TaxTMI 
TaxTMI 
2019 (9) TMI 662
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....the assessee explained the transaction as under:- "Nomination fee - business expenditure Note on our Business Model: We are into manufacture of Hangers. These hangers ore used both as a packaging/display product by the eventual buyer. We mainly service the global brands such as Old Navy, Asda George, C&A, Arcadia etc., As far as garment sourcing is concerned, the same is always sourced along with hangers. So the garment manufacturer when he exports his garment will do it with hangers. We have a variety of hangers for each applications. (Shirts. Pants. Suits. Undergarments, Kids Wear etc). these models have been developed and approved by various global vendors through our Group. Mainetti Group has been in this business for over 50 years. The garment manufacturer will price his final product along with hangers. So for him to source the hangers from us we need to be an accredited/preferred vendor of his final customers. Some retail stores based on our Group's brand image /global presence accredit "Mainetti India" as a preferred vendor- consequent to which the garment manufacturer places his orders with us. In this connection, i....
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....ove, by virtue of this agreement not only is business secured bill a continuous return on investment in tools made by the assessee company is ensured. In this connection, attention is drown to the decision of the Hon'ble Supreme Court in the case of SA, Builders Ltd v CIT(A) & Anr [2007] 288 ITR I (SC), wherein it has been held as follows: "once it is established that there was nexus between the expenditure and the purpose of the business (which need not necessarily be the business of the assessee itself), the Revenue cannot justifiably claim to put itself in the armchair of the businessman or in the position of the board of directors and assume the role to decide how much is reasonable expenditure having regard to the circumstances of the case, No businessman can he compelled to maximize its profit. The IT authorities must put themselves in the shoes of the assessee and see how a prudent businessman would act. The authorities must not look at the matter from their own viewpoint but that of a prudent businessman." By the ratio of the said decision, it is clear from the above cited facts that there is a nexus between the nomination fees paid and the bu....
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..... 4,07,88,503/- for the A.Y.2013-14. 2.2 The Ld.CIT(A) erred in allowing the nomination fees paid expenses claimed by the assessee despite the fact that the assessee failed to furnish any evidence in the form of tripartite agreement before the Assessing Officer in support of the claim that they are the Sole or Preferred Vendor for the foreign retailer. 2.3 The Ld.CIT(A) had failed to observe that the Assessing Officer had rightly pointed out that the cost of tools would be accounted for at the time of fixing the sale price of the hangers and it makes no business sense for the foreign retailer to accept that there be a moratorium on the payment of Nomination fee on the part of the assessee. 3. The Ld.CIT(A) has allowed assessee's appeal based on the decision of the Hon'ble ITAT, Chennai in ITA Nos. 3432 & 3433/Chny/2016 dtd. 18.05.2018 which has not yet reached finality. Revenue has filed further appeal u/s.260A before Hon'ble High Court which is pending for disposal. 4. For these and other grounds that may be adduced at the time of hearing, it is prayed that the order of the learned CIT (A) may be set aside and that of the Assessing O....
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....ssessee has no relevance to the business model of the assessee. These findings of the Revenue are not appreciable. The Revenue cannot sit on judgment with respect to the business policies and decisions made by the assessee during the course of the business of the assessee. Any business carried out by any entity has various dimensions and complexities which have to be prudently tackled by the entity in order to survive in that business. Further the general practice in any business is that when an entity obtains certain benefits from another entity, a portion of the benefit is passed on to that entity in some manner or the other in order to nourish healthy business environment. In the case of the assessee, the proximity of the assessee's clients and the garment suppliers who are purchasing the hangers from the assessee are not in dispute and is also genuine. More over the clients of the assessee are in a position to influence the purchase price of the hangers purchased by the garment suppliers from the assessee. In these circumstances when the clients of the assessee have insisted the garment suppliers to purchase the hanger from the assessee, it is quite natural that they would expe....