AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2026 (1) TMI 1537
X X X X Extracts X X X X
X X X X Extracts X X X X
....ces under section 143(2) and 142(1) of the Income-tax Act, 1961 (for short 'the Act') were issued and served on the assessee. In response, the ld. AR of the assessee submitted relevant information from time to time as called for. 4. The assessee is providing various types of computer hardware/software support services like spyware removal, set up, installation, help and report and other related support services to the individuals and small businesses. During the year, assessee has undertaken certain international transactions with its Associated Enterprise (AE). Therefore, the matter was referred to Transfer Pricing Officer (TPO) for determining the Arms Length Price (ALP) of these transactions. The TPO has passed his order dated 28.10.2016 and has not made any adverse inference in respect of international transactions. Accordingly, no additions were made. 5. During assessment proceedings, the Assessing Officer observed that assessee has made payments to its AE i.e. Iyogi Inc. USA towards marketing and other support services. Assessee was asked to submit details of services received along with copy of agreement entered into with its AE. Further it was asked to indicate whethe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....essee was to make an application u/s 194(2) of the Act. The assessee failed to exercise this option. Based on the above observation, the Assessing Officer disallowed the payment of Rs. 197,71,98,209/- to Iyogi USA for the reason that assessee has not deducted TDS u/s 40(a)(i) of the Act. 7. Further the Assessing Officer observed from the profit and loss account submitted by the assessee that it has deducted Rs. 2,49,11,265/- corresponding to provision for refund while computing the taxable income. A separate notice was issued to the assessee to explain the same. In response, the assessee has submitted that the provision of refund paid is refund paid to customers in the next financial year till the date when the financial statement were finalized i.e. actual refund paid to customers from 1st April till accounts were finalized and whose revenue has been recognised in this financial year. The Assessing Officer found that the above reply of the assessee is cryptic and vague. Since assessee failed to submit proper details during assessment proceedings, he proceeded to disallow the amount debited towards provisions for refund paid of Rs. 2,49,11,265/-. 8. Further the Assessing Offi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....isallowance made u/s 40(a)(i) of the Act and provisions for refund paid only. We are restricting ourselves to the above said issues raised by the Revenue. 12. Further ld. DR of the Revenue also raised additional ground as under :- "Whether on the facts and circumstances of the case and in law, the Ld. CIT (A) erred in deleting the disallowance made by the AO u/s 36(1)(va) of the Act of Rs. 82,01,034/- on account of late deposit of employee's contribution of PF&ESI in light of the settled legal position emanating from the judgement of Hon'ble Supreme court in the case of Checkmate Services Pvt. Ltd." 13. Considered the rival submissions and material placed on record by both the parties. We observed that the issue raised by the Revenue in additional ground is legal issue. In the light of Hon'ble Supreme Court in the case of NTPC, Limited vs. CIT (1998) 229 ITR 383 (SC), we are inclined to admit the additional ground and take up the same for adjudication herein below. 14. At the time of hearing, ld. DR of the Revenue raised the issue of ESI/PF on which Revenue has raised additional ground of appeal. Since the issue under consideration is squarely covered in favour of....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Assessing Officer has wrongly interpreted the confidentiality clause as make available. He submitted that it is a general clause mentioned in almost all the agreements entered by the respective parties. It does not mean that the services rendered by its AE are the information make available to the assessee. Further he brought to our notice page 27 of the impugned order wherein ld. CIT (A) has appreciated the relevant facts available on record and he rightly observed the details of make available cited by the Assessing Officer at para 22 and 23 of the assessment order and he has rightly appreciated the facts on record and allowed the grounds raised by the assessee for the simple reason that the services are rendered outside India. Therefore, the income is not taxable in India and there is no income accrued or arisen in India, therefore, there is no requirement for deducting TDS. He heavily relied on the findings of the ld. CIT (A). 18. Further he brought to our notice page 169 of the paper book (AY 2012- 13) which is the notes to financial statement submitted by the assessee wherein it is clearly mentioned that the assessee provides online subscription based technical support se....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ought to our notice various case laws relied on by the Assessing Officer. Further he brought to our notice pages 27 & 28 of the appellate order and submitted that it is ambiguous order and the ld. CIT (A) has not considered the managerial services also not properly considered the relevant facts on record. Therefore, he heavily relied on the findings of the Assessing Officer. 21. With regard to ground no.3, ld. DR brought to our notice page 20 of the assessment order and submitted that assessee has created provision for refund paid without submitting any details as called for during assessment proceedings. He submitted that this is only a provision and objected to the findings of the ld. CIT (A) that he had allowed the claim of the assessee based on the past history of expenses claimed by the assessee. He submitted that it is not like a warranty which requires provisions based on scientific study. He heavily relied on the findings of the Assessing Officer. 22. On the other hand, ld. AR of the assessee brought to our notice page 70 of the paper book (AY 2012-13) and submitted that during the period of assessment proceedings, the property of the assessee was locked and at the po....
