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2016 (10) TMI 424 - ITAT MUMBAI

2016 (10) TMI 424 - ITAT MUMBAI - TMI - Non deduction of tds - disallowance made for non monetary perquisites - Held that:- We find that the assessee had paid income-tax in respect of salary paid to WJ as per the employment agreement, that it had suo motu made a disallowance for non-monetary perquisites, that WJ had offered the disputed amounts in his return of income. Considering the fact that WJ had paid the tax on the amount in question, we are of the opinion that the order of the FAA needs n .....

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election of comparables - Held that:- We find that the AO had made adjustment as the assessee had included loss making entities in the comparables list, that the FAA had ignored the fact that two of the five comparables were showing loss , that he emphasised on net worth of the company rather than the losses suffered by the companies, that both the companies were suffering losses for continuously three years . In our opinion the AO was justified in excluding the constant loss making entitles fro .....

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ng, reinsurance-broking, risk management and insurance programme management services for businesses, public entitites, insurance companies, associations, professional services organisation and private clients, filed its return of income on 31. 10. 2004, declaring total Loss at ₹ 1, 75, 28, 794/-. The AO completed the assessment u/s. 143(3) on 22. 12. 2006, determining its loss at ₹ 98. 74 lakhs. 2. First Ground of appeal is about deleting the disallowance of Income tax on expatriate .....

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d on behalf of expatriate s salary could not be allowed. Finally. he made a disallowance of ₹ 43, 24, 288/-. 2. 1. Aggrievd by the order of the AO the assessee preferred an appeal before the First Appellate Authority (FAA). Before him, it was argued that the assessee had borne Income tax in respect of salary paid to William Jones (WJ), that the said expenditure was in terms of employment agreement entered into with WJ, that the tax borne by the assessee had been offered for tax as part of .....

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of the AO and referred to the provisions of section 10(e)(e) of the Act. The Authorised Representative(AR)stated that WJ had offered the amount in question for taxation, the assessee itself had made the disallowance of ₹ 6. 24 lakhs. He also referred to Form No. 16 of WJ . 2. 3. We have heard the rival submissions and perused the material before us. We find that the assessee had paid income-tax in respect of salary paid to WJ as per the employment agreement, that it had suo motu made a di .....

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paid towards membership fee of Willingdon Sports Club and Breach Candy Swimming Bath Trust by the assesse. The AO held that the membership fee paid towards the club by the assessee company was capital in nature as it was the first year of revenue generation, that it was going to bring enduring benefit to the assessee for years to come. He made a disallowance of ₹ 3. 24 lakhs. 3. 1. During the appellate proceedings the FAA, relying upon the judgment of Jurisdictional High Court in the case .....

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, has held that club membership fees incurred by an assessee is a business expenditure and has to be allowed as per provisions of section 37 of the Act. Respectfully following the above judgement Ground No. 2 is decided against the AO. 4. Ground No. 3 is about Transfer Pricing (TP). During the assessment proceedings the AO noted that the assessee had entered into International Transactions (IT)with its Associate Enterprise(AE). He directed it to justify the TP study and prove that the transactio .....

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used for different AE. s in respect of advisory fee. Vide its letter dt. 7. 12. 2006 the assessee computed the mean as under :- Comparable Companies Adjusted OP/TC Geojit Financial Services Ltd. 57. 39% Integrated Enterprises (India) Ltd. 21. 16% Keynote Corporate Services Ltd. -2. 61% S K P Securities Ltd. 69. 57% VCK Capital Market Services Ltd. -25. 40% Mean 24. 02% 4. 1. After considering the submission of the assessee the AO held that out of the five comparables two were loss making and ha .....

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8 Add: Arm s length return on total cost @ 49. 37 31, 80, 725 Arm s length price of advisory fees 96, 23, 353 ALP after considering 5% range as per proviso to section 92C(2) of the Act. 91, 42, 185 Less: Actual Advisory fee as per para 4. 4(b) 82, 64, 583 Adjustment 8, 77, 602 4. 2. During the appellate proceedings the assessee argued that the inclusion of loss making company in the distribution curve was just as normal as the inclusion of company that were extremely profitable, that the AO had .....

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