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2019 (4) TMI 709 - DELHI HIGH COURTExpenditure allowable u/s 37 - amount paid to ‘Lok Foundation’, an entity registered in Mauritius - fee paid to Lok Foundation for a gamut of services rendered outside India - AO alleged that the consultancy fee was a ploy to siphon away the profits - wholly and exclusively for the purpose of business - HELD THAT:- Payments made by the assessee for the efforts and services rendered by a third person, in the present case by Lok Foundation, cannot be rejected as held in the assessment order as non-business expenditure on the ground that the foreign investors should have made that payment Lok Foundation. This is untenable and unacceptable. The efforts had benefitted the assessee in the form of increased investment in India resulting in increase in the advisory fee being paid to the assessee. AO should not have commented and decided on who should have paid commission. The investors may or may not be interested in paying fee to Lok Foundation. The assessee would be justified in making payment to expand and increase their business and income, which would be an expenditure wholly and exclusively for the purpose of business. Another reason given by the AO was that Mauritius was a tax haven in which tax was payable only @ 3%. He did not advert to the other facts including increase in investment, deduction of tax at source on payment made to Lok Foundation, and also the documents placed and relied upon by the assessee with reference to the services rendered by Lok Foundation. The said documents and factum have been taken into consideration by the first appellate authority. AO had not bothered to even take on record and into consideration the factum that TDS @ 10% had been deducted. Thus, money remitted to Lok Foundation was taxed in India on gross receipt basis without reference to and deducting any expenditure incurred. Further, the Assessing Officer did not refer the question of quantum of fee paid to Lok Foundation to the Transfer Pricing Officer. Findings are primarily findings of fact, drawing inference and conclusions after referring to and based upon evidence and material on record. The findings as recorded are not illogical and perverse, which require interference. We would not reappraise the evidence as a normal appellate court while exercising jurisdiction under Section 260 of the Act - Appeal dismissed.
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