TMI Blog2019 (1) TMI 591X X X X Extracts X X X X X X X X Extracts X X X X ..... at liberty to submit necessary details in order to establish its case. Observation made by us will not impair or injure the case of the AO nor any prejudice will cause be to defence/explanation of the assessee. AO shall decide this issue afresh in accordance with law. With the above observation, we allow all these appeals for statistical purpose. - ITA No.1091/Ahd/2015 And ITA No.2986/Ahd/2015 - - - Dated:- 10-1-2019 - SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER For The Assessee : Shri Sanjay R. Shah, AR For The Revenue : Shri Ranjan Kumar Singh, Sr.DR ORDER PER RAJPAL YADAV, JUDICIAL MEMBER: Present three appeals are directed at the instance of the assessee against separate orders of the ld.CIT(A) dated 16.12.2013, 9.1.2015 and 27.8.2015 passed for the Assessment Years 2009-10, 2011-12 and 2012-13 respectively. 2. Grounds of appeal taken by the assessee in all these years are not in consonance with Rule 8 of the Income Tax (Appellate Tribunal) Rules, 1963, rather they are descriptive and argumentative in nature. Common grievance of the assessee in all these three years relates to disallowance of GBU service ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ir proportionate salary for time devoted for company activities, use of infrastructure for company activities etc. The company has in all debited ₹ 40.44 lacks towards GBU charges during the year out of which ₹ 8 lacks is disallowed for non deduction of tax at source. Thus, monthly expense is worked out to ₹ 3.37 lacks which in absence of foreign travelling expenses of directors, their proportionate salary and all other incidental expenditure for monitoring activities of company can be said to be quite reasonable and allowable. 4.1 . However from a careful analysis of the copies of the relevant agreement a very striking fact came to notice that practically there is no difference in the services allegedly obtained under the aforesaid two different agreements. This fact will be cigar .from the following chart where excerpt regarding the nature of services to be 'provided under the aforesaid two agreements have been reproduced in a juxtaposed manner :- Management Charges (Excerpts from Page No.l of agreement dated 1.4.2006) GBU Charges (Excerpts from Annexure-l agreement dated . .2008) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k. Health and safety related guidance and support l. support for human resources functions and strategies m. support for supply chain management and logistics operation; 4.2 The above chart makes it obvious that except 3 services allegedly provided, under GBU Services charges, not even a word in these two separate agreement is different in respect of the nature of services said to be obtained by assessee company from its holding company in the relevant previous year, The three additional services mentioned in the GBU Service charges are also very general in nature for which a residuary clause was already provided in the agreement of Management Charges at point no. V. Copies of both these agreements are enclosed as Annexure 'A' and 'B1 to this order. 4.3 The only conclusion which can be drawn after perusing the aforesaid chart is that assessee company inflated its expenses by debiting ' two different amounts of expenditure for same nature of services allegedly provided to it by its holding company i.e. MCC pic. It was an intentional act because despite already having an agreement for obtaining these services under the na ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the assessee has been getting different types of services under the agreement for management charges. But some services were being broadly monitored at head office level and time devoted by main management for the operation in India is being charged to the assessee. Thus, he emphasised that it an hierarchical monitoring of all operations worldwide at global HO level. The elements of service rendered to the Indian subsidiary are being recognized at global HO level also, and for that charges are being calculated. To our query that what demonstrative evidence assessee has produced showing nexus between management at global HO vis- -vis operation in India, then the ld.counsel for the assessee submitted that though direct evidence could not be produced in the asstt.Year 2009-10, but an application for permission to place additional evidence in the Asstt.years 2011-12 and 2013-14 have been filed before the Tribunal, whereby copies of material showing correspondence and other relevant material sought to be placed on record. The ld.counsel for the assessee thereafter submitted that certain details showing how the expenditure are being recognized at global head office were produced before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... port prepared by its tax consultant and submitted that such charges are being calculated at arm s length, which have not been doubted by the AO. We do not find any force in the contention of the assessee, because the AO has doubted the service provided to the subsidiary by the holding company at threshold. In other words, in the opinion of the AO, no such activities have been carried out by the parent company at global head for providing assistance to the assessee, and therefore, question whether these charges were calculated at arm s length or not, does not arise. Faced with the above situation, and keeping in view the application filed for adducing additional evidence in other two years, we deem it appropriate to set aside orders of the ld.CIT(A) in all these three years and remit this issue to the file of the AO for adjudication afresh. The ld.AO is required to examine organizational structure of the holding company vis- -vis the assesseecompany. The assessee has to demonstrate a nexus between consultancy and any other nature of services provided by the holding company at the global head with some demonstrative evidence. In other words, it is to be demonstrated that certain serv ..... X X X X Extracts X X X X X X X X Extracts X X X X
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