TMI Blog2022 (9) TMI 1538X X X X Extracts X X X X X X X X Extracts X X X X ..... ces. AO failed to list out what are the highly technical services the companies are providing to the assessee company. AO also failed to show that under which clause the expertise available with the companies is made available to the assessee company for using the expertise by the assessee in its managerial decision making process. We also observe that the issue has been decided in favour of the assessee during the assessment years 2010-11 and 2014-15 by the ld. CIT (Appeals) and the Revenue has accepted these decisions by not filing further appeals to this Tribunal. It is also noticed that for the assessment year 2012-13 the Assessing Officer did not make any disallowance for non-deduction of TDS on management service charges paid by the assessee to its AEs. No valid reason to interfere with the findings of the ld. CIT (Appeals) in holding that the managerial services charges paid by the assessee to its non-resident AEs is not liable to TDS under the provisions of section 195 of the act. Thus, we sustain the order of the ld. CIT (Appeals) and reject ground No. (a) of grounds of appeal of the Revenue. Disallowance of management charges u/s 37 - CIT(A) deleted addition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t on expenses on management fees for A.Y. 2009-10, 2010-11, 2013-14 2014-15 on the payments made its group entity in UK. (b) On the facts circumstances of the case and in law, the ld. CIT (A) has erred in deleting the disallowance of this expenditure made buy the AO of Rs.2,06,29,647/- u/s 37 of the I. T. without considering that during the assessment proceedings, the assessee has submitted only some of invoices on a sample basis and not produced any other evidence. (c) Whether on the facts circumstances of the case and in law, the ld. CIT (A) has erred in deleting the addition of Rs.1,64,839/- made by the AO in respect of delayed payment of Employee s contribution to the EPF/ESI, by not appreciating that the Employees contribution to EPF/ESI is governed by the provision of section 2(24) r.w.s. 36(1)(va) and not by the section 43B of the I.T. Act. 3. The first ground relates to disallowance under section 40(a)(i) of the Income Tax Act, 1961 (the Act) in respect of payment made for management services. Briefly stated the facts are that during the course of assessment proceedings the assessee was required to furnish the details in respect of payments made outsi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd Administrative Management from its overseas group entities for better management of its business activities. 5. Justifying the non-deduction of TDS on the aforesaid payments the assessee submitted that provisions of the Income Tax Act provides that TDS is required to be deducted from payments made to non-residents only if such amounts are chargeable to tax under the provisions of the Act. It was contended before the Assessing Officer that it is legal position that by virtue of section 90(2) of the Act where the Government of India has entered into an agreement with the Government of any other country by granting relief of tax or as the case may be Avoidance of Double Taxation ( DTAA ) then in relation to the assessee to whom such agreement applies the provisions of such DTAA shall apply to the extent which are more beneficial to the assessee. Therefore, it was contended that the provisions of DTAA over-ride the provisions of the Act to the extent these DTAA are favourable to the assessee. 6. The assessee further contended that the definition of Fees for Technical Services ( FTS ) under the India UK DTAA and fees for included services (FIS) in the India USA DTAA covers on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd taking note of the fact that for assessment year 2010-11 the ld. CIT (Appeals) decided the issue in favour of the assessee, held that management charges paid by the assessee to its AEs do not fall under FTS and not liable to deduction of tax at source under section 195 of the Act. 9. The ld. DR strongly supported the order of the Assessing Officer. The ld. DR further submits that the Revenue did not file appeal for the assessment year 2010-11 where the CIT (Appeals) decided the issue in favour of the assessee in view of the meager disallowance. The