9911796707
TMI Blog2019 (3) TMI 483X X X X Extracts X X X X X X X X Extracts X X X X ..... ated in the applications, the same are allowed and the delay in filing/re-filing is condoned. Applications stands disposed of. ITA 169/2019, ITA 170/2019 & ITA 173/2019 1. The principal issue urged with respect to the assessment year 2007-2008, 2008-2009 and 2009-2010, in these appeals under Section 260A of the Income Tax Act (hereinafter the Act), by the Revenue is whether the salaries paid to the assessee's Australian AE, were towards reimbursement of expenses or they were unwarranted. 2. The brief facts are that the assessee renders business support services and is the subsidiary of an Australian company. The assessee's inability to carry out the task assigned to it led to creation of a joint venture (JV company), which took over the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... noted that the methodology with respect to the Comparable Uncontrolled Prices (CUP) method under Rule 10B. The CIT(A) observed as follows: "Apart from the above position, the same expatriate employees were also involved in providing services to the AE as well as to joint venture company (JV). In other words, the income side of the appellant has two components, namely, receipts from its AE and receipts from the JV. The same set of employees are responsible for these two receipts. The salary of the employees were paid by the AE. This was because the employees were on secondment from the Australian AE. Their salaries were paid in Australia. The appellant was reimbursing these salaries. The AO treated the arm's length price of the reimbur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ey from India and lowered taxes' has been countered by the assessee. In an illustrative example three different scenarios were worked out which was given to the AO during the assessment proceedings. The same is reproduced in the table below: . Illustrative for Expat Salary & Business Support Services Particulars As per facts Salary paid by assessee As per Show Cause salary paid by JV-No BS income Alternative show cause working salary paid by JV - with BS income Assessee JV Assessee JV Assessee JV Revenue -From AE -From JV From customer 38 60 N/A N/A N/A 3000 - - N/A N/A N/A 3000 38 - N/A N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion to be asked is whether in an uncontrolled transaction, the parties to the similar transaction behaved in the same way as the appellant did? In the absence of any comparable uncontrolled transaction (CUP) 'price of a similar transaction, treating there imbursernents made by the assessee as unnecessary and the value of the transaction as NIL is unjustifiable. It is not open to the TPO to suggest where from the employees' salaries should have been recovered by the appellant. Therefore, I hold that the decision of the TPO cannot be sustained. Therefore, the AO is directed to delete the addition made in this regard. 5. This court is of the opinion that the view of the CIT (A) which also commanded itself to the ITAT was in the circum ..... X X X X Extracts X X X X X X X X Extracts X X X X
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