TaxTMI 
TaxTMI 
2016 (6) TMI 496
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....ellant and the domestic related entities are based on business objectives and motivated solely by commercial expediency, which need not necessary result in profits''. 3. The Brief facts of the case that the assessee is in the business of development of properties and rendering consultancy services and filed return of income on 29.10.2005 declaring loss of Rs. 3,08,96,605/- and was processed u/s.143(1) of the Act. Subsequently, as per scrutiny norms notice u/s.143(2) of the Act was issued and ld. Authorised Representative of assessee appeared from time to time and filed information. The main business of the assessee being rendering project management services and asset management services to its group companies and engaged in promotion of properties including IT parks all over the world. The income of the assessee being service charges and other incomes and service charges pertain to services rendered during the year as under:- Rs. (i) Ascendas IT Park Chennai Limited 1,69,09,862/- (ii) Information Technology Park Limited 3,82,495/- (iii) L & T info-city -Ascendas Limited 44,32,139/- 2,17,24,496/- As per profit and loss account n....
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....oner of Income Tax (Appeals) considered the grounds and submissions made in the appellate proceedings and verified observations of the Assessing Officer in assessment proceedings and the pattern of working. The ld. Authorised Representative of the assessee submitted that order of the Assessing Officer is not sustainable and supported his arguments with followings decisions :- (a) ''DCIT vs Nagarjuna Investment Trust Ltd (1998) 65 ITD 17 (Hyd) (b) Mysore Minerals Ltd vs. ITO (ITAT Bangalore) (c) R.M.P. Perianna Pillai & Co vs. CIT (1961) 42 ITR 370 (Mad) (d) Pandit Bros. vs. CIT (1954) 26 ITR 159 (Pun) (e) CIT vs. Salitho Ores Ltd. (2010) 344 ITR 161 (Bom) (f) Eastern Investments Ltd vs. CIT (1951) 20 ITR 1 (SC) (g) CIT vs. Walchand & Co etc. (1967( 65 ITR 271(SC) (h) CIT vs. Dhanrajgirji Raja Narasingirji (1973) 91 ITR 544 (SC) (i) CIT vs. A. Raman & Co (1968) 67 ITR 11 (SC) (j) Sri Ramalinga Choodambikai Mills Ltd vs. CIT (1955) 28 ITR 952 (Mad) (k) Dhakesari Cotton Mills Ltd. vs. CIT (1954) 26 ITR 775 (SC) (l) Gargi Din Jwala Prasad vs. CIT (1974) 96 ITR 97 (All)'' The ld. Commissioner of Income Tax (Appeals) considered the submissions and confirmed the o....
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....s raised on the markup that the Assessing Officer has arbitrary marked up the rate 8% on the operative cost of the assessee company for the sister company which is not in order. The assessee having a long standing relationship with the sister companies on financial aspects and charging of service fees is based on estimation of income being first year. The Assessing Officer erred in mark up the cost without any rationality and decisive factors and supported the arguments with the decisions of Tribunals and prayed the action of the Assessing Officer is bad in law and pleaded to allow the appeal of the assessee. 6. Contra, the ld. Departmental Representative relied on the findings of the Assessing Officer and Commissioner of Income Tax (Appeals) and vehemently opposed the grounds of the appeal and prayed for dismissal of appeal. 7. We heard the rival submissions, perused the material on record and judicial decisions cited. The only issue that the ld. Authorised Representative emphasized the basis of mark up by the ld. Assessing Officer at 8% on total overall cost. The assessee company engaged in development of IT parks, managerial and technical services to the industrial park and SE....
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....nt transactions between the unrejected parties. But instead of determining ALP the Assessing Officer has estimated the income which is not permissible when the accounts of the assessee were not found in any deficiency or suffering from any defect. It is pertinent to note that the profit of an entity is effected by various factors including the fixed cost, the capacity at which the particular entity functions in comparison to its total capacity and further the stage of the business of a particular entity whether it is the initial stage or after stabilization of the business activity. In the case on hand, the Assessing Officer has accepted the service charges charged by the assessee to its AEs, in the subsequent assessment years. It is reproduced by the Assessing Officer in the impugned assessment order that the assessee has earned the profits in the subsequent assessment years. The revenue has not disputed the fact that the earlier assessment year as well as subsequent assessment year, the price charged by the assessee to its parties the services rendered by the assessee are accepted by the Assessing Officer. It is also not in dispute that the price charged by the assessee to its re....