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TMI Blog2016 (6) TMI 125X X X X Extracts X X X X X X X X Extracts X X X X ..... entative for the assessee, submitted that the assessee-company engaged in manufacturing and service of wind turbine generators and sale of wind turbine components. According to the Ld. representative, the assessee is selling the wind turbine generators and its components in the domestic market as well as in the international markets. Referring to the objection raised before the Dispute Resolution Panel in the grounds of objection No.6, a copy of which is available at page 71 of the appeal folder, the Ld. representative submitted that the assessee claimed before the Dispute Resolution Panel that the Transfer Pricing Officer computed the sales of the assessee by excluding the income from annual maintenance service without excluding the corres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i, the Ld. Departmental Representative, submitted that the Transfer Pricing Officer found that income from annual maintenance service needs to be excluded. Therefore, the expenditure incurred for annual maintenance service also needs to be excluded. However, it is not clear from the assessment order and the order of the Transfer Pricing Officer whether it was really excluded from the operating cost. Therefore, the Assessing Officer may be directed to verify whether the expenditure for annual maintenance service is excluded or not. 4. We have considered the rival submissions on either side and perused the relevant material available on record. The Transfer Pricing Officer by way of show cause notice observed that the miscellaneous income in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer after receiving the report from the DRP, shall pass order in conformity with the direction of the DRP as provided in Section 144C(13) of the Act. 5. Now coming to the second ground of appeal with regard to disallowance of Rs. 10,50,000/- towards sales commission. 6. Shri Ajit Tolani, the Ld. representative for the assessee, submitted that the assessee claimed an expenditure of Rs. 10,50,000/- towards sales commission. The assessee had filed copy of the invoice before the Assessing Officer. The Assessing Officer disallowed the claim of the assessee only on the ground that there was no agreement between the parties. According to the Ld. representative, the payment of sales commission is not in dispute. According to the Ld. represen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ard to names and address of commission agents and the commission paid, this Tribunal is of the considered opinion that the disallowance has rightly been made. It is not in dispute that an identical disallowance was made in the earlier assessment year 2010-11 on identical set of facts. Therefore, this Tribunal do not find any reason to interfere with the order of the lower authority and accordingly, the same is confirmed. 9. The next ground of appeal is with regard to disallowance of Rs. 3,87,91,750/- under Section 40(a)(i) of the Act. 10. Shri Ajit Tolani, the Ld. representative for the assessee, submitted that the parent company of the assessee, namely, Vestas Denmark, gave guarantee to the customers of the assessee who purchased windmil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... customers, why such payment shall not be treated as business profits in the hands of the parent company? The Ld. representative submitted that in case the payment was considered as business profit, then naturally there should be a permanent establishment for parent company in India. In this case, there is no permanent establishment, therefore, payment made to the parent company is not chargeable under the Indian income-tax. The Ld. representative further submitted that a copy of the guarantee performance given by the parent company is available at page 49 of the paper-book. The parent company guarantees to perform the contract of warranty and service in case the assessee-company fails to perform. In view of this guarantee, according to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dia and Denmark clearly shows that what was paid by the assessee is not interest. It is a payment for the so-called guarantee said to be given by the parent company. The question arises for consideration is what kind of services are rendered by the parent company and whether such services are rendered in India and whether such payment is liable for taxation in India. This Tribunal is of the considered opinion that since the payment does not partake the character of interest, it would naturally be a business profit for the parent company. In the course of its business activity, the parent company of the assessee gives guarantee to Indian customers for performance in case the assessee-company fails to perform its obligations. The agreement, n ..... X X X X Extracts X X X X X X X X Extracts X X X X
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