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2011 (11) TMI 487 - AT - Income TaxTransfer pricing adjustment – reference to TPO - payment made to CWS - ALP in respect of reimbursement of expenses made to AE on ground that services availed by the assessee are not intra-group services - assessee's claim regarding the payment made to CWS on the ground that CWS had used one of its employees to render liaison services to IBM on behalf of the assessee – Held that:- Assessee has been shown to have earned substantial revenues from IBM and according to the business needs of the assessee, these services were required to be obtained. If such services are provided by the employees of the assessee company, then, it has to incur extra expenditure, thus it was justified in availing services of liaison office. Also, there is no absence of evidence submitted by the assessee to support its contention that it has reimbursed the cost in respect of revenues earned by it on account of services rendered by AEs. Therefore, addition made is deleted – as for similar services obtained from CWHK as from the chart it is revealed that the main revenue earned is by the assessee only which is 82.44% of the total revenue and re-imbursement of cost is only to the extent of $ 2,81,265/- out of which cost allocated to the assessee is $ 2,03,931. The revenue relatable to such cost allocation is $ 3,037,398. Evidence in the shape of various e-mails sent by Mr. Arshpreet Choudhary to the assessee company with regard to various clients from whom the assessee has earned income are also placed before the AO, TPO and DRP. Thus, it cannot be said that there is absence of evidence submitted by the assessee and it will be incorrect to say that the assessee did not furnish evidence to support its contention that it has reimbursed the cost in respect of revenues earned by it on account of services rendered by CWHK. All the details have been furnished on record. Decided in favor of assessee. Dis-allowance of "referral fee" paid to AE – Revenue contended it to be diversion of income to group concerns and no benefit is derived from such expenditure - Held that:- Referral fee has been paid to AE for identifying new business opportunities for the assessee company. The said international transaction has been made subject of determination of ALP by the TPO & TPO found that transaction at arm's length then it will not be permissible for the A.O. to re-examine that transaction and make dis-allowance of the same under normal provisions of the Act. Also, on merits, assessee had submitted ample evidence to support that expenditure is incurred with respect to revenue earned by the assessee on property transaction referred to the assessee by its AE. No adverse material whatsoever has been brought on record to show that either the evidence submitted by the assessee in this respect was incorrect or the contention of the assessee that expenditure relating to transaction entered into with AE's were less costly was incorrect. Addition is not justified – Decided in favor of assessee. Unrealized service tax disallowance u/s 43B - It is the case of the assessee that service tax did not become payable and it was not routed through P&L A/c - Held that:- It is seen that no reasons have been assigned for not admitting the claim of the assessee and no reference has been made to the decision in case of Real Image Media Technologies (P.) Ltd.(2007 (12) TMI 263 - ITAT MADRAS-C) wherein held that as per regulations of Service Tax Act the service tax will become due by 5th of month immediately following the quarter in which the payments are received and, therefore, the rigors of provisions of Section 43B are not applicable to service tax – matter restored back to DRP to pass a reasoned and speaking order. Dis-allowance of depreciation on computer periphals @ 60% - Held that:- In view of decision in case of CIT v. BSES Yamuna Power Ltd (2010 (8) TMI 58 - DELHI HIGH COURT) A.O. is directed to allow depreciation to the assessee on computer peripherals @ 60% - Decided in favor of assessee.
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