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2019 (3) TMI 1458 - AT - Income TaxDisallowance of Management Fees paid to its holding company IMC Inc, USA- Allegation that assessee had failed to prove that any benefit had accrued from the expenses - bills are serially numbered and booked at close of the year - HELD THAT:- The liability of assessee was to make payments to its holding company on the basis of invoices raised by holding company on monthly basis; copy of invoices are also placed. The perusal of said invoices would reflect the breakup under the head ‘Services and Labour’, under which names of personnel providing the services are written and different amounts payable to each of them are mentioned. Further details are given in respect of travel of the persons, if any telecommunication of computer charges and delivery expenses under the head ‘Travel / other expenses’. Such are the details which were available from month to month and the amounts in each month vary. The objection of authorities below in this regard was that though invoices have been raised but the same were serially numbered and also that the amounts were due to be paid at the close of the year. We find no merit in the stand of authorities below. It is an understanding between the parties, which has to be looked into and the expenses have to be allowed on accrual basis specially where the assessee is following mercantile system of accounting. Merely because the amounts were due at the close of the year, would not disentitle the assessee from claiming the said expenditure. coming to the next aspect of the disallowance of assessee on the ground whether any services were availed or not. The assessee in this regard has furnished additional evidence before the CIT(A), copies of which are placed at pages 79 to 173 of Paper Book. The said evidence is in the form of various emails exchanged between employees of the assessee and personnel of holding company. We have gone through the said evidence and we are of the view that the assessee had established its case of availment of said services. Following the same parity of reasoning in the case of Emerson Climate Technologies (India) Ltd. Vs. DCIT [2017 (12) TMI 1568 - ITAT PUNE] and EATON FLUID POWER LIMITED VERSUS THE ASST. COMMISSIONER OF INCOME-TAX, CIRCLE-8, [2018 (6) TMI 1266 - ITAT PUNE], we hold that entire expenditure booked under the Management Fees is to be allowed as deduction in the hands of assessee. The grounds of appeal raised by assessee are thus, allowed.
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