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2013 (2) TMI 429 - AT - Income TaxCredit of TDS allowed proportionally - disallowance as appellant has failed to correlate the job income returned vis-à-vis the vendor cost/job order cost - CIT restricted the TDS credit to the extent of the revenue credited to the profit and loss account over the receipt as per the TDS certificate - Held that:- Prescription of section 199 mandates allowing of credit for TDS in the year in which the income on which such tax deducted, is offered for taxation . As the assessee-offered the entire amount to tax in the instant year there is no justification in allowing only the proportionate part of the tax deducted at source. As the authorities below have followed the revision order of CIT for assessment year 2003-04 while taking the view that the credit will be given for TDS only to the extent of the amount credited in P&L account since, the view taken in assessment year 2003-04 is reversed by the Tribunal, set aside the order of CIT(A) and allow Ground taken by the assessee - in favour of assessee. Adhoc disallowance of common facility charges being 20% paid to its holding company - Held that:- AO has made no effort to demonstrate as to what would be fair market value of services and proceeded to disallow the same on adhoc basis as overall percentage of expenditure incurred. The disallowance in the present case is thus based on quantum of expenditure incurred rather than the fair market value of services for which expenditure is incurred. This approach, is contrary to the scheme of the Company. As decided in Indo Saudi Travel Services P. Ltd.,[2008 (8) TMI 208 - BOMBAY HIGH COURT], the legal proposition that payment to a sister concern cannot be disallowed under section 40A(2)(b) of the Act unless tax avoidance motive is established and as in the present case DR does not dispute that both the companies i.e. the assessee and parent company are taxed at the same rate and have sufficient taxable profits. Thus the mere fact that the allocation of expenses has not been made on the basis of rigid and detailed formula does not by itself make the expense disallowable under section 40A(2)(b) thus the impugned disallowance was indeed uncalled for on the facts of this case - in favour of assessee.
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