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2023 (3) TMI 33 - AT - Income TaxDepreciation on Non-compete Fee - HELD THAT:- Respectfully following the ITAT Chennai Bench’s decision in assessee own case for A.Y.2001-02 we hold that assessee is eligible for depreciation on non-compete fee. Accordingly, as far as ground regarding non-compete fee is concerned, the Revenue’s Ground is dismissed. Depreciation on Effluent Treatment Plant - DR submitted that ld.CIT(A) has admitted additional evidence without giving opportunity to the AO. On perusal of the ld.CIT(A)’s order, it is observed that CIT(A) has not called for any remand report from the AO. It is an admitted fact by the AR that the assessee had submitted Chartered Engineers certificate which was not submitted before AO. The said certificate contains list of machinery. Therefore, the ld.CIT(A) has violated Rule 46A of the Income Tax Rules. Accordingly, the Ground related to Deprecation on Effluent Treat Plant is set-aside to the file of Assessing Officer. The AO is free to conduct necessary enquiries and assessee is given liberty to file all the documents before the AO. The AO shall pass order after giving opportunity of being heard to the assessee. Therefore, of the Revenue for the A.Y. 2010-11, 2011-12 & 2012-13 is allowed for statistical purposes. Employee’s Contribution towards PF - AO has disallowed us.36(1)(va) - AO has observed that the assessee had not deposited the employee’s contribution towards Provident Fund within the due date mentioned in the “The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952” - HELD THAT:- The issue of delayed payment of employee’s contribution of Provident fund has been decided by Hon’ble SC in the case of Checkmate Services (P.) Ltd. [2022 (10) TMI 617 - SUPREME COURT] held that the employee’s contribution towards PF has to be deposited before the due date mentioned in the respective statute. In this case it is an admitted position by the assessee in the Audit Report that the amount was not deposited before the due date mentioned in The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952. Hence, the impugned amount has been rightly disallowed by the AO. Disallowance on Account of Management Services - TPO for determination of Arm’s length price of the international transactions. The TPO analyzed the International transaction of Management Services in the Order u/s 92CA - HELD THAT:- It is a self serving document as it is prepared by parent company and the subsidiaries had to agree. As mentioned there are 16 receiving parties located at different geographical locations. However, it is presumed in the agreement that all of them have requirement of the so called services mentioned in the agreement irrespective of the geographical difference.The services provided were to be billed at a fee Calculated at Budgeted Cost plus 5% mark up. It is important to mention here that the assessee has not provided any documents to prove the budgeted cost. Rather the assessee has not provided “ What was the budgeted cost for various services separately” We have gone through the invoices which are enclosed in the paper book, none of the invoices mentions the Budgeted Cost. The assessee has not submitted which services were utilized by more than one AEs, and what was the Budgeted cost of these services, and what was the turnover of all these AEs and how these were allocated. We have gone through the invoices and these invoices does not contain any of these details. Rather all the invoices are vague. The onus is on the assessee to prove it. Therefore, the TPO was right in holding the value at NIL. We have analyzed all the copies of emails submitted by the assessee as evidence of the “So-called” services provided by the AE to the assessee. We have observed that none of the emails establish any service being provided by the AE to the assessee. Therefore, we are of the opinion that the assessee has failed to substantiate by documentary evidence, any services provided by the AE to the assessee. Therefore, on facts and circumstances of this case we are of the opinion that no services were provided by the AE to the assessee. Since, there are no services, there is no question of benchmarking them. One can analyze the ALP if there are any services, but in the case of the assessee there is no service by the AE to the assessee. Hence, the TPO has rightly held value of the so called services as NIL because there are no services. Thus we uphold the order of the TPO on the issue of “Management Services”.
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