TaxTMI 
TaxTMI 
2016 (7) TMI 372
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....s AE and the assessee made very brief submissions stating that it had paid consultancy fee. Vide his letter dated, 23. 3. 2006, he asked the assessee to justify the payment of consultancy charges. He invoked the provisions of section 92C of the Act. As per the AO, the assessee did not make any submission to justify the payment of consultancy charges. He held that the auditors, while endorsing the International Transactions (IT)with the AE, had only relied on the information provided by the assessee, that the assessee had not submitted any evidence to justify the payment of consultancy fee to its AE. Therefore, he restricted the consultancy charges, payable to the AE to the extent of 75% of the consultancy fees. He determined the Arm's Length Price(ALP)of the IT as under: Consultancy fees received(Rs.) Paid (Rs.) Allowed(Rs.) Disallowed(Rs.) MSRDC 3 Project 32,76,750 34,36,720 8,19,187 26,17,533 Jaypee DSC Project 26,39,226 18,19,554 6,59,806 11,59,748 Ahmedabad Mehsana Project 81,80,220 49,23,077 20,45,055 28,78,022 Total 1,40,96,196 1,01,79,351 35,24,048 66,55,303 As resul....
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....h MIT-Hungary, that as per the agreement the AE was also required to provide additional services to the assessee, that the AO had rejected the CUP analysis carried out by it without providing any cogent reason, hat the AO was duty bound to rebut the method adopted by the assessee before replacing his own analysis, that AO was mandatorily required to carry out an analysis and to select one of the prescribed methods. After considering the assessee's submission, remand report and other available material the FAA held that TP proceedings were not whimsical exercise to suit the tax payer/the AO, that the assessee had availed technical services from its AE, that it had selected the CUP method as MAM, that it had identified a service agreement entered into by the AE with MIT Hungary, that it had compared the hourly rates charged by the AE to the assessee with those charged to MIT. The analysis of the scope of the services and the rates charged by AE was as under : Contracting entities Intertoll PTY Ltd., S.A. and Intertoll ICS India Pvt. Ltd., India Intertoll PTY Ltd., S.A. and Magyar Limited, Hungary(MIT) Project and country where services were p....
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....greement entered into by the AE with the Hungarian party and with the assessee were made available to the AO, that from the agreements it is clear that the AE was charging lesser consultation fee from the assessee, that there was no reason to reject the CUP method. 2. 3. We have heard the rival submissions and perused the material before us. We find that the assessee had entered into agreements with three companies for executing projects namely Ahmedabad-Mehsana Highway;Mumbai-Pune Expressway and Delhi Gurgaon Expressway, that it had made payment to its AE for providing it consultancy, that it had selected CUP method for determining the ALP of the IT, that the AO had directed the assessee to justify the basis of determination of the ALP, that it furnished an agreement entered in to between its AE and an independent Hugarian entity, that the agreement clearly proved that the rates charged by the AE were much less than the rates charged from the independent party, that the scope of the agreement entered in to with the assessee was wider as compared to the agreement of the MIT-Hungary, that without assigning any reason he disallowed 25% of the consultancy charges, that the AO had f....
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....a fair and just manner. State as an institution can levy and collect only due taxes from its subjects. So, the if the AO. s. determine the tax liability in an unfair manner and if the demand is not of the DUE taxes appellate authorities are expected to allow relief to the assessee . It is what the FAA has done in the case before us. He found that the assessee had selected CUP method one of the valid methods. If the AO had some reservations that the method adopted by the assessee was not MAM, he should have give reasons for rejecting it. He had two chances to rebut the claim of the assessee-during the assessment proceedings and during the remand proceedings. He very well knew that the assessee had objected to the ad hoc disallowance and rejection of the CUP method. But, he stuck to his guns while submitting the remand report and supported the estimated disallowance. His approach goes against the very basis of the TP provisions. Either he was ignorant of the TP provisions or he was adamant to make the disallowance at any cost. But, his action cannot be endorsed. Why was the transaction entered in to by the AE with MIT Hungary could not be a basis for arriving at ALP was never discuss....
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....esh enquiry. After considering the submission of the assessee and the remand report, the FAA held that the AO had issued a notice dt. 23. 3. 2006 directing the assessee to appear on 27. 3. 2006 and produce additional information, that the assessee asked for some time, that the AO rejected the request made by it, that sufficient opportunity was not given to the assessee, that the AO failed to avail the opportunity granted by the-then- FAA and did not add anything new in his remand report, that the payment for expenditure on business promotion including that to the sister concern was by cheque, that there was no finding of fact that the gifts were either not bought or not given, that the AO cannot step into the shoe of the businessman to decide what expenditure to incur, that the accounts of the assessee were audited u/s. 44AB of the Act, that the disallowance of Rs. 5 lakhs out of total expenditure of Rs. 7. 70 lakhs was by any standard excessive. The FAA restricted the disallowance to Rs. 1lakh. 3. 2. Before us, the DR and the AR supported the order of the AO and the FAA respectively. We have considered the material on record and heard the rival submissions. We find that t....
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....ssment, the AO held that the assessee had claimed telephone expenses of Rs. 1. 16lakhs for the month of March 2006 out of the total expenditure of Rs. 3. 80 lakhs. Vide his letter dt. 23. 3. 2006, he asked the assessee to justify the expenditure and to explain the reasons for incurring heavy expenses in the month of March. As per the AO the assessee did not file any explanation. Therefore he disallowed an amount of Rs. 75, 000/- out of the total expenditure. 5. 1. Before the FAA, the assessee submitted that the nature of business warranted continuous use of mobile, that there cannot be any personal use of mobile in the case of a company. After considing facts of the case the FAA deleted the addition. 5. 2. The DR stated that the issue could be decided on merits. AR relied upon the order of the FAA. In our opinion, the order of the FAA does not suffer from any legal infirmity. The incurring of expenditure is not doubted. As stated in earlier part our order-it is a case of a company, so, no disallowance can be made on account of personal element of expenditure. We uphold the order of the FAA and dismiss ground no. 6. 6. Last Ground of appeal is about deleting the addition of....