TaxTMI 
TaxTMI 
2023 (11) TMI 797
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....cts and in the circumstances of the case and in law, the Ld. CIT (Appeals) was justified in deleting the upward adjustment of Rs. 2,11,50,685/- made by the TPO in respect of international transactions of the assessee pertaining to payment of management fees? (ii) Whether on the facts and in the circumstances of the case and in law, the Ld. CIT (Appeals) erred in ignoring the fact that the assessee had failed to benchmark the transactions with its AE as per law thereby failing to discharge the primary onus cast upon it by the Act? (iii) Whether on the facts and in the circumstances of the case and in law, the Ld. CIT (Appeals) erred in allowing aggregation of transaction which is contrary to the provisions of Section 92C of the Act and Rule 10A to 10C of the Income-tax Rules? (iv) Whether on the facts and in the circumstances of the case and in law, the Ld. CIT (Appeals) was justified in allowing payment of management fees of Rs. 2,11,50,685/- without bechmarking the transactions which is contrary to the - provisions of Section 92C of the Act and Rule 10A to 10C of the Income tax Rules? (v) "Whether on the facts and in the circumstances of the cas....
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....ar, Chennai, Bangalore and Pune. During the course of proceedings before Transfer Pricing Officer, the TPO proposed an adjustment of Rs. 2,50,12,272/- by way of disallowance of payment of management fees by the assessee company to its associated enterprises. During the course of proceedings, the assessee contended that the TPO should not reject TNMM as the most appropriate method since the assessee has received various services from which benefits have accrued to the assessee and payments have been made to the associated enterprises at arms length price, even under the CUP method adopted by the TPO. However, the TPO confirmed the aforesaid transfer pricing officer adjustment amounting to Rs. 2,50,12,272/- in the hands of the assessee. 7. In appeal, the assessee submitted that the TPO for preceding assessment year 2010-11 had proposed an adjustment of Rs. 3,22,18,260/- to the international transaction of payment of management fees by the assessee to its associated enterprise but the DRP had directed to delete the disallowances of management charges. It was further submitted that in a similar issue of disallowance of management fee, the ITAT in the assessee's own case for assessme....
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....ts documentary evidence to justify the receipt of services, the receipt of commensurate direct and tangible benefit and substantiate that the amount paid was not in any way in excess of the amount paid in a third party scenario, such payments for cost allocated cannot be treated at arms length price. In response, the counsel for the assessee submitted that the issue is directly covered in favour of the assessee by the observations made by Hon'ble ITAT in assessee's own case for assessment year 2011-12. 9. We have heard the rival contentions and perused the material available on record. It would be useful to reproduce the relevant extracts of ITAT order in MA 154/Ahd/2020 in ITA 720/Ahd/2017 for assessment year 2011-12 dated 07-09-2022 for ready reference. "The Miscellaneous Application has been filed by the Revenue praying for rectification of the order passed by the Bench on 27.12.2019. According to Revenue, while calculating the disallowance in respect of operating revenue of manufacturing [email protected]%, the Bench has wrongly applied 2% of the same. 2. We have perused the order passed by the bench. The paragraph 7 thereof categorically deals with the percentag....
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....Department. 11.1 In light of above observations, ld. CIT(A) allowed the appeal of the assessee with the following observations:- "5.5 Ground No. 9 is on disallowance of depreciation on computer software of Rs. 9,47,864 to the income of the Appellant, by considering depreciation on computer software @ 25% as against @ of 60% claimed by the Appellant. The appellant has brought to attention that the predecessor Hon'ble CIT(A)-1, Vadodara has deleted similar addition made by the AO in AY 2011-12 vide para 4.3.1 of the order dated 13.05.2015 following the judgement of Hon'ble Mumbai ITAT in the case of National Collateral Management Services Private Limited v. ACIT ITA No. 2237/Mum/2013) The appellant has also relied on the decision of Hon'ble Madras HC in case of Computer Age Management Services (P.) Ltd. (2019) 109 taxmann.com 134 (Madras). In view of all this the AO is directed to delete the addition of Rs. 9,47,864/- The ground succeeds." 12. The Department is in appeal before us against the aforesaid order passed by ld. CIT(A). 13. We observe that in the case of CIT vs. Computer Age Management Services supra, the Madras High Court has held that where s....
