TaxTMI 
TaxTMI 
2024 (2) TMI 528
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....IT(Appeals), National Faceless Appeal Centre, Delhi [NFAC], for the AY 2016-17. 2. The only issue raised in this appeal is regarding the disallowance of Rs. 17,05,381 u/s. 40A(2) of the Act being 50% of the total back office charges of Rs. 34,10,763 paid to group consultant MEMGIIPL. 3. At the outset, the appeal is time barred by 660 days. Petition for condonation of delay along with affidavit 25.10.2023 has been filed by the assessee stating that the official incharge of the company due to her confinement stage was irregular in office and went on long continuous leave and the impugned order of the CIT(A) was not downloaded from ITBA portal and placed before appropriate authority of the company. While the company was preparing for fit....
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....vidually to group companies and not to the groups as a whole. Banks give loans at rates at par with the market rates and hence no further efforts is actually needed by the holding company. Therefore the AO was not convinced with the explanation of the assessee and disallowed 50% of the amount u/s. 40A(2) of the Act. The AO rejected the assessee's submission that similar disallowance in the case of assessee group concerns in the case of Manipal Health Systems Pvt. Ltd. in ITA Nos.1667/Bang/2016 was deleted by the ITAT on the ground that the matter was pending in appeal before the High Court. 7. On appeal before the CIT(Appeals), the assessee submitted that the AO has not brought any instance or comparable case to show that the payment was....
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....red as per agreement. Further, the assessee was a loss making company for the current assessment year and benefitted greatly from using the Manipal logo which cannot be quantified in revenue terms. It is not illogical to pay an amount to MEMGIIPL qua the service agreement entered into which is at 0.5% of its total turnover. The AO has not justified the disallowance by bringing on record any instance of comparable case to show that payment was excessive or unreasonable and not been able to show how the same constituted fair market value of the services. The AO has merely proceeded on the basis that the assessee had its own independent set up for such services and did not require services of MEMGIIPL. Further no such addition has made in the ....
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....d in this agreement are as under: Fund management and financial services Accounting and Auditing services Treasury operations (Direct and Indirect) Advisory Services Management and Advisory Services Secretariat and Legal Services Project Feasibility & Implementation Real Estate & Facilities Services Human Resources Development Quality & Information Technology Services Central Processing Brand Royalty Brand Royalty - JVs Marketing, PR and Road Shows 10. On perusal of the record, we also find that AO was not consistent in restricting the disallowances during the assessment year 2009-10 to 2011-12. In assessment year 20....
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....ould be some evidence on the basis of which action of the AO would be held to be justified to show that expenses are unreasonable or excessive. In the case of DCIT Vs. Microtex Separators Ltd., (supra) the jurisdictional High Court has held that so long as there is no intention to evade tax and so long as the commission is not shocking, the said commission has to be accepted particularly in the light of the wordings of the section 40A(2) of the Act. 11. Having carefully examined the orders of the authority below in the light of these judicial pronouncements and the arguments advanced by the parties, we find that AO has not doubted the payment made by the assessee to MEMGIIPL on account of services rendered by them. But he has made ....