TMI Blog2012 (3) TMI 721X X X X Extracts X X X X X X X X Extracts X X X X ..... for the business of the assessee. 3. The facts of the case are that it is noted by the AO in Para 4 of the assessment order that the assessee company has paid Rs. 33,65,154/- on account of service charges and the amount of Rs. 26,47,252/- on account of reimbursement of salary of office staff of the holding company M/s. Sarabhai Enterprises Ltd. The AO asked the assessee to justify the payment. In reply, the assessee submitted before the AO that the management and Senior Executives of the holding company are providing guidance and advices on corporate matters and for this purpose, the service charges of Rs. 33,65,154/- was paid. The assessee was asked to submit evidences in support of the claim that the corporate planning and policy management is being run by the holding company. The AO also asked the assessee to justify quantum of payment even if some guidance is received from the holding company. The AO noted that the assessee has failed to provide any evidence in support of the services rendered by the holding company. It was submitted by the assessee before the AO that this matter has been dealt in earlier years and decided by the appellate authorities. The AO was not satisfi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unal in the earlier was upheld by the Tribunal. It is not coming out from this order of the Tribunal as to whether the details and evidences were furnished by the assessee before the AO. In the present year, the basis of the AO is that details were not furnished before him regarding expenses. There is no mention in the order of the Ld.CIT(A) also that such details were furnished before him. He has also deleted both the disallowances regarding service charges on this basis that the issue is covered in favour of the assessee by the order of the learned CIT(A) in earlier years. For the second issue, he simply relied upon the letter addressed to various staff of the holding company regarding their deputation. As per the details available on pages 152 to 154 of the paper book, we find that, corporate expenses were recovered from the assessee in the ratio of turnover of the assessee and various other group companies. We are of the considered opinion that although allowability of the expenses is covered by the Tribunal s order, the computation of the same has to be examined by the AO to see that the same is correct and hence, we feel that this matter should go back to the file of the AO f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee has claimed service charges of Rs. 8,12,33,688/- on account of services obtained from M/s. Sarabhai Common Services, a division of the holding company. It was claimed before the AO that M/s. Sarabhai Common Services has provided steam, electricity, water and many other common services to the industries situated in the same compound. It is further noted by the AO that in order to examine the reasonableness of the payments to the holding company, the assessee was asked to give details of total expenses incurred by the holding company on common services and also to give basis on which these expenses have been apportioned between the different units. Thereafter, the AO has noted that the details have not been submitted and under these facts, it was held by the AO that an amount of Rs. 1,00,00,000/- is unreasonable within the meaning of section 40A (2) (b) of the IT Act. He made disallowance to that extent. Being aggrieved, the assessee carried the matter in appeal before the learned CIT(A). 11. The learned CIT(A) deleted this disallowance on the basis that M/s. Sarabhai Common Services have provided the assessee not only with the debit notes but also the actual amount of units of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, this matter should also go back to the file of the AO for fresh decision after examining the basis of rates charged by M/s. Sarabhai Common Services for the various services. Hence, we set aside the order of the learned CIT(A) on this issue also and restore the matter back to the file of the AO for fresh decision after examining the basis of rates charged by M/s. Sarabhai Common Services to the assessee and charged by it from other units for the same services. The AO shall pass necessary order as per law in the light of the above discussion after providing adequate opportunity of being heard to the assessee. Ground No.3 of the appeal of the Revenue is also allowed for statistical purposes. 15. Ground No.4 of the appeal of the Revenue reads as under: 4. On the facts and in the circumstances of the case and in law the learned CIT(A) erred in deleting the addition of Rs. 50,00,000/- being the amount of services charges paid to Sarabhai Chemicals Ltd., a division of the holding company, which was disallowed by the A. O. under section 40A(2) (b) of the I. T. Act, treating the same as not paid for the business of the assessee. 16. Brief facts are that it is noted by the AO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers of the authorities below. We find that on page 212 of the paper book details of processing charges paid to M/s. Sarabhai Chemicals to the extent of Rs. 233.03 lacs is available. This is simply a detail of month wise debit note with debit note number and date and there is no other detail available regarding rates and quantity for which the huge amount of processing charges was paid by the assessee. On page 213 of the paper book is the details of processing charged for the month of April, 1993 and May, 1993 for which payment of Rs. 36.37 lacs is included in the total expense of Rs. 233.03 lacs. On paper book page 203 to 206 is the copy of Gazette of India. On page No.207 of the paper book, rate for plain tablet per 1000 nos. for 350 mg. is prescribed at Rs. 10. On page 214 of the paper book is the details of debit note for the month of June, 1993 in which for 500 mg tablets, for a pack of 100 tablets, the rate charged is Rs. 3.675. If the prescribed rate for 1000 nos. of tablets is Rs. 10/-, then the rate for 100 nos. of tablets should be Re.1/- only. Similarly, on page 214 of the paper book for 250 mg. capsule for packing of 200 capsules, the rate charged by M/s. Sarabhai Chemic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the learned CIT(A) deleted the disallowance in the present year also. Now, the Revenue is in appeal before us. 24. The learned DR supported the assessment order whereas the learned AR supported the order of the learned CIT(A). He also submitted that in AY 1992-93 and 1993-94, this issue has been decided by the Tribunal in favour of the assessee and he drew our attention to Para 9 page 7 of the Tribunal s order. 25. We have considered the rival submissions, perused the records and gone through the orders of the authorities below. We find that in Para 9 of the Tribunal s order also, the issue is regarding disallowance of interest in respect of debit balance of M/s. Open Innovations Ltd. The Tribunal has deleted this disallowance on the basis of earlier years Tribunal order. Since in the present year also, no difference in facts could be pointed out by the learned DR of the Revenue, we feel that no interference is called for in the order of the learned CIT(A). Ground No.5 of the appeal of the Revenue is accordingly dismissed. 26. Ground No.6 of the appeal of the Revenue reads as under: 6. On the facts and in the circumstances of the case and in law the learned CIT(A) err ..... X X X X Extracts X X X X X X X X Extracts X X X X
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