TMI Blog2018 (6) TMI 839X X X X Extracts X X X X X X X X Extracts X X X X ..... charges - Held that:- Following the judgement of decision of the Hon'ble Delhi High Court in CIT v/s Herbalife India International Pvt. Ltd. [2016 (5) TMI 697 - DELHI HIGH COURT] it is held that provisions of section 40(a)(i) of the Act are not applicable to payment of management charges - Decided in favour of the assessee. No interest under section 234B of the Act is chargeable - Decided in favour of the assessee. - ITA no.2856/Mum/2015, ITA no.2857/Mum/2015 And ITA no.3920/Mum/2015 - - - Dated:- 15-6-2018 - SHRI SAKTIJIT DEY, JUDICIAL MEMBER AND SHRI N.K PRADHAN, ACCOUNTANT MEMBER For The Assessee : Shri Nitesh Joshi For The Revenue : Shri Samuel Darse ORDER PER BENCH Appeal by the assessee for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aken up for disposal together. 7. Brief facts relating to the issue are, the assessee company is the Indian Branch of a U.K. based company viz. Lloyd s Register Quality Assurance Ltd. The assessee is engaged in the business of quality management system audit, equipment management system audit, occupational health safety assessments and training relating to such activities. For the assessment year under dispute, the assessee had filed its return of income on 14th November 2007, declaring total income of ₹ 1,31,62,475. Assessment in case of the assessee was completed under section 143(3) of the Act on 22nd December 2009, accepting the returned income. Subsequently, the Assessing Officer being of the opinion that management charges of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er being of the view that licence charges and management charges are in the nature of head office expenses called upon the assessee to explain why the expenditure claimed should not be restricted to 5% of adjusted total income as per provisions of section 44C of the Act. Though, the assessee objected to the proposed disallowance, however, the Assessing Officer rejecting the submissions of the assessee restricted the expenditure claimed by the assessee to 5% of the adjusted total income, thereby, allowing an amount of ₹ 12,46,526 under both the heads resulting in disallowance of ₹ 1,05,21,514. Without prejudice to the aforesaid decision, the Assessing Officer also held that the management charges paid being in the nature of fees ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ever, subsequently, vide order dated 6th April 2018, in M.A. no.749 750/ Mum./2017, has fully deleted the disallowance of management charges under section 44C of the Act. The learned Authorised Representative, thus, submitted that the disallowance in the impugned assessment year should be deleted. 10. The learned Departmental Representative has not opposed the aforesaid submissions of the learned Authorised Representative. 11. We have considered rival submissions and perused materials on record. Undisputed facts are, the Assessing Officer by treating the management charges as Head Office expenses has restricted the claim of the assessee to 5% of the total adjusted income in terms of section 44C of the Act. Whereas, learned Commissione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 14. The learned Commissioner (Appeals) while dealing with the issue has dismissed the ground raised by the assessee as infructuous. 15. The learned Authorised Representative submitted that while deciding identical issue in assessee s own case the Tribunal relying upon the decision of the Hon'ble Delhi High Court in CIT v/s Herbalife India International Pvt. Ltd., 384 ITR 276 (Del.), has held that provisions of section 40(a)(i) of the Act are not applicable to payment of management charges. 16. The learned Departmental Representative agreed that the issue was decided in favour of the assessee in assessment year 2008 09 and 2009 10. 17. Having considered rival submissions and perused material on record, it is noted that while d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act. 23. This issue is identical to the issue raised in grounds no.2, 3 and 5, by the assessee in its appeal being ITA no.2586/Mum./2015, decided by us in the earlier part of the order. Following our decision in Para 11 of the order, we delete the disallowance sustained by the learned Commissioner (Appeals) under section 44C of the Act. Grounds raised are allowed. 24. Ground no.3, is on the issue of applicability of section 40(a)(i) of the Act to management charges. 25. This issue is identical to the issue raised in ground no.4, by the assessee in its appeal being ITA no.2856/Mum./2015, following our decision in Para 17 of this order; we allow this ground. 26. Ground no.5, is on the issue of levy of interest under section 23 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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