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2023 (2) TMI 518 - ITAT DELHIDisallowances of engineering expenses paid by the assessee to its head office - Expenditure duly and exclusively for the purpose of business of PE - HELD THAT:- As the name of the employees along with the nature of duties and number of hours apportioned have been have been made part of the debit note. Tax Authorities below have over stressed on non-production of time log sheets without finding any shortcoming and fallacy into the information already available and provided. The bench is of considered opinion that to discredit an expense questioning whether it was duly and exclusively for the purpose of business of PE the information that was available should be considered deficient before questioning intention of the assessee to not have produced time log sheet. When the Tax Authorities below are not questioning that execution of projects as PE then discrediting one of the expenses of the nature of engineering expenses crucial to the accomplishment of the project was not justified. Particularly in regard to Assessment Year 2005-06 when transactions were reported to be at arm’s length by the ld TPO and the ld TPO study included examination of engineering services than that all the more required material reasons to discredit the debit note for lack of corroboration. The bench is of considered opinion that findings of the ld Tax Authorities below in regard to the disallowance of engineering expenses cannot be sustained. - Decided in favour of assessee.
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