TaxTMI 
TaxTMI 
2019 (3) TMI 629
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....s, these were heard together and disposed of by way of this consolidated order for convenience and avoiding of repetition of factual discussion. ITA No.2667/Del/2015 & C.O. No. 285/Del/2015 2. The grounds of appeal raised in ITA No. 2667/Del/2015 by the Revenue and the grounds raised in cross objection No. 285/Del/2015 by the assessee in respect of the assessment year 2004-05 are reproduced as under: Grounds of Appeal: 1. On the facts and circumstances of the case, the CIT(A) has erred in determining the applicable date of agreement of Buying Agency Services. 2. On the facts and circumstances of the case, the Ld. CIT(A) has erred in justifying the difference of cost allocation. 3. On the facts and circumstances of thecase, the CIT(A) has erred in holding that the consideration received by the assessee From AIMPL under the Buying Agency Services Agreement is not in nature of Fee for Technical Services u/s 9(1)(vii) of the act and therefore, no taxable u/s 115A of the Act. 4. On the facts and circumstances of the case, the CIT(A) has erred by deleting interest u/s 234B of the IT Act. 5. The appellant craves to add, amend, modify, ....
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....ade in reassessment completed on 15/04/2013 by the Assessing Officer included addition of Rs. 62,46,552/-for buying agency commission income and Rs. 1,75,425/- for difference in receipt on account of cost allocation reported in return of income vis-à-vis reported in transfer pricing certificate in form No. 3 CEB of Income-tax forms. On further appeal, the Ld. CIT(A) rejected the objections of the assessee against invoking jurisdiction under section 147 of the Act, however deleted addition of buying agency commission following the order of the Income-tax Appellate Tribunal (in short 'the Tribunal') for assessment year 2007-08. The addition in relation to difference of cost allocation was also deleted after factual verification of the return of income and form No. 3CEB. Aggrieved, the Revenue is in appeal against the deletion of the additions, whereas the assessee is in cross objection against upholding the validity of initiation of reassessment proceeding under section 147 of the Act. 4. At the outset, we may like to mention that neither anyone appeared on behalf the assessee despite notifying the date of hearing nor an application for adjournment was filed. The appeal bei....
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....ideration is whether the consideration received by the assessee from AIMPL under the Buying Agency Services Agreement ('BAS') could be characterized as 'fees for technical services' under section 9(l)(vii) of the Act and accordingly by taxed under the provisions of section 115A of the Act. Explanation 2 to section 9(1 )(vii) defines 'fees for technical services' as under: Explanation 2.-For the purposes of this clause, "fees for technical services" means any consideration (including any lump sum consideration) for the rendering of any managerial technical or consultancy services (including the provision of services of technical or other personnel) but does not include consideration for any construction, assembly, mining or like project undertaken by the recipient or consideration which would be income of the recipient chargeable under the head "Salaries". 5.1. It is evident that for a particular stream of income to be characterized as 'fees for technical services', it is necessary that some sort of 'managerial', 'technical' or 'consultancy' services should have been rendered in consideration. The terms 'managerial', 'technical' or 'consultancy' do not find a defin....
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.... is given for the use of the machinery or scientific equipment it would partake the character of fees for technical services hut when it is only for the procurement of the scientific equipments it would be a simple service of commercial and industrial nature. It, therefore, cannot be termed as a technical sendee for which the procurement fees charged by the assessee cannot be a consideration for technical services. The third category is managerial service. The managerial service, as aforesaid, is towards the adoption and carrying out the policies of a organization. It is of permanent nature for the organization as a whole. In making the stray purchases, it cannot be said that the assessee has been managing the affairs of the Indian concern or was rendering managerial services to the assessee. 5.3. The copies of the Buying Agency Services agreement are placed on record, the nature of services have not been disputed. Department has only interpreted them to be amounting to ' Fees for Technical Services', in our considered opinion these are not technical services but routine services offered in the procurement assistance . The agreements demonstrate that the assessee was to re....