X X X X Extracts X X X X
X X X X Extracts X X X X
....re not fully convinced of the findings of the ld. CIT (A).ld. CIT (A) has proceeded to allow the claim of the assessee merely on the basis of their submissions and he has not verified the detailed annexure to the invoices submitted by the assessee which is placed at pages 125 to 131 of the paper book. For the sake of clarity, we are reproducing invoice and relevant break-up for the first quarter as under :- 25. From the description of the annexure, we observed that there are certain expenditures claimed by the AE like on-ground tech support, payment gateway charges and process outsourcing cost which is about 68% of the total administration expenditure claimed by the AE. From the record, we observe that the assessee was not able to explain on-ground tech support provided to the assessee of US$ 216,575, payment gateway charges of US$ 654,045 and process outsourcing cost of US$ 4,195,938. Further we observed that the AE has claimed cost of sales and internal marking charges separately. From the above category of description, it is not clear the nature of expenditure as well as services provided by the AE outside India. From the total expenditure claimed by them, it is almost 53% of....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... services for personal computers and laptops which spans over the various periods. In some cases, if the customer is not satisfied with the services, the assessee has to refund the charges as collected by them from the customers. In this regard, assessee makes provision for such type of refund every year. Accordingly, for the year under consideration, assessee has provided provision of Rs. 2,49,11,265/-. The abovesaid provision as created by the assessee based on past experience. When the assessee was called for corresponding details for creating provision for refund and the same was reduced from the profit in the Profit and Loss account. The assessee could not submit the relevant information during assessment proceedings. After considering the submissions of both the parties, in our considered view, since the assessee is in the business of providing technical support services for personal computers and laptops, the charges will cover more or less for a year or more years depending upon the agreements with the customers. There are possibilities that unsatisfied customers may request for refund, for such eventuality assessee has created certain amount as provision and reduced the sa....
X X X X Extracts X X X X
X X X X Extracts X X X X
....5, 6 & 7, the same are consequential in nature and accordingly the same are dismissed. 30. In the result, the appeals filed by the revenue and assessee are partly allowed as indicated above. Order pronounced in the open court on this 5TH day of January, 2026. ============= Document 1 125 iYogi Inc 291 Broadway, Suite 803 New York NY 10007 URL: http://www.iYogi.net iYogi GREAT TECH SUPPORT. 000 Kind Attention: Mr. Subhash Chandra Agarwal Invoice no. : ITSPL/Jun 12/001 Date : 30 June 2012 Billed to: iYogi Technical Services Pvt. Ltd. DLF Building No. 6, 1St Floor, Tower-C Sector - 24 & 25A, DLF Cyber City, Gurgaon - 122002 (Haryana) - India INVOICE Particulars Marketing Support Services rendered for the period from April 2012 to June 2012, as per the annexure attached. 11,643,792 Total due 11,643,792 Net Amount due: USD Eleven Million six hundred forty three thousand seven hundred ninety two only. For iYogi Inc 28 Authorized Signatory Annexure to invoice: Category Description Amount in USD Advertisements - Other $3,805 Amortisation $15,616 Annual Service & Licensing Charges $15,743 Bank charges $4,637 B....