AI Drafter 
TaxTMI 
TaxTMI 
2017 (3) TMI 1755
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.... justified the arm's length price as under: Nature of International Transaction Amount(In Rupees Lacs) Most Appropriate Method Profit Level Indicator Tested Party's Operating Margin Comparables Operating Margin Availing of marketing support services from IDS-A 439.70 Transactional Net Margin Method ('TNMM') Operating Profit/Operating Cost ('OP/TC') 5.50% 10.03% Provision of IT/IT enabled Services to IDSA for resale 336.67 TNMM Operating Profit/Sales ('OP/Sales') 1.50% 1.77% Availing of marketing support services from IDS-UK 16.21 TNMM OP/TC 5.75% 6.68% Reimbursement of expenses paid/received 3.82 Comparable Uncontrolled Price Method ('CUP') N.A Refer para 5.4.1 Refer para 5.4.1 4. On a reference from the Assessing Officer the TPO determined the arm's length price of the international transactions. While the arm's length price of international transactions pertaining to market support services from IDS-A and IDS-UK and reimbursement of expenses paid/received to/from IDS-A was accepted by the TPO, the international transactions pertaining to provision of IT/IT enabled services to IDS-A for re....
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....e through the orders of the authorities below as also the documents referred to before us during the course of arguments. Though we find that the order of the TPO was detailed leading to the aforesaid transfer pricing adjustment, we shall be confining ourselves only to the arguments raised by the Ld.counsel for the assessee and the Revenue ,both for and against the order passed by the Ld. CIT (Appeals). 8. The first contention raised before us by the Ld. counsel for the assessee is that the TP study of the assessee has been rejected for the reason that the foreign AE was taken as a tested party. Arguments both for and against the action of the TPO were made before us. The impugned transaction relates to IT enabled services entered into with IDS-A amounting to Rs. 336.67 lacs. The assessee had justified the arm's length price of the said transaction by applying TNMM method taking OP/TC as the PLI and the associate enterprise(AE) i.e. IDS-A as the tested party. All these facts are not disputed. The TPO rejected IDS-A as a tested party for the reason that the tested party should be one who has the least complex functions, which does not own valuable intangibles property or unique a....
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....s available. 2. It should be a party for which data in respect of comparable transactions is available. 3. It should be a party for which has the least complex functions 4. It should be a party for which does not own valuable intangible property or unique assets that distinguish it from comparables. 13.5 When the facts and circumstances of the case are tested on these factors following position emerges:- 1. In the show cause notice, assessee was asked to establish with evidence how the costs taken are without markup:- "Further, it has been stated that IDS Infotech has charged a markup on international transactions pertaining to provision of ITEnabled services. However, no such segmental financials establishing the same have been given. Cost sheets given also do not provide any evidence to establish that the costs taken are without any markup." 13.6 It is seen that the comparables given are foreign comparables. Very little information in respect of the same has been provided except their P&L accounts. No description has been given in the TP report to establish whether the comparables are also involved in the same activit....
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.... Ld. counsel for the assessee drew our attention to transfer pricing report for the preceding year, placed at Paper Book page No.417 and the order of the Transfer Pricing Officer for the preceding year i.e. assessment year 2009-10, placed at Paper Book page No.133 in this regard. b) The next contention raised by the assessee was that the foreign tested party i.e. IDS-A was the least complex amongst the parties to the transactions, the other party being the assessee itself. The Ld. counsel for the assessee stated that while the assessee was engaged in full-fledged product development and marketing/product selling covering a wide range of activities and other commercial or marketing intangibles and is the developer, owner and licensor of virtually all valuable intellectual property rights including proprietary products and processes, whereas it bears all significant business and entrepreneurial risks, product development, performance and financial risks and develops and sells products and services to unrelated parties across the globe, the IDS-A, on the other hand, indulged only in the activity of providing marketing support services to the assessee for the American market a....
