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2018 (6) TMI 1267 - AT - Income TaxHead Office Expenditure disallowance - undisclosed markup on the cost incurred by the Head Officer in UK - claim u/s 44C - Held that:- So far as addition made by the Assessing Officer on account of undisclosed markup on the cost incurred by the Head Office in UK is concerned, we are of the opinion that the income, if any that accrues on account of expenditure incurred by the Head Office, it will be the income of the Head Office and not the Indian Branch Office in view of the decision of the Delhi Bench of the Tribunal in the case of Education Australia Limited ( 2012 (11) TMI 89 - ITAT DELHI). For disallowance on account of section 44C Mumbai Bench of the Tribunal in the case of British Bank of Middle East (2005 (6) TMI 476 - ITAT MUMBAI) under similar circumstances has held that non-debiting of the expenditure in the books of account of India operations is not relevant for allowability of the same in the light of the law laid down in the case of Kedarnath Jute Mills Co. Ltd. (1971 (8) TMI 10 - SUPREME COURT). It has been held that as long as the expenditure is really incurred and is otherwise deductible, the deduction cannot be declined on the ground that it has not been debited in the books of account. Since in the instant case there is no dispute to the fact that the head office has incurred the expenditure for the Branch office, the genuineness of which has not been doubted and since the assessee has claimed the deduction u/s 44C of the I.T. Act in the computation statement, therefore, Assessing Officer is not justified in disallowing the claim merely for not debiting the same in the Profit & Loss Account - direct the Assessing Officer to allow the claim of expenditure u/s 44C and delete the addition on account of undisclosed mark up on the costs incurred by the HO in UK - Decided in favour of assessee
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