Shanti Prime Publication Pvt. Ltd.
Sec. 143(3) OF income Tax Act, 1961— Transfer Pricing --- The assessee was engaged in the business of providing software development and premium solution worldwide. The assessee was a subsidiary of company named Key Management Group (KMG) (Inc), USA. The issue was related to transfer pricing adjustment made by the TPO and partially confirmed by DRP. Both the parties were in appeal challenging the decision rendered by DRP. The assessee-company pays commission to KMG USA for the marketing services rendered by it. The assessee-company applied CUP method (Internal CUP) to bench mark the international transactions entered with its AE. The TPO, however, rejected the CUP method and adopted TNMM method as most appropriate method and accordingly made transfer pricing adjustment. The DRP granted relief with respect of comparable. Accordingly Tribunal submitted that issues relating to transfer pricing adjustment was restored to the file of the AO/TPO and remitted the matter back to the AO to consider the above submissions de novo after affording due opportunity of being heard to the assessee-company.The AO noticed that the assessee, while computing deduction under s. 10B, has not reduced the expenditure from export turnover. The AO computed the deduction under s. 10B of the Act by reducing. The DRP has referred to both ss. 10B and 10A in its directions. The grounds urged by both the parties refer to s. 10A only. Thus, there was confusion about the section under which the deduction was claimed by the assessee.the assessee has claimed the provision for doubtful debt under s. 36(1)(vii) of the Act, as the same is in the nature of "bad debts written off", since the assessee had deducted the "Provision for doubtful debts" amount from the "Sundry debtors balance" shown in the asset side of Balance sheet. Since the impugned claim has not been examined by the AO in terms of 36(1)(vii) of the Act, tribunal restore the issue for examining the same afresh.
Tribunal held that the Provision for gratuity is an ascertained liability eligible to be deducted from net profit for the purpose of computing book profit under s. 115JB of the Act. Accordingly, the assessee was allowed."
The appeal of the assessee as well as revenue were treated as partly allowed.--- KMF INFOTECH LTD. vs. DEPUTY CIT.  23 ITCD Online 146 (BANG)