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....or unique assets. 15. In the present case, we find that TPO has rejected foreign AE as the tested party for the reason that no reliable data in respect of foreign comparables was available. Thus as far as the foreign party being the least complex entity to the controlled transactions and not owning any valuable intangible or unique assets is concerned, there is no dispute that the foreign entity to the transactions i.e. IDS-A is the least complex and does not own any valuable intangible or unique assets. The only issue on which the acceptance or rejection of the foreign entity as a tested party rests is vis-à-vis availability of the appropriate foreign comparables. 16. The only reason with the TPO for holding so , which emerges from the above discussion and arguments made before us and on the basis of the facts which were brought to our notice for rejection of the foreign entity as the tested party, is that the data in respect of comparable transactions was not available. At this juncture, we would like to point out that the I.T.A.T. in a number of decisions, pointed out by the Ld.Counsel for the assessee, held that if an assessee wishes to take a foreign entity as a t....
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....t complex of the controlled tax payers, and will not own valuable intangible property or unique assets that distinguish it from potential uncontrolled comparables. As GMDAT is not only a complex entity owning valuable intangibles, the data for comparability of GMDAT or the comparable is also not available. 11.5.2. This view of the DRP has been denied by the learned Sr. Counsel during the course of hearing which has not been contradicted by the Revenue with any documentary evidence. 11.6. To sum up, it was the argument of the assessee that if stringent comparability analysis as adopted by the TPO were to be adopted, and then M&M should also be put to such a stringent comparability test. It was, further, argued that M&M is also involved in the manufacture of multi utility vehicles, light commercial vehicles as well as three wheelers apart from passenger cars. It was, further, countered by the assessee if Force Motor Limited were to be rejected on the basis of different profit profile and then M&M should also be axed on the same logic. We find force in the above argument of the assessee. According to the assessee, GMDAT is only engaged in manufacturing and supply of ....
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....held that the tested party should be the least complex of the controlled transaction and should not own valuable intangible property or unique assets and a foreign entity in the controlled transactions could also be treated as a tested party. Thus clearly, there is no bar as such in treating the foreign entity in a controlled transaction as a tested party merely for the reason that the data of the comparable companies was not available. What is essential in this regard is that the data should be available in the public domain which the Revenue with all its resources can have access to and or the assessee has furnished all relevant data to the tax administration. 19. In the present case, we find that both the conditions are being fulfilled. On perusal of the transfer pricing study conducted by the assessee placed at Paper Book page Nos.709 to 771, we find that it has been categorically mentioned therein that Global Symposium, a search engine covering financial and business datas for companies operating across the globe was used and it has data from four public databases/ sources: i) Standard & Poor's Research Insight : Compustat North American data. ii) Standard....
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.... a general statement which is also incorrect, that no description was given regarding activities in which the comparable companies were involved, pointed out no other anomaly was in the data of the comparable companies furnished by the assessee. Therefore, following the decisions of the I.T.A.T. as quoted above, we set aside the rejection of the foreign entity IDSA as the tested party. 22. It is pertinent to point out that for determining the ALP of the international transactions relating to marketing services provided by IDS-A and IDS-UK also ,we find, that the assessee had taken the foreign entities as the tested party. These were not rejected by the TPO. Clearly, therefore, there is inconsistency in the stand of the TPO rejecting the selection of foreign entity as a tested party for the purpose of IT enabled services while accepting the same for marketing support services. For this reason also, the rejection of the foreign entities as a tested party needs to be set aside. 23. Further as pointed out by the Ld. counsel for the assessee, in the preceding assessment year also the assessee had taken IDS-A as its tested party, which was duly examined by the TPO. Submissions in t....