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....d its marketing expenses reimbursement after grossing up. The AO is therefore directed to delete the addition of Rs. 1,75,425. The ground of appeal is accordingly allowed." 8.1 In our opinion, the matter is of factual verification only. The assessee in the return of income filed has offered marketing expenses reimbursement of Rs. 8,17,970/-and taxes borne by AIMPL amounting to Rs. 2,06,976/-and grossed up the amount to Rs. 10,24,946/-. Whereas the Assessing Officer considered the figure of Rs. 9,93,395/- reported as marketing expenses reimbursement in form No. 3 CEB and made addition for the difference amount (9,93,395 - 8,17,970) = Rs. 1,75,425/-. The assessee explained the amount of marketing expenses reimbursement and tax component borne by the Indian entity and offered both the amount for tax. In view of the above factual finding, which has not been controverted by the Ld. DR, we do not find any error in the order of the Ld. CIT(A) on the issue in dispute, accordingly, we uphold the same and dismiss the ground No. 2 of the appeal of the Revenue. 9. The Ground No. 4 being consequential and Ground No. 5 being general in nature, we are not required to adjudicate upon the sam....
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....e in respect of a company, an application for corporate insolvency resolution process has been admitted by the Adjudicating Authority under section 7 or section 9 or section 10 of the Insolvency and Bankruptcy Code, 2016 (31 of 2016), the return shall be verified by the insolvency professional appointed by such Adjudicating Authority." 10.2 Thus, it is evident that the company being non-resident entity, the cross objection might have been verified by person holding a valid power of attorney from such company and said power of attorney was required to be attached with the said cross objection. 10.3 But on the perusal of the cross objection, it is found that it has been filed by authorised signatory without enclosing a valid power of attorney, and thus the cross objection is not maintainable, accordingly, it is dismissed in limine. 11. In result, the appeal of the Revenue is dismissed whereas cross objection filed by the assessee is not admitted. ITA No. 2668/Del/2015 12. Now, we proceed to decide the appeal bearing ITA No. 2668/Del/2015 for assessment year 2007-08. The grounds raised in ITA No. 2668/Del/2015 are reproduced as under: 1. On the facts and circum....
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....the ground that had the assessee's case not taken up further scrutiny, then there would have been an obvious revenue loss to the government. In this manner, the explanation of the assessee was rejected as not being bonafide and penalty under section 271(1)(c) of the Act, amounting to Rs. 54,90,958/- equivalent to the amount of tax sought to be evaded was levied by the Assessing Officer on 30/07/2013. Aggrieved, the assessee filed appeal before the Ld. CIT(A) and submitted that all information in respect of their addition made was duly disclosed to the Assessing Officer in the notes to computation filed alongwith the original return of income. In support of the contention that no penalties to be levied in case the assessee had disclosed its position in the documents filed with the return of income, the assessee relied on various decisions including the decision of the Hon'ble Supreme Court in the case of Reliance Petro Products Private Limited (322 ITR 158). The assessee also reiterated the submission that reimbursement of expenses actually incurred by the recipient, on behalf of the payer, does not constitute income in the hands of the recipient and, thus, issue being debatable, pe....
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....tions in respect of items declared by the appellant in its revised return and also in respect of buying agency commission treating it FTS. Hon'ble ITAT deleted addition in respect of buying agency commission. The AO levied penalty u/s 271(1 )(c) on an amount equal to 100% of tax sought to be evaded considering that returned income of the appellant is NIL and therefore levying penalty on all incomes which have been either declared by the appellant in its original return or in revised return. 5.2 I find force in contention of the appellant that the AO has not established that the appellant has either concealed or furnished inaccurate particulars of its income. The appellant has offered to tax marketing support services fee and interest income in its original return of income. Further, fact of receipts of other reimbursement has been mentioned in note nojLpf notes to computation of income annexed along with return of income. The case of the appellant also does not fall under provisions of Explanation 1 to section 271(l)(c) because the appellant had a bonafide belief that reimbursements are not taxable based on judicial decisions. The appellant has also argued that it has offe....