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....ion claimed on computer software license, without appreciating the fact that purchase of licenses to use the software is only an additional tool used in the business which comes under the classification of intangible assets and accordingly the same is eligible for depreciation @ 25% only." (vi) Whether on the facts and in the circumstances of the case and in law, the Ld. CIT (Appeals) is justified in deleting the addition of Rs. 1,11,12,560/- made by the Assessing Officer on account of excess claim of consumption of own generation of electricity unit without appreciating the fact that the assessee had purchased electricity of 6935006 units @Rs.6.96 per unit in the FY 2012-13 and had shown own generation of electricity of 1792350 units @ Rs 13.16 per unit during the year under consideration but the assessee has failed to produce necessary supporting evidences required by the Assessing Officer during the course of assessment proceedings to substantiate the huge increase in the cost of own generation of electricity claimed by the assessee during the year under consideration. (vii) Whether on the facts and in the circumstances of the case and in law, the Ld. CIT (Appe....
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....city: 21. The brief facts in relation to this ground of appeal are that during the course of assessment, the Assessing Officer observed that power and fuel during the year under consideration had increased to 898.17 lakhs compared to 537.68 lakhs in the immediately preceding year. On further verification, the Assessing Officer observed that assessee had purchased electricity @ 6.34 per unit in financial year 2011-12 and @ 6.96 in the financial year 2012-13 and had generated own electricity @ 11.14 per unit in financial year 2011-12 and @ 13.16 per unit in financial year 2012-13. In response to queries raised by the Assessing Officer, the assessee submitted that the electricity generated by own generation is 3.5 liter of diesel oil which is same for both the years. Accordingly, the Assessing Officer asked the assessee to explain as to why the assessee decreased purchase of electricity during the current year as compared to last year when the purchase of electricity was cheaper as compared to cost of own generation of electricity. Further, the Assessing Officer observed that the submission of the assessee that rent has been paid by the assessee for hiring generator set is not subs....
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....ration from end of July, 2012. But the electricity was not made available till June, 2013. Accordingly, the assessee generated electricity in-house using diesel generator set. The counsel for the assessee further submitted that vide letter dated 22-12-2016, the assessee had filed all necessary details before the Assessing Officer along with full invoices to justify the increase in full cost. It was submitted that expenditure was incurred on account of commercial expediency and commercial expediency is always the prerogative of the businessmen. Accordingly, it was submitted that ld. CIT(A) has correctly deleted the addition holding that Assessing Officer cannot substitute the rate of consumption without rejecting the books of accounts and that the tax authorities are precluded from substituting their own reasoning as to the conduct of business by the taxpayer. 23. We have heard the rival submission and perused the material available on record. We observe that on perusal of the paper book, it is seen that the assessee had filed various invoices for hiring of generator sets, which have not been disputed. Further, the assessee had also submitted that invoices for purchase of oil for....
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.... on account of disallowance of excess depreciation claimed on computer software license, without appreciating the fact that purchase of licenses to use the software is only an additional tool used in the business which come under the classification of intangible assets and accordingly the same is eligible for depreciation @ 25% only (vi) Whether on the facts and in the circumstances of the case and in law the Ld CIT (Appeals) is justified in deleting the addition of Rs 2,02,32,475/- made by the Assessing Officer on account of excess claim of consumption of own generation of electricity unit without appreciating the fact that the assessee had purchased electricity of 10865692 units @ Rs 7 58 per unit in the FY 2013-14 and had own generation of electricity of 2557835 units @ Rs 15.49 per unit in the FY 2013-14 but the assessee has failed to produce necessary supporting evidences required by the Assessing Officer during the course of assessment proceedings to substantiate the huge increase in the cost of own generation of electricity claimed by the assessee during the year under consideration. (vi) Whether on the facts and in the circumstances of the case and in law,....