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2017 (4) TMI 1340 - AT - Income TaxTPA - addition made on account of payment of administrative services fees and addition on account of payment - of royalty to AE - proof of receipt of administrative services as well as technical knowhow - Held that:- The onus lies on the assessee to prove that the actual services for which the administrative services fees were paid are actually rendered or the use of technical knowhow @ 5% of the domestic sales. It may be mentioned that the question of the bench marking of transaction would arise only if the assessee proves that there was actual transfer of technical knowhow to the appellant and the technical knowhow was actually used by the assessee in the manufacturing activity of the appellant. It is a matter of fact that before the lower authorities as well as before us, the assessee company had only described the nature of technical knowhow and nature of administrative services received. It does not conclusively prove that the assessee company actually received the administrative services as well as the technical knowhow which are used in the manufacturing activity of the appellant. The appellant had not filed any additional evidences to prove the administrative services/technical knowhow are actually received by the appellant and thus the assessee company had failed to discharge this onus of proving this aspect. Therefore, even as per the provisions of Indian Evidence Act, the presumption can be drawn that the assessee has no evidence to prove this aspect. Therefore, the AO/TPO was justified in adopting the ALP in respect of payment of administrative services and royalty at Nil. Thus, the grounds of appeal in ground Nos. 2 to 7 are dismissed. In respect of the other grounds of appeal, since we held that there was no proof of receipt of administrative services as well as technical knowhow which is used in the process of manufacturing activity, the question of bundling of transaction or aggregating all other transactions does not arise. Disallowance on account of doubtful advance written off - Held that:- The conditions necessary for allowance as a bad debt are not applicable in the present case. It is not a debt arising on account of any sale transaction and a bad debt presupposes existence of a debt and these were not a forming part of the total income in the earlier years of the appellant. Therefore, the claim cannot be allowed as a bad debt. Further, this cannot even be allowed as a business loss for the reason that the issue of irrecoverability from the department has not attained the finality as the issue is pending before the appellant authorities. This can be claimed as a deduction only if it becomes clear that it cannot be recovered as a deduction.
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