TaxTMI 
TaxTMI 
TaxTMI 
2026 (4) TMI 268
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....evenue by 66 days. Considering the reasons adduced in the condonation petition, in the interest of substantial justice, we are inclined to condone the delay and admit the appeal of the revenue for adjudication. 3. The revenue has raised the following grounds of appeal before us:- "1. Whether on facts and circumstances of the case and in law, the Ld. CIT(A) was right in holding that the reimbursements of expenses are at arm's length and in deleting the adjustments made by the TPO despite the assessee not having benchmarked the services received separately and aggregating the services received. 2 Whether on facts and circumstances of the case and in law. The Ld. CIT(A) was right in deleting the adjustment on account of reimbursement of personnel costs, despite the assessee not having provided the proof of requisition of service on the basis of fees charged by experts 3. Whether on facts and circumstances of the case and in law, the Ld. CIT(A) was right in deleting the adjustment on account of reimbursement of IT related expenses despite the assessee not having provided any agreement for the same or any contemporaneous documentary evidence that it rec....
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....e in dispute before us in the present appeals:- Payment of Royalty - Rs 21,49,59,886 Reimbursement of expenses to AEs - Rs 2,47,46,548 7. First let us take up Reimbursement of expenses to AEs. This comprises of three items as under:- A) Reimbursement of Personnel Cost to Benind SPA / Benetton Group SPA - Rs 1,35,10,009 7.1. The assessee had employed expatriates with vast experience in the industry and Benetton Group to assist the assessee in some of its critical business activities. During the relevant year, certain portions of their salary, which included social security costs, was incurred by AE on assessee's behalf, purely for the sake of administrative convenience. The said costs were subsequently reimbursed by the assessee to its AEs. No markup was charged by the AEs on this transaction. Moreover, the salaries of expats involved in the sourcing segment have been marked up by the assessee at 12% while charging from the AEs in respect of 3 out of 5 people. Further, the employees were on the payroll of the assessee and the assessee has the sole responsibility towards that employee. Any incidental expenses incurred by reimbursed by the assessee in relation to ....
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.... revenue to prove whether they had filed any appeal before the Hon'ble Supreme Court. 7.1.3. The Learned DR vehemently argued that this Tribunal in assessee's own case for Asst Year 2014-15 in ITA No. 7315/Del/2019 dated 7-11-2024 had restored this issue to the file of Learned TPO to consider the additional evidences in the form of consultancy agreement dated 1-7-2013 filed by the assessee before the Learned CITA which stood not examined by the Learned CITA. Per Contra, the Learned AR submitted that this consultancy agreement is dated 1-7-2013 is in connection with services rendered by Mr Daniel Leung who had not rendered any services to the assessee during the year under consideration. Further this consultancy agreement is dated 1-7-2013 and is not at all relevant for the year under consideration. Hence he submitted that the issue in dispute is squarely covered by the earlier year orders of Tribunal and the orders of Hon'ble Delhi High Court referred supra. In view of this, we do not deem it fit to interfere with the order of the Learned CITA. B) Reimbursement of IT related expenses to Benind SPA - Rs 67,03,487 7.2. The assessee received information technology support ser....
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....urt. In view of this, we do not deem it fit to interfere with the order of the Learned CITA. C) Reimbursement of Advertisement & Publicity expenses to AE (United Colors of Communication SPA )- Rs 45,33,052 7.3. During the year, the AE (United Colors of Communication SPA) incurred certain advertisement expenses on behalf of the assessee, which were subsequently reimbursed by the assessee on cost-to-cost basis. These expenses were incurred by the AE specifically for the assessee for the purpose of administrative convenience. Accordingly, the sum of Rs 45,33,052 was reimbursed by the assessee to the AE. The assessee also submitted that it is not always possible to quantify or to determine the true value of benefits received from the services availed, and not all services can be evidenced as tangible. The case of the assessee is that these expenses were incurred for the marketing and publicity of assessee's products. Had these expenses not been borne by the AE, assessee would have had to incur a higher cost by engaging third party service providers for the same purpose. This does not include any provision of services by the AE's, and these are nothing but actual cost that is ....