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2011 (9) TMI 259 - AT - Income TaxArms length price (ALP) u/s 92CA - use of brand name - Disallowance of claim of usance interest expense of ₹ 2,48,47,396/- Disallowance of 10% of expenses claimed under the head "Staff Welfare" on ad hoc basis. - Penalty u/s 271((1)(c) - Held that:- a company may use the foreign brand/logo for not only increasing its market share, but also for maintaining its existing market share. Thus, it is always not necessary that the use of brand name will increase the business profits. - In the case of Dy. CIT v. Ekta Appliances [2011 (2) TMI 568 - ITAT, DELHI], the TPO determined the ALP for the royalty payment to be Nil, primarily on the ground that the assessee has not been benefited from the technical Know how and the assessee was incurring losses continuously. - the TPO did not examine the arms length price of the impugned royalty payment in accordance with the provisions of Sec.92C of the Act. It is also the contention of the assessee that the TPO did not indicate to the assessee that he proposes to treat the impugned transaction as a sham one nor did he call for any objection from the assessee in that regard. - Matter remanded back for fresh decision. Usance interest expenses - Held that:- it is the prerogative of the assessee to regulate its business affairs and it is not open for the department to question the same. Similar views have been expressed by the Hon'ble Supreme Court in the case of Dhanrajgirji Raja Narasingirji, referred [1973 (3) TMI 6 - SUPREME Court]. - with respect to the allegation that assessee did not submit the documentary evidence, the assessee may be provided with one more opportunity to substantiate its claim with necessary documents. Ad hoc disallowance made in the expenditure claimed under the head "Staff welfare" - it is the case of the Assessing Officer that though the assessee has given the break up details of the impugned expenditure, yet it has failed to furnish the complete details and further it was not shown that the same was incurred only for the welfare of its employees alone. We notice that the Assessing Officer is not clear as to the nature of details he is expecting from the assessee. - Matter remanded back for fresh consideration.
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