TMI Blog2015 (5) TMI 688X X X X Extracts X X X X X X X X Extracts X X X X ..... stantial revenue of ₹ 4,68,98,175/-) as opposed to AE driven transactions that yielded ₹ 6,27,45,515/-. The AO also ignored the fact that the arm’s length transactions in the present case in fact led to lower referral fee of 27.65% as opposed to the non-AE international transactions where the identical outgoing was up to 30.97%. Given these set of circumstances, the undue emphasis placed upon lack of certain particulars which did not fit into the mould as to suit the understanding of the AO could not have led to the disallowance. Having regard to this background, the Court is of the opinion that the ITAT’s findings on this aspect are entirely factual and cannot be characterized as perverse calling for interference.- Decided in favour of assesse. - ITA 475/2012, CM APPL.11174, 13156 & 17819/2014 - - - Dated:- 7-5-2015 - S. Ravindra Bhat And R. K. Gauba,JJ. For the Appellant : Mr. N.P. Sahni, Sr. Standing Counsel with Mr. Nitin Gulati, Jr. Standing Counsel. For the Respondent : Mr. S. Ganesh, Sr. Advocate with Mr. Gajendra Maheshwari, Mr. Sumit Batra and Ms. Swati Thapa, Advocates. ORDER S. Ravindra Bhat, J. (Open Court) 1. The present appeal, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the judgment to stand so far as the findings on questions nos. (E) is concerned. 3. On behalf of the Revenue it was submitted that whilst no doubt the concession was made, there was no authority in support of such a position. As a result, the Court after considering the submissions of the parties, allowed the Review Petition - so far as it concerned itself with question no.2, in the following terms: - We have considered the submissions. The notes made by both the members of this Bench during the hearing, in fact, support the review petitioner s contention. The statement of learned Standing Counsel also bears out the averments that question no.(E) was given up. The Court, however, was of the opinion that since this is a question of law and had been squarely urged in the appeal at more than one place, such a concession would not be binding upon the revenue. In these circumstances, the appropriate and equitable order to be made would be recall and review the judgment to the extent it renders findings on questions nos. (E) and (F). Consequently, the judgment dated 23.05.2014 so far as it answered questions nos. (E) and (F) in favour of the revenue are hereby recalled. List ITA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the business purpose of the same. Before us the AR of the assessee was not able to prove through the documentation that the observations of the AO are incorrect. Under these circumstances, no directions are being issued. 6. Before the ITAT, besides agitating the main question, the Revenue s chart which was the principal part of the transfer pricing exercise undertaken by the TPO and re-examined by the DRP, the disallowance of ₹ 1,73,52,992/- was contested by both the parties. The entire discussion is in paragraph nos.25-40 of the impugned order. The ITAT noted the assessee s contentions. Firstly, the assessee submitted that given the phraseology and structure of Section 92CA (4) and its past legislative history, the AO was precluded from examining the genuineness of the claim once the entire matter had been scrutinized by the TPO. On facts, the assessee urged that all the material which was necessary to verify the admissibility or otherwise of the claim of expenditure for ₹ 1,73,52,992/- was on the record and that the AO did not apply himself to the task appropriately. The respondent further urged that the AO s order betrayed a discriminatory approach. On this, it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ort the expenditure and it was shown that such expenditure is incurred with respect to revenue earned by the assessee on property transaction referred to the assessee by its associate enterprises. It was submitted that the expenditure incurred by the assessee in respect of transaction referred by AE s was much less than the similar expenditure incurred vis-a-vis the independent parties. Such contention was also placed before TPO. No adverse material whatsoever has been brought on record to show that either the evidence submitted by the assessee in this respect was incorrect or the contention of the assessee that expenditure relating to transaction entered into with AE s were less costly was incorrect. Therefore, even on merits there is no justification in upholding the disallowance. Looking from any angle, the sustenance of addition of ₹ 1,73,52,922/- is not justified and the same is deleted. This ground of the assessee is allowed. 8. Learned counsel for the Revenue argued that the assessee was unable to support the claim of having incurred any expenditure at all. Mr. N.P. Sahni, Sr. Standing Counsel, appearing on Revenue s behalf submitted that by claiming to have paid R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Foreign Independent entities 4,68,98,175 1,45,27,408 3. Domestic independent entities 23,55,263 4,57,955 Total 11,19,98,953 3,18,80,330 12. The following concededly are a matter of record: - (i) The AO accepted the Referral Fee claim in respect of the non-AE transactions (to the tune of ₹ 4,68,98,175/- - for which the referral fee was ₹ 1,45,27,408/-). (ii) The AO accepted the transactions in respect of the domestic independent entities (leading to Revenue of ₹ 23,55,263/- and for which the Referral Fee paid was ₹ 4,57,955/-. (iii) The ITAT took note of the fact that the Referral Fee agreement had been placed on the record. Furthermore, six transactions with different parties were involved from which the revenue had been derived by the assessee. This operation was a common one and was the subject matter of the scrutiny insofar the first question of law (i.e. Revenue sharing ALP) was concerned. 13. The materials on record also show that the assessee relied ..... X X X X Extracts X X X X X X X X Extracts X X X X
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