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2018 (11) TMI 122 - ITAT DELHIDisallowance of expenses incurred on support service u/s 37 - Both authorities have disallowed the expenses on the ground that, firstly, M/s. GRPL was not in a position to provide such services looking to its infrastructure; and secondly, it was a make believe arrangement from a sister concern to reduce the tax liability of the assessee, as M/s. GRPL’s profits have been set off from brought forward losses. Held that:- Nowhere has it been brought on record that M/s. HPL Infrastructure P. Ltd., i.e., assessee, during that period had its own office or infrastructure to carry on its business. Out of the said amount, ₹ 7,79,328/- has been paid for support services and infrastructure charges. Thus, the major expenses relate to these ‘support services charges’ from where assessee was running its office. If the service has been rendered as per the ‘work order’ and assessee has incurred the expenditure in the course of its business, then such an expenditure cannot be disallowed simply on the ground that payment has been made to a sister concern or there was no necessity for incurring such expenditure or it does not have much infrastructure in the form of fixed assets. Once it has been brought on record that M/s. GRPL has taken a lease on rent and also maintaining the office, who in turn is providing such office space and other infrastructure facilities to the assessee, then it cannot be held that it is a make believe arrangement, unless any contrary material is brought on record or any inquiry has been done from M/s. GRPL. - Decided in favour of assessee.
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