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2022 (9) TMI 1538 - AT - Income TaxDisallowance u/s 40(a)(i) - payment made for management services to non-resident AEs - assessee furnished that it had paid sum to its group entities outside India under the head management charges - CIT(A) held that the payments made towards management services to non-resident AEs by the assessee are not FTS and not liable for deduction of TDS u/s 195 - HELD THAT:- On perusal of the assessment order it is noticed that the AO gives a finding that the agreements show that the companies provided highly technical services and can be rendered only by a person who has high degree of expertise. It was also the observation of the Assessing Officer that the expertise which is available to the respective companies is made available to the assessee company for using the same in its managerial decision making process. While coming to such conclusion the AO failed to refer to any specific clause of the agreement where the non-resident AE companies provide highly technical services. AO failed to list out what are the highly technical services the companies are providing to the assessee company. AO also failed to show that under which clause the expertise available with the companies is made available to the assessee company for using the expertise by the assessee in its managerial decision making process. We also observe that the issue has been decided in favour of the assessee during the assessment years 2010-11 and 2014-15 by the ld. CIT (Appeals) and the Revenue has accepted these decisions by not filing further appeals to this Tribunal. It is also noticed that for the assessment year 2012-13 the Assessing Officer did not make any disallowance for non-deduction of TDS on management service charges paid by the assessee to its AEs. No valid reason to interfere with the findings of the ld. CIT (Appeals) in holding that the managerial services charges paid by the assessee to its non-resident AEs is not liable to TDS under the provisions of section 195 of the act. Thus, we sustain the order of the ld. CIT (Appeals) and reject ground No. (a) of grounds of appeal of the Revenue. Disallowance of management charges u/s 37 - CIT(A) deleted addition - HELD THAT:- CIT (Appeals) has examined the evidences furnished and came to the conclusion that the expenses incurred towards management services are for the purpose of business and such services are routine and recurring in nature and qualify as Revenue expenditure. It is also the submission of assessee that the Assessing Officer in any of the earlier assessment years or in subsequent assessment years these expenses were disallowed invoking the provisions of section 37(1) of the Act. No infirmity in the order passed by the ld. CIT (Appeals) in allowing these expenses as Revenue expenditure incurred by the assessee for its business purposes. Decided against revenue. Disallowance made towards PF and ESI - CIT(A) deleted addition - HELD THAT:- On perusal of the order of the ld. CIT (Appeals) we observe that the payments towards PF and ESI were made within due date for filing return of income u/s 139 of the Act and the ld. CIT (Appeals) following the decision of the Hon’ble Delhi High Court in the case of CIT Vs. AIMIL Ltd. [2009 (12) TMI 38 - DELHI HIGH COURT] held that there was no justification in making disallowance towards PF and ESI contributions. We see no infirmity in the order passed by the ld. CIT (Appeals). This ground of appeal is dismissed.
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