amount and further the nature of expenses mentioned in the debit notes and the transfer pricing study reports are also at variance, accordingly he made an adjustment of Rs. 3,251,464/- determining the arm's-length price of the same at Rs. Nil. Accordingly, order under section 92CA (3) of the act was passed on 27/7/2021 proposing the above adjustment. 07. The learned AO further noted that assessee has claimed foreign exchange loss of Rs. 69,539,201/-. The learned AO found that the foreign remittance loss of Rs. 36,584,150 incurred by the assessee was not supported wit....
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....rovided by the assessee does not prove availing of any services therefore it held that the claim of the reimbursement of expenses deserve to be rejected. ii. With respect to the disallowance of foreign exchange loss on remittance under section 43AA of the act amounting to Rs. 36,584,150, where the assessee filed the additional evidences and remand report was sought from the learned assessing officer which was never received by it in time before passing of the direction, the learned dispute resolution panel held that the assessee has not produced any record before the lower authorities to suggest that the said expenditure is been incurred wholly and exclusively for the purposes of the business of the assessee. When the assessee has failed to produce any material evidence to suggest that such expenditure has been laid out for the purposes of the business of the assessee, the same cannot be allowed. Accordingly the disallowance of foreign exchange loss on remittance of Rs. 36,584,150 was also rejected. iii. With respect to the disallowance of foreign exchange loss amounting to Rs. 6,963,346 which was pertaining to financial year 2016 - 17 and being reversal entry, the learned disp....
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....first quarter of 2018. The details are not also supported by any agreement. We fail to understand that how the lower authorities have reached at a conclusion on the 3 Sample debit notes which are in a foreign language. Assessee has also not narrated the facts properly that how the above expenditure cross-charged to the assessee company by its associated enterprises. Even the complete breakup of the expenditure showing the nature of expenditure was also not submitted. In view of this we set-aside ground number [1] of the appeal back to the file of the learned transfer pricing officer with a direction to the assessee to substantiate the nature of such expenditure, and how such expenditure have benefited to the assessee. The learned TPO may examine the same and decide the issue afresh in accordance with the law. 014. Second ground of appeal is with respect to disallowance of foreign exchange losses. During the course of assessment proceedings the learned assessing officer asked the assessee about the details of the foreign exchange loss of Rs. 69,539,201/- the assessee submitted the summary of such losses and also bifurcated that into revenue account as well as on capital account. As....