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2020 (11) TMI 868 - ITAT MUMBAIAddition at the rate 20% of expenses incurred by the assessee for services rendered to M/s Cigna TTK during the year - Whether CIT(A) was justified in accepting the claim of the assessee that there was no profit element involved in a transaction wherein the assessee had provided a highly technical and professional services to the other party, that too by utilizing its own funds? - HELD THAT:- Giving that the assessee received development cost for developing and transferring the initial infrastructure to Cigna TTK, the transaction is not expenditure in the hands of the assessee. For the assessee (the recipient of the amount) the provisions of specified domestic transaction would not be applicable. We find that (i) the vendor agreement between the assessee and Cigna TTK has been entered at cost and no income has been earned by the assessee, (ii) there is neither any evidence nor allegation that assessee has received any consideration over and above to what is mentioned in the aforesaid agreement. In the absence of any evidence to show either that the sales were sham transactions or that the market prices were in fact paid by the purchasers, the mere fact that the goods were sold at a concessional rate to benefit the purchasers at the expense of the company would not entitle the income-tax department to assess the difference between the market price and the price paid by the purchasers, as profit of the company. We affirm the order of the Ld. CIT(A) deleting the addition - Decided against revenue.
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