TaxTMI 
TaxTMI 
2024 (6) TMI 1579
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....ed 31/12/2022, proposed to make addition of Rs. 61,05,381/- by disallowing certain payments made to third party service providers under section 37 of the Act Rs. 1,60,78,394/- by disallowing direct expenses u/s. 44C of the Act and Rs. 1,03,35,005/- on the ground of not offering the matching income to tax. The Learned Assessing Officer also disallowed a sum of Rs. 53,17,732/- towards cessation of liability, but it is not subject matter of this appeal, because such a ground is not pressed at the time of arguments. 3. Assessee preferred objections before the learned DRP and submitted certain additional evidences in respect of which the learned DRP obtained remand report from the learned Assessing Officer. Having considered the remand report, the learned DRP issued directions dated 27/09/2023 under section 144C(5) of the Act. Pursuant to such directions, the learned Assessing Officer passed the final assessment order dated 31/10/2023, making addition of Rs. 72,84,429/- under section 37 of the Act Rs. 1,60,78,394/- under section 44C of the Act and Rs. 1,03,35,005/- disallowing the bad debts claimed by the assessee. Hence, this appeal by the assessee, challenging such additions. 4.....
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....xpress any adverse opinion or felt the necessity to issue notice under section 133(6) again so as to have any clarification post submission of the additional evidence. Further, learned DRP failed to state how the earlier non-response to the notice under section 133(6) of the Act would vitiate the remand report where the learned Assessing Officer did not express any adverse remarks. Learned AR submitted that the assessee is ready to secure compliance to the notices under section 133(6), if any issued in respect of any clarification, post the additional evidence. She further submitted that out of 315 third parties, the learned Assessing Officer sought information and made addition in respect of 25 third parties and that too disallowance of the total amount is not warranted. Further, according to her, the accounts of the assessee are audited and no discrepancy with the books was identified by either of the Revenue authorities. Merely because on an earlier occasion, there was no proper response to the notice under section 133(6) of the Act, the entire amount paid to the third parties cannot be disallowed. 8. Per contra, learned DR submitted that the assessee merely furnished the agr....
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....edings vitiated the remand report. 11. In these circumstances, we are of the considered opinion that disallowing the entire expenditure in the shape of payments to these third parties is not justifiable. Hence, we direct the learned Assessing Officer to delete the addition made on this score. This ground is allowed. 12. Coming to the disallowance of expense under section 44C of the Act is concerned, the assessee under other expenses in the consolidated P&L Account reported expenses of Rs. 1,21,62,145/- allocated head office overheads and Rs. 1,60,78,394/- towards business development and marketing expenses. According to the assessee, the assessee had shown the general and administrative expenses of the head office overheads, allocable to the assessee and took notice by the learned Assessing Officer. The head office incurs certain expenses, namely, review of the tenders/bids called for civil works that are announced in India, viability anyalysis of the tenders announced, selection of tenders for which the branch/PO has to apply for, assistance in preparation of the tender, critical review of the tender being filed, deciding on the financial aspects of the tender, participating....
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....ombay), the Hon'ble Bombay High Court held that, Section 44C is applicable only in the cases of those non-residents, who carry on business in India through their branches; that the said section was introduced to get over difficulties in scrutinising claims in respect of general administrative expenses incurred by the foreign head office insofar `as such expenses stand related to their business or profession in India having regard to the fact that foreign companies operating through branches in India sometimes try to reduce incidence of tax in India by inflating their claims in respect of the head office expenses. In other words, section 44C seeks to impose a ceiling/restriction on head office expenses; that, however, section 44C contemplates allocation of expenses amongst various entities; that the expenditure which is covered by section 44C of the Act is of a common nature, which is incurred for the various branches or which is incurred for the head office and the branch; that in the cases where the expenditure was exclusively incurred for the branch, and the officers came from the head office to India to attend to the work its branch and, in connection with that work, the expense....
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....) of the Act is concerned, though challenged the disallowance made under section 44C of the Act, the assessee did not take any ground before us challenging the disallowance made under section 40(a)(i) of the Act. Not taking such a ground in appeal before us on account of disallowance made under section 40(a)(i) of the Act, in our opinion, amounts to acceptance of such disallowance made by the learned Assessing Officer on account of disallowance under section 40(a)(i) of the Act. On that count, the assessee fails and the disallowance of Rs. 1,60,78,394/- made by the learned Assessing Officer under section 40(a)(i) of the Act, sustains. 20. Now coming to the last addition by disallowing the bad debts in the shape of receiving lesser amount than the recognized revenue in respect of Pali PO and UDRP PO. Contention of the assessee is that for years in the ITRs, the assessee recognized revenue, recorded the same in the books and offered for tax, which were scrutinized and accepted by the department, but ultimately after completion of the project, the NHAI withheld payments of full amounts on the ground of certain deficiencies in service. 21. According to the learned Assessing Offic....