TaxTMI 
TaxTMI 
2017 (11) TMI 54
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.... by the order of AO, the assessee preferred an appeal before the CIT(A). 4. As regards adjustment of Rs. 13,52,778/- u/s 92CA(3), the CIT(A) upheld the action of the AO. As regards the disallowance of an amount of Rs. 68,87,500/- on account of lease premium, the CIT(A) deleted the disallowance following the decision of his predecessor in assessee's own case for AY 2010-11 as well as the decision of the ITAT in assessee's own case in AY 2010-11 wherein the coordinate bench dismissed the appeal of the revenue upholding the decision of CIT(A). 5. Aggrieved by the order of the CIT(A), the revenue is in appeal before us raising the following grounds of appeal: "1. The Ld. CIT (A) erred both on facts and in law in holding that the lease rent paid of Rs. 68,87,500/- is allowable as Revenue expenditure. 2. The Ld. CIT (A) erred in law in ignoring the decision of the Hon'ble Supreme Court in the case of M/ s. Panbari Tea Ltd. 057 ITR 0422 (1965) wherein the Hon'ble Supreme Court held that the lease rent paid is Capital Expenditure. 3. The Ld. CIT (A) erred in law in ignoring the decision of Hon'ble Supreme Court in the case of Durga Das Khanna 07....
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....y instalments. The question was whether such instalments towards premium was a revenue or capital receipts. It was held, on those facts, that it was capital receipts. The Hon'ble Court observed that the real test of a salami or premium is whether the amount paid, in lumpsum or in instalments, is the consideration paid by the tenant for being let into possession. When the interest of the lessor is parted with for price, the price paid is premium. From the above, it is clear that the receipt of premium whether in lumpsum or instalments is immaterial, it is the intention of the party and the price paid for parting of the possession. In the given case, the assessee has paid the one time premium. Hence, this case is materially distinguishable from the present case, hence, cannot be applied. 6.2 Further, revenue has raised in Ground No. 3 that ld. CIT(A) has ignored another decision of Apex Court in the case of Durga Das Khanna (supra) in which lease premium received is a capital receipt in the hands of recipient and corresponding payment is a capital expenditure in the hands of the payer. On careful reading of the above decision, the lessees agreed to pay under lease Rs. 55,200/- to ....
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....sessee was a consideration for granting sub-lease of the assessee's rights and not a payment of monthly rent in advance and as such was liable to tax as short term capital gains. In the present case, assessee had made the payment as premium and not received to consider the G. Seetha Kamraj's case as they are not similar. Hence, we cannot consider G. Seetha Kamraj's case in the present case as the same is not similar. However, the AR had relied on the various decisions which are presented before the CIT(A). These cases are similar to the present case in particular, the case of DCIT Vs. Sun Pharmaceuticals India Ltd. (329 ITR 479 (Guj.) are similar to the assessee's case. It was held by the Hon'ble Gujarat High Court, dismissing the revenue appeal, that the tribunal had found that the land in question was not acquired by the assessee. Merely, because the deed was registered, the transaction in question would not assume a different character. The lease rent was very nominal. By obtaining the land on lease, the capital structure of the assessee did not undergo any change. The assessee only acquired a facility to carry on business profitably by paying nominal lease rent. The lease rent ....
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.... for scientific business and infrastructure operations of certain USP affiliates (USP China and USP Brazil) while he was employed in USP LLC., Dr. Srini continued oversight responsibility of these affiliates from USP India. His responsibilities include overseeing the construction process, involvement in staff recruitment, capital procurement, oversight of budgeting, establishing and maintaining relations with key stakeholders etc. USP India recharged the apportioned salary and other direct expenses of Dr. Srini incurred by USP India to respective USP affiliates on a cost to cost basis. 8.1 When the AO/TPO asked the assessee as to why a mark-up of 10% be not charged on the services rendered in the nature of reimbursement, the assessee replied that Shri Srini has acted in fiduciary capacity and the company is not the full beneficiary of the services of Shri Srini. Hence the expenditure related to the cost of Shri Srini was recharged to the AEs, for whose benefit he was working. After considering the submission of the assessee, the TPO observed that the receipt of reimbursement had not been routed through books of account and no independent party would render such services without ....
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....he operating revenue as well as the operating costs for the purpose of aggregation of transactions and determining arm's length price under TNMM. The taxpayer has made payments towards the operations and on the employees as also are operational in nature and therefore cannot be excluded. The margin of the taxpayer is quantified at 12.98%. Thus. mark-up of 10% made by the TPO/AO is reasonable. Thus, there is shortfall of Rs. 13,52,778 as the arm's length price of reimbursements received is Rs. 1,48,80,563/- as determined by the TPO. Thus I hold that of addition of Rs. 13,52,778/ - is justified." 11. Considered the rival submissions and perused the material facts on record. Dr. Srini Srinivasn, employee of USP LLC was transferred to the rolls of USP India in June 2010 as a whole time Director. Dr. Srini had oversight responsibility for scientific business and infrastructure operations of certain USP affiliates (USP China and USP Brazil) while he was employed in USP India, His responsibilities include overseeing the construction process, involvement in staff recruitment, capital procurement, oversight of budgeting, establishing and maintaining relations with key stakeholder....