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....expenses, out sourcing and business development expenses in as much as no TDS is required to be deducted and as such the order is illegal, arbitrary and unjustified. 3. That the Ld. Commissioner of Income Tax (Appeals) has failed to appreciate that the provisions of Section 195 are not attracted in as much as payments were made to parties who are outside of India and have no permanent establishment in India and as such the order passed is illegal, arbitrary and unjustified. 4. That the Ld. Commissioner of Income Tax (Appeals) has erred in law as well as on facts in upholding that income of non resident has accrued and arisen in India which is contrary to the facts of the case and as such the order passed is illegal, arbitrary and unjustified. 29. The brief facts relating to the case are that the assessee is the supplier of software related services and had incurred expenses on account of commission, legal and professional charges, outsourcing expenses, market support fees to various companies/abroad some of which were its associated enterprises. During the course of assessment proceedings, the Assessing Officer noted that the assessee had made payments on accou....
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....not provided any evidence to prove that the services were rendered outside India. In view of this, he held that the assessee was liable to deduct tax on the aforesaid payments and having failed to do so, the provisions of section 40(a)(i) of the Act were attracted. He, therefore, made a disallowance of an amount of Rs. 2,84,52,914/-. 31. The matter was carried in appeal before the Ld. CIT (Appeals), where the assessee submitted that the said expenditure had been incurred for services rendered outside India to parties outside India, the said parties had no permanent establishment in India, nor any business connection in India and therefore the assessee stated that no TDS was required to be deducted on the aforesaid payments and, thus no disallowance was warranted on account of non-deduction of tax at source on the said payment as per the provisions of section 40(a)(ia) of the Act. The Ld. CIT (Appeals) after considering assessee's submission held that the source of income for the entities was the agreement with the assessee company and by virtue of the same, there was direct benefit to the assessee company. Ld .CIT(A) held that the source of income, therefore, for the services re....
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....case also, the Assessing Officer had held the assessee liable to TDS on the said payments since he had observed that these payments constituted deemed incomes of the payees since the services rendered on account of the payments made were utilized in India, were not in connection with any business and profession carried outside India, were on account of agreement between the assessee which was an Indian company. The I.T.A.T. in the said case we find, deleted the disallowance made, by holding that the Assessing Officer nor the CIT (Appeals) given any finding whether the nature of income in the hands of the nonresidents is that of income accrued in India or income deemed to have accrued in India. The Hon'ble I.T.A.T. also held that there is no finding on record by any of the lower authorities that non-resident payees had any business connection in India or even any permanent establishment in India. 35. The I.T.A.T. exhaustively dealt with the issue at hand and went through various pertinent sections involved. It first dealt with section 40(a)(ia), invoking which disallowance had been made and pointed out that as per the said section, only those payments made to nonresidents on ....
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....licability of provisions of tax deduction at source u/s 195 of the Act was not attracted and, therefore, no disallowance on account of non deducting tax at source should be made u/s 40(a)(ia) of the Act. The relevant findings of the I.T.A.T. at paras 21 to 38 of the order are as follows : "21. We have heard the learned representatives of both the parties, perused the findings of the authorities below and considered the material available on record. The facts as culled out by us from the perusal of the orders of the lower authorities as well as submissions oral and written filed by both the parties before us, are that the issue is with regard to the disallowance made by the Assessing Officer invoking the provisions of section 40(a)(i) of the Act, whereby on certain payments made to nonresident entities, the assessee failed to deduct tax at source. The impugned payments made to the respective non-resident entities are as follows : Communication expenses Commission Legal & professional Marketing & selling Business Development Outsourcing B.V.Design Products, Netherland 1,26,794 5,63,949 ....
