TaxTMI 
TaxTMI 
2006 (5) TMI 70
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....between the appellant and M/s. Results Engineers and Consultants in the matter of providing necessary technical advice to the company and the company has agreed to pay royalty towards the service rendered by the consultants. The assessing authority disallowed the claim of the royalty in terms of the orders passed by him. Aggrieved by the same, an appeal was filed before the Appellate Commissioner. The Appellate Commissioner reversed the findings of the assessing authority in so far as sham transactions in his order. However, the Appellate Commissioner has chosen to provide 2 per cent, relief as against 5 per cent, as claimed by the assessee. The Revenue accepted the order of the Appellate Commissioner. However, the assessee filed a second ....
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....rovisions of section 40A(2) of the Act when the transaction was held to be genuine and there was no material to establish the market value of the services rendered, especially when the agreed royalty had been paid to the contracting party by the appellant? 2. Whether the Tribunal was justified in ignoring the closing stock as shown by the appellant which was subjected to audit under section 44AB of the Act to support the value of closing stock declared to the bank? 3. Whether the Tribunal was justified in upholding the impugned addition on account of variation in the value of closing stock between the value declared in the accounts and the value declared to the bank as made by the assessing authority when the assessing authority did not e....
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....ve chosen to hold the issue against the assessee, and, therefore, no question of law arises since all these orders are passed on the facts. He would support all these orders in so far as the finding on closing stock is concerned. After hearing, we have carefully perused the material on record. The admitted facts would reveal an agreement between the appellant and M/s. Results Engineers and Consultants. The admitted facts would further reveal payment of royalty towards the services rendered by the said Results Engineers and Consultants. The assessing authority in his order has noticed that the agreement is only sham to take the funds of the company in the garb of royalty payment. To come to this conclusion, he has noticed the partners so a....
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....tick in the matter of professional or technical services. It all would depend upon the facts of each case. In the case on hand only the consultants charged 5 per cent, in the light of technical know-how being provided to the manufacturing machine tool unit. In our view, 5 per cent, as claimed by the assessee cannot be termed as arbitrary or unreasonable, particularly taking into consideration the professional expertise being provided to the appellant company by the Consultants. In the circumstances, reduction from 5 per cent, to 2 per cent, is an arbitrary reduction and, therefore, the same requires to be set aside by this court. In the circumstances, we accept the arguments of Sri Parthasarathi, learned counsel for the appellant, that the ....