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TMI Blog2021 (6) TMI 402X X X X Extracts X X X X X X X X Extracts X X X X ..... t. Ltd. (GPPL) 4. Briefly stated, the facts of the case are that the assessee has been engaged in the business of manufacturing of sugar. Major activities of the company are crushing of sugarcane and production of the refined sugar and other by-products. The assessee filed its return declaring total income at Nil but paid taxes under section 115JB of the Act. An audit report in Form No.3CEB was furnished declaring seven SDTs totaling Rs. 8,64,70,983. The Assessing Officer (AO) made a reference to the Transfer Pricing Officer (TPO) for determining the Arm's Length Price (ALP) of SDTs. In this appeal, we are concerned with the SDT of Rent payment amounting to Rs. 4,91,89,500. The assessee applied the Comparable Uncontrolled Price (CUP) method for demonstrating the transaction to be at ALP. The TPO required the assessee to furnish details of the entire property in respect of which the rent was paid, that is, number of floors, area, square feet on each floor; name and address of all the persons to whom the property was let out and the details of total rent received by the owner along with rate per square feet charged to the assessee and unrelated parties; any other comparable unco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld that the Leave and licence agreement was bogus. After rejecting the assessee's benchmarking under the CUP method, the TPO proceeded to determine the ALP of the SDT under 'Other method' as per rule 10AB of the Income-tax Rules, 1962 (hereinafter referred to as 'the Rules') which, inter alia, recognizes `the price which would have been paid' as a valid base for determining the ALP. Accordingly, he determined the ALP of the SDT of payment of Rent at Nil, which led to the transfer pricing adjustment of Rs. 4.91 crore. The AO made the above referred transfer pricing addition. 5. The assessee moved the ld. CIT(A) urging, inter alia, that the TPO relied on the Inspector's report for making the addition, which was never confronted to it. The assessee submitted an album of photographs and other additional evidence before the ld. CIT(A) to substantiate its claim of having used the building. The ld. CIT(A) sent such additional evidence to the TPO/AO for comments. The TPO objected to such additional evidence and the photographs submitted by the assessee by stating that these photos were clicked in the year 2019 and hence irrelevant. The TPO also found faults with the additional evidence fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rking of 10000 sq. ft. in front of building and covered parking of 9360 sq.ft. totalling 54453 sq.ft. The TPO required the assessee to furnish necessary details, some of which were supplied. During the first appellate proceedings, the assessee put forth additional evidence revealing that the premises was occupied and used by it for business purpose. To substantiate its claim, the assessee filed certain evidence, in some of which the registered office of the assessee was shown as Shop nos. 11 and 12, Ground floor, Sawant Corner. The ld. CIT(A) called for the comments of the TPO, who stated that Shop nos. 11 & 12 were not let out to the assessee as per the Agreement. In the counter comments of the assessee, it was admitted that though such shops were not officially let out to the assessee, but were in possession of JSPM and further that one of the trustees of JSPM was Chairman of the assessee company and that he was looking after the assessee's affairs from Shop nos. 11 & 12 at the ground floor. It was further submitted that, albeit, the assessee occupied the area actually taken on rent as per the Agreement, but for the sake of convenience, it used shops nos. 11 & 12 on the ground fl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee moved into new premises of Sawant Corner in 2009, there cannot be any question of its non-occupation in the F.Y. 2012-13. Even though the address of shop nos. 11 and 12 is given in most of the evidences filed by the assessee, it simply reaffirms that the premises 'Sawant Corner' was occupied by the assessee. It was only for the purpose of convenience that the address of shop nos. 11 and 12 on the ground floor was given from where the Chairman of assessee company, a main trustee of JSPM, was operating. Mere mentioning of shop nos. 11 and 12 as its address, which were not let out to the assessee as per the Agreement, cannot justify the rejection of argument that the assessee did not shift to 'Sawant Corner' at all. As such shops were admittedly in the possession of JSPM and the Chairman of assessee company happened to be main trustee of JSPM, no adverse inference can be drawn from this fact. 12. The next additional evidence is a copy of Minutes of board of directors meeting of the assessee company held on 04.12.2012. Such Minutes also recognize that the meeting of board of directors took place at shop nos. 11 and 12, Sawant Corner. This evidence also goes to prove the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 19. The assessee submitted certain telephone bills before the TPO to prove that the premises was in its occupation and use at the material time. The TPO issued a notice u/s 133(6) of the Act to BSNL for ascertaining if the telephone numbers given by the assessee were active in the financial year 2012-13. BSNL replied that one of the numbers, namely, 020- 24317386 was working since 06.07.2011 and other numbers started in the year 2015 only. Since the bills of this number were also admittedly in the name of assessee-company, it further fortifies the case of the assessee of occupying the premises for its business purpose. 20. Taking into consideration totality of the facts and circumstances prevailing in the instant case, there remains no doubt whatsoever that the premises of 'Sawant Corner', Pune, let out to the assessee under the Agreement, was in its occupation and use during the year under consideration. 21. The TPO has observed in his remand report that the assessee, GPPL and JSPM are all related companies who arranged the entries in their books of account in such a way so as to mitigate the tax liability rightly due to the exchequer. It was explained that JSPM actually used t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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