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.... issues raised by the Assessing Officer placed reliance on the order of the learned CIT (Appeals), while with regard to the issue of 'fees for technical services' raised by the learned CIT (Appeals), his submission was that in the absence of exact nature of services rendered by the assessee, coming out of the various agreements and invoices, it is to be presumed that the payments are in the nature of 'fees for technical services'. With respect to the DTAA also, his submission was that in the absence of any such nature coming out of record, it is to be presumed that the services have been 'made available' to the assessee. Therefore, the same is exigible to the provisions of tax deduction at source. 24. Now the issues for adjudication, coming in this background, before us are as follows : i) Whether the impugned payments are of the nature, whereby the provisions of TDS are applicable, in the absence of which the disallowance is called for under section 40(a)(i) of the Act. ii) With respect to payments made to IMCS, whether the Explanation to section 37(1) of the Act is applicable to the said payments. iii) With respect to payment made to IMCS, whet....
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....equired to be deducted as provided under the relevant Chapter, the provisions of this section can be invoked. Chapter-XVII deals with collection and recovery of taxes while part-B of this Chapter deals with tax deduction at source, the provisions relating to tax to be deducted out of payment made to a non-resident are provided in section 195 of the Act, which read as under : "195(1) Any person responsible for paying to a non- resident, not being a company, or to a foreign company, any interest (not being interest on securities) or any other sum chargeable under the provisions of this Act (not being income chargeable under the head" Salaries" ]) shall, at the time of credit of such income to the account of the payee or at the time of payment thereof in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier, deduct income- tax thereon at the rates in force: " 27. The most important terms in this section are "chargeable under the provisions of this Act". From this, it is very clear that only if an amount is chargeable under the Income Tax Act, the liability to deduct tax on the payment of such amount arises. Charge of income tax is provi....
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....nt provisions are that of section 9(1)(i) of the Act, which read as under : "9 (1) The following incomes shall be deemed to accrue or arise in India- i) all income accruing or arising, whether directly or indirectly, through or from any business connection in India, or through or from any property in India, or through or from any asset or source of income in India, 135[***] or through the transfer of a capital asset situate in India; [Explanation 1]: For the purposes of this clause- (a) in the case of a business of which all the operations are not carried out in India, the income of the business deemed under this clause to accrue or arise in India shall be only such part of the income as is reasonably attributable to the operations carried out in India; (b) in the case of a non-resident, no income shall be deemed to accrue or arise in India to him through or from operations which are confined to the purchase of goods in India for the purpose of export; [* * * *] [(c) in the case of a non-resident, being a person engaged in the business of running a news agency or of publishing newspapers, magazines or ....
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....ral commission agent or an agent of an independent status.]" 30. We are to judge from the facts and circumstances of the present case whether the impugned payments are deemed to accrue or arise in India to the respective recipients, as we have already mentioned that only those payments which are of the nature of sum chargeable under the provisions of the Act are exigible for provision of tax deduction at source. Here we are inclined to refer to the judgment of the Hon'ble Supreme Court in the case of G.E. India Technology Centre Pvt. Ltd. Vs. CIT (2010) 327 ITE 456 (SC), whereby it has been held that section 195 (1) of the Act uses the expression 'sum' chargeable under the provision of the Act and weightage is needed to be given to these words. Further, section 195 uses the word 'payer' and not the word 'assessees'. The payer is not assessee. The payer becomes an assessee in default only when he fails to fulfill statutory obligation under section 195(1) of the Act. If the payment does not have the element of the income, the payer cannot be made liable. The Hon'ble Supreme Court thus rejected the contention of the Department by holding that if the sum paid is not ch....
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....on-resident in the taxable territory is India having intimate and near relation of a continuous nature of the business of the non-resident and attributed to the earning profits by the non-resident in his business. We should understand that all commercial relations will not necessarily constitute business connection unless a commercial connection is really and intimately connected with the business activity of non-resident in India and is contributory to the earning of the profits in the said activity of the non-resident. Some illustrative instances of non-residents having business connection in India have been quoted in the judgment of the Hon'ble Supreme Court in the case of R.D. Aggarwal (supra, which are as under : i) Maintain a branch office in India for purchase or sale of goods or transacting other business. ii) Appointing an agent in India for systematic and regular purchase of raw material or other commodities, or for sale of nonresident goods or for other business purposes. iii) Erecting a factory in India where raw produce purchased locally is worked into a firm suitable for sending abroad. iv) Forming local company to sale products....
