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DCIT, Circle-18 (1) , New Delhi Versus Weir Engineering Services (India) Ltd.

2016 (3) TMI 310 - ITAT DELHI

Addition on unexplained difference in the value of sales - Held that:- There is no dispute on the fact that the assessee credited a sum of ₹ 24.78 crore to its Trading account as Sales and Service charges. The case of the AO is that certain items, as listed on page 9 of the assessment order totaling ₹ 6.15 crore, were not included by the assessee in the figure of total sales, which position has not been accepted by the ld.CIT(A). We have perused break-up of total Sales with Commissio .....

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e score. We, therefore, uphold the impugned order in deleting this disallowance. - Decided in favour of assessee

Disallowance on account of unexplained commission payment where corresponding sales had not been credited by the assessee to the Trading and Profit & Loss Account - Held that:- It is seen from break-up of total turnover and total commission, as discussed supra, that there is complete detail of commission on sales to the tune of ₹ 1,27,77,515/- which figure matches wit .....

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these circumstances, we find no reason to interfere with the impugned order deleting disallowance of commission - Decided in favour of assessee

Disallowance towards technical fee payment - non deduction of tds - Held that:- On a specific query, no Agreement, between the assessee and parent company evidencing the nature of work done and remuneration for such technical assistance was placed on record. In the absence of any such Agreement, it is difficult to understand the nature of wor .....

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the assessee did deduct tax at source from payments made to its parent company. This issue is, therefore, sent back to the file of AO for a fresh decision as discussed hereinabove. - Decided in favour of assessee for statistical purposes.

Disallowance on account of royalty payment made by the assessee - disallowance by applying section 40(a)(ia) - Applicability of section 2(22)(e)Held that:- We find that the assessee entered into an Agreement with its sister concern for the use of pa .....

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pendent entities and the factum of user of patent/trademark etc. has not been denied by the AO. Obviously, when the assessee is using patents/trademarks of its parent company, it will have to pay royalty for the same which cannot be disallowed, unless it is not at arm’s length price. We, therefore, uphold the impugned order on this score.

As regards the applicability of section 2(22)(e), we find that the same is again without any bedrock. The ingredients of this provision are not appl .....

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No.2557/Del/2011 - Dated:- 29-1-2016 - SHRI R.S. SYAL, ACCOUNTANT MEMBER AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER For The Assessee By : Shri Manoneet Dalal, and Shri Yishu Goel, Advocates For The Respondent : Shri Rajiv Ranka, Sr. DR ORDER PER R.S. SYAL, AM: This appeal by the Revenue arises out of the order passed by the CIT(A) on 28.2.2011 in relation to the assessment year 2007-08. 2. The first ground is against the deletion of addition of ₹ 6,15,68,134/- made by the AO on accoun .....

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ter going through two Annexures filed by the assessee in this regard, the AO observed that there was a difference of ₹ 6,15,68,134/- between two figures, namely, ₹ 18,21,12,483/- as per Annexure-7 and ₹ 12,05,44,349/- as per Annexure-1. He noted that whereas Annexure-7 contained 74 bills, Annexure-1 had only 61 bills. Reproducing the difference between the two Annexures with date of invoice, customer and sales value on page 9 of the assessment order, he made addition for this d .....

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d a sum of ₹ 24.78 crore to its Trading account as Sales and Service charges. The case of the AO is that certain items, as listed on page 9 of the assessment order totaling ₹ 6.15 crore, were not included by the assessee in the figure of total sales, which position has not been accepted by the ld.CIT(A). We have perused break-up of total Sales with Commission, a copy of which is available on pages 37-46 of the paper book. The thirteen items as noticed by the AO are, in fact, appearin .....

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against the deletion of disallowance of ₹ 60,19,438/- made by the AO on account of unexplained commission payment where corresponding sales had not been credited by the assessee to the Trading and Profit & Loss Account. This ground is, in fact, consequential to ground no. 1. It is seen from break-up of total turnover and total commission, as discussed supra, that there is complete detail of commission on sales to the tune of ₹ 1,27,77,515/- which figure matches with the amount of .....

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umstances, we find no reason to interfere with the impugned order deleting disallowance of commission. This ground fails. 6. Ground no. 3 is against the deletion of disallowance of ₹ 67,67,729/- towards technical fee payment. The assessee debited a sum of ₹ 67.67 lac under the head Technical expenses. On being called upon to submit justification for this deduction, the assessee filed a letter stating that technical assistance and licence agreement was made with Weir Pumps Ltd., Scotl .....

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s and perused the relevant material on record. The ld. AR invited our attention towards page 90 of the paper book which is an Agreement between ONGC and the assessee. It was claimed that pursuant to this Agreement, the assessee got technical assistance from its parent company for which the said payment was made. However, on a specific query, no Agreement, between the assessee and parent company evidencing the nature of work done and remuneration for such technical assistance was placed on record .....

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ity of section 40(a)(ia) is concerned, we find that the same is not correct inasmuch as the assessee did deduct tax at source from payments made to its parent company. This issue is, therefore, sent back to the file of AO for a fresh decision as discussed hereinabove. 8. The only other ground which survives for adjudication is ground no. 4, which is against the deletion of disallowance of ₹ 38,11,165/- on account of royalty payment made by the assessee to M/s Weir Pumps Ltd., Scotland. The .....

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