TMI Blog2022 (5) TMI 1374X X X X Extracts X X X X X X X X Extracts X X X X ..... appropriate to restore the assessee's instant identical first and foremost grievance back to the Assessing Officer for his afresh adjudication as well as necessary factual verification as per law within three effective opportunities of hearing. Ordered accordingly. The assessee's corresponding grounds are treated as allowed for statistical purposes. - ITA Nos. 1506, 1507 & 512/PUN/2017/18 - - - Dated:- 6-5-2022 - SHRI S. S. GODARA , JUDICIAL MEMBER AND DR. DIPAK P. RIPOTE , ACCOUNTANT MEMBER For the Appellant : Aarti Sathe For the Respondents : S. P. Walimbe ORDER Per S. S. Godara , JM These assessee's three appeals are directed against the CIT(A)-7, Pune's separate orders dated 30.01.2017 (AYs 2010-11 2011-12) and dated 13.12.2017 (AY 2012-13) passed in case No. PN/CIT(A)-7/Cir-7/1064/2014-15, No. PN/CIT(A)-7/Cir-14/154/2016-17 No. PN/CIT(A)-7/Cir-14/10549/2016-17; respectively. Relevant proceedings are under Section 143(3) of the Income Tax Act, 1961 (in short the Act) in the former twin and under Section 143(3) r.w.s. 144C of the Act in the last assessment year; respectively. Heard both the parties. Case files perused. 2. It tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decision of the ITAT in case of appellant for A.Y. 2006-07 vide ITA No. 1450 1454/PN/2001 dated 09.12.2015. The appellant relied on judicial pronouncement for reasonableness of expenditure. The appellant submitted that there is consent of JV partners and benefit has been received by the appellant from service provided by TACO. The appellant has also relied on decision of ITAT Pune in case of IATA Toyo Radiator Pvt. Ltd. dated 18.03.2016. 5.5 The agreement with TACO dated 02.02.2005 says that: Clause 3.3 term This agreement shall be effective from Oct. 1st 2003 and unless earlier terminated in accordance with the provisions hereof, shall remained in full force for period of 7 years from the effective date. 5.5.1 The ITAT in para 10 of order dated 09.12.2005 has observed that the claim of the assessee that similar expenses were also allowed in A.Y. 2002-03 was brushed aside as principle of resjudicata do not apply and also in view of circumstances of the case wherein the AO had examined the claim of the assessee in detail with reference to terms and condition of agreement and nature of service rendered by TACO. 5.5.2 This suggests that the agreement were in fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7 years has already expired though agreement exists. Therefore, onus was on the appellant to show that what are actual services rendered and payments were reasonable in comparison to services available in the market. 5.8 The appellant is paying salary to technical administrative and marketing staff debiting to profit and loss account. The appellant is also incurring direct and indirect expenditure required for running the organization. From the e-mails submitted it cannot be concluded that how much resources of TACO is utilized in terms of manpower or any other resources. Under these circumstances, quantification of services rendered is not possible. Further, the market value of the services rendered cannot be judge in absence of any data in respect of man hours utilized by the appellant. From the e-mail it can also not be said that no services is being utilized by the appellant. The appellant has also not submitted that in the open market how much cost it would incur for receiving same services as provided by the TACO. The reasonableness of expense is required to be proved by the appellant. The High Court of Bombay in case of CIT vs. Shatrunjay Diamonds reported in 261 ITR 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ectly applied even if it is considered that some services are rendered by the TACO. 5.11 The appellant has relied on decision of ITAT Pune in case of TAT A Toyo Radiator Pvt. Ltd. dated 18.03.2016. In this decision the decision of the ITAT in case of the appellant for AY. 2009-10 has been followed by the ITAT. Therefore, facts remains same that in absence of copy of return filed by TACO the ratio of the judgment of the ITAT cannot be applied. 5.12 From the assessment order it is apparent that assessee has been assessed at Rs. 49,72,21,710/- under normal provisions of the I. T. Act and income under section 115JB at Rs. 42,37,13,080/-. The AO observed that since tax liability u/s. 115JB is higher the same is considered for determining tax liability payable by the assessee seems to be incorrect statement. Ostensibly, returned income as well as assessed income is more than income u/s. 115JB. In fact, computation of tax in computerized seat shows that gross tax of Rs. 14,91,66,513/- and tax credit under 115JM at Rs. 2,70,31,208/-. This shows the payment made by the appellant would have been subject to tax @ 30%. Apparently the appellant has not filed documentary evidence in re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r thoughtful consideration to the foregoing rival arguments. We make it clear that the assessee had indeed filed its recipient's tax returns in support of its argument that the impugned Section 40A(2)(a) (b) disallowance does not survive any more once both these parties stood assessed at the maximum marginal rate in light of the CBDT's age old circular No. 6/P dated 06.07.1968 to this effect. This is in addition to the fact that it has also sought to prove its addendum to the impugned agreement (supra) extending the period of operation thereof covering all the instant three assessment years for the first time only. Faced with this situation, we deem it appropriate to restore the assessee's instant identical first and foremost grievance back to the Assessing Officer for his afresh adjudication as well as necessary factual verification as per law within three effective opportunities of hearing. Ordered accordingly. The assessee's corresponding grounds are treated as allowed for statistical purposes. 6. Learned counsel next pleads that the assessee does not wish to press its identical second and third substantive grounds regarding credit of foreign tax paid under S ..... X X X X Extracts X X X X X X X X Extracts X X X X
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