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....inding given by us in the above paragraph that the amounts are not in the nature of income in the hands of the recipients, we need not go into the respective treaties, in view of the fact that the provisions which are beneficial to the assessee are to be taken care while fastening tax liability. 37. The basic principle to be applied in such cases is that one has to first look at the domestic law to find out if the non-resident assessee is taxable thereunder. If it is taxable, only then one has to go into the treaty, if any, between India and the country to which the non resident belongs, to, find out if there is any beneficial provision in the treaty to exempt the assessee from taxation or reduce the rigours of the domestic law. If there is such a provision in the treaty, the assessee is entitled to claim that it should be given the benefit of the treaty provisions. On the other hand, if the assessee is not taxable under the domestic law itself, there is no need to look into the provisions of the DTAA, even if one exists, to find out if there is any provision under which the non-resident can be brought to tax. In other words, the treaty cannot be used as a taxing statute. ....
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.... introduction and assistance in execution of an agreement and assisting in selling services and facilitating relationship with Augusta staff. In this background, he stated that the services provided by IMCS are not commensurate with the commission. Therefore, the services are not being rendered for the purpose of business and profession. There is no dispute with respect to the fact that both IMCS and Steven International are not related parties of the assessee company. Analysis of payment made to an entity which is not related in any way with the assessee is not an exercise expected from the Assessing Officer. We do not understand under what provisions the Assessing Officer is trying to make out the case that the payment made to IMCS are not commensurate with the work done by them. It is the prerogative of the businessman to run its business the way he wants. The Assessing Officer for the purpose of Income Tax Act cannot question the reasonableness of any such payment made by the assessee. Therefore, we do not find this allegation of the Assessing Officer backed by any legal provision. Incidentally, we would like to mention here that even if the Assessing Officer wants to assess th....
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....f service rendered by the non-resident would come within the ambit and seep of expression 'consultancy service' and hence tax should have been deducted at source as the amount paid as fee could be taxable under he head 'fees for technical services'" 43. From bare perusal of the above sentence one can very easily infer that the learned CIT (Appeals) here also has not given any finding, in fact here he is only referring to the judgment of Hon'ble Supreme Court in the case of GVK Industries Ltd. (supra). 44. In view of the above, we see that the learned CIT (Appeals) has not given any finding that the payments in question are 'fees for technical services' in nature. We understand the law that in case a payment is held to be in the nature of 'fees for technical services', the place of rendering services becomes irrelevant in view of the provisions of section 9(1)(vii) of the Act. However, even if the argument of the learned D.R. is accepted that the learned CIT (Appeals) has given a finding that these payments are 'fees for technical services', nowhere from the order of the learned CIT (Appeals) we see any effort being made by him to come to such a conclusion. It ....
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....e not exigible in the present case. 45. We may clarify that we have not dealt with each expenditure specifically, since the issues involved in all these expenses were common and we did not find any inclination to deal each expenditure separately. Ground Noos.2, 3 and 4 are allowed." 36. As we have already stated above, the facts in the present case are identical to that in the case of assessee for assessment year 2009-10, with the impugned disallowance of expenses having been made for the reason that the same were taxable in India since they were sourced from India on account of the agreement entered into with the assessee an Indian Company and also on account of the utilization of the services for the benefit of the assessee Indian Company. In the present case also we find that there is no finding of the lower authorities with regard to the fact that the income to the payees of the said expenses arose or was deemed to arise in India as per the provisions of section 9 of the Act. There is no finding regarding the existence of any business connection, as defined, under section 9(1) of the Act nor of any permanent establishment of the payees in India. Moreover in the pres....
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....wners and the assessee. The assessee, therefore, stated that the amount of rent paid was not the income of the recipient alone but constituted that of the co-owners also between whom it should have been apportioned and then determined whether the limit specified u/s 194I of the Act, for tax deduction at source of rent, was crossed in the case of any person. The Ld. counsel for the assessee drew our attention to the copy of lease agreement for letting out of the property placed at Paper Book page no. 242, 255 and 258 in this regard. 43. The Ld. DR, on the other hand, relied upon the order of the lower authorities and further stated that even if the contention of the Ld. counsel for the assessee is accepted, the matter should be remanded back to the Assessing Officer to examine the issue in the light of the contentions made and thereafter re-work/re-determine the disallowance to be made u/s 40(a)(ia) of the Act. 44. We have heard the contentions of both the parties. We find merit in the contentions of the Ld. counsel for the assessee that the rent had been paid to one person on behalf of various co-owners of the said property. The lease agreement placed at Paper Book page No.24....
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.... states that all payments are to be made in favour of Brig.N.S. Sandhu though there are 15 owners and landlords of the said property specifically mentioned in the lease deed at Paper Book page No.255. 47. It is evident from the said lease deeds, which was there even before the Assessing Officer, that there are several co-owners of the properties which have been taken on lease by the assessee and rent paid thereon. The income in such circumstances cannot, therefore, be said to be the income of the recipient of the rent only. When they have received the same only on behalf of other coowners the rent paid constitutes the income of all the coowners and the same is to be apportioned among them as per the method prescribed, if any, in the lease agreement or in proportion of their co-ownership and thereafter only if the rental income in the case of any co-owners exceeds the prescribed limit for the purpose of deduction of tax u/s 194I of the Act, the tax is to be deducted at source. 48. In the light of the above, we, therefore, restore the matter back to the Assessing Officer to apportion the rental income in the hands of the co-owners as per legally permissible, determine the renta....
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....ed that the tax had been deducted and paid in Netherlands. 54. During the course of hearing before us, the Ld. counsel for the assessee reiterated the contentions made before the lower authorities stating that the said salaries had been paid to employees on account of services rendered outside India and, therefore, the salary was not taxable in India and thus there was no requirement to deduct tax at source on the same. The Ld. counsel for the assessee stated that for the aforesaid reason, since there was no liability to deduct tax at source, no disallowance on account of non-deduction of TDS could be made u/s 40(a)(iii) of the Act. 55. The Ld. DR, on the other hand, supported the orders of the lower authorities and stated that the salary being paid outside India to non-residents, the same was taxable in India and thus liable to TDS and same having not been deducted, disallowance u/s 40(a)(iii) had been rightly made. 56. We have considered the contentions of both the parties. The issue in the present ground is relates to invoking the provisions of section 40(a)(iii) of the Act, which deals with disallowance of payment which is chargeable under the head "salary" and is paya....
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....was otherwise deductible under the provisions of sub-section (1). (1B) For the purpose of paying tax under sub-section (1A), tax shall be determined at the average of income-tax computed on the basis of the rates in force for the financial year, on the income chargeable under the head "Salaries" including the income referred to in sub-section (1A), and the tax so payable shall be construed as if it were, a tax deductible at source, from the income under the head "Salaries" as per the provisions of sub-section (1), and shall be subject to the provisions of this Chapter. 59. A perusal of the above section shows that for attracting the liability of tax deduction at source, the said income should be chargeable to tax under the said head. Even section 40(a)(iii) begins with any payment which is chargeable under the head "salaries" meaning thereby that the salary paid should be chargeable to tax as such in India. Chargeability to tax and the scope of total income is dealt with in sections 4 and 5 of the Act which have already been discussed above in ground Nos.2, 3 and 4 dealt with above by us. As per the said sections in the case of non-residents income which is either recei....
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.... Revenue all along we find, has been that section 40(a)(iii) is attracted because the payments have been made outside India to non-residents. The Revenue, we find, has picked up only one of the conditions enumerated u/s 40(a)(iii) for making disallowance, choosing to completely ignore the basic condition required to be fulfilled, which is taxability of the said salary in India. Therefore, the disallowance, we hold, has been made on an incorrect interpretation of law. In view of the above, we hold that no disallowance u/s 40(a)(iii) on account of non deduction of tax on salary paid outside India is warranted and the disallowance made amounting to Rs. 39,73,746/- is directed to be deleted 61. In view of the above, ground No.6 raised by the assessee is allowed. 62. Ground No.7 raised by the assessee reads as under:- "7. That the Ld. CIT(A) has erred in law as well as on facts in upholding the addition of Rs. 25,02,206/- made by the Assessing officer whereby she disallowed the interest paid up by applying the provisions of section 36(i)(iii) which is allowable arbitrarily and unjustified." 63. The issue raised in the present ground relates to disallowance of interest ....
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..... DR conceded that on identical set of facts and circumstances, disallowance made u/s 36(i)(iii) had been deleted by the ITAT in the said order. He further relied on the order of the CIT(A). 68. We have heard the contentions of both the parties, perused the orders of the authorities below and also order of the ITAT in ITA No. 52/Chd/2016 dated 24.5.2016 rendered in the case of the assessee for assessment year 2009-10. On going through the same, we find that in the said assessment year, disallowance of interest amounting to Rs. 16,59,106/- was made u/s 36(1)(iii), being proportionate amount of interest paid on secured loans, on account of investment made in wholly owned subsidiaries of the assessee company in U.S. and U.K, amounting to of Rs. 1,66,23,000/-. The ITAT in the said case held that the investment had been made in the wholly owned subsidiaries of the assessee companies, the financial health of these concerns effect the financial health of the assessee companies also and therefore, the investment made in the subsidiaries companies are for commercially expedient purposes. The ITAT relied upon the decision of the Apex court in the case of S.A. Builders Vs. CIT (2007) 288 I....
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....here it is obvious that a holding company has a deep interest in its subsidiary, and hence if the holding company advances borrowed money to a subsidiary and the same is used by the subsidiary for some business purposes, the assessee would, in our opinion, ordinarily be entitled to deduction of interest on its borrowed loans." 8. In view of the above, we observe that even the Hon'ble Supreme Court has endorsed the view that since a holding company has a deep interest in its subsidiary and if the holding company advances borrowed money to a subsidiary and the same is used by the subsidiary for some business purposes, the assessee is entitled to deduction of interest on the borrowed funds. In the present case, there is no dispute about the fact that the amounts have been advanced to the wholly owned subsidiaries of the assessee company and there is no fact brought on record by any of the lower authorities that the amounts have been used by these subsidiary companies for any purpose other than their business purposes. In view of this, we are inclined to hold that the amounts given to subsidiary companies were on account of commercial expediency. Therefore, no disallowance....
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....V5 licence had been accounted for/ adjusted against written down value of the said asset and similarly an amount of Rs. 70,443/- had been adjusted against advance money given by the company to one of the transferee employee. The Ld. CIT (Appeals) rejected the assessee's contention stating that the assessee had not substantiated the same by filing details of block of asset, WDV etc. He, therefore, upheld the addition made by the Assessing Officer. 74. During the course of hearing before us, the Ld. counsel for the assessee reiterated the contentions made before the lower authorities and stated that receipt of Rs. 57,68,163/- had been duly accounted for in the books of the assessee having been received on account of sale of Catia V5 licence and shown in the ledger account of M/s Aeromatrix Info Solutions Pvt. placed at Paper Book page 288, in the schedule of fixed assets placed at Paper Book page No.385, in the ledger account of software purchased placed at Paper Book page No.693 and in the ledger account of depreciation for the year placed at Paper Book page No.695. The Ld. counsel for the assessee stated that all the above duly reflected the receipt of the said amount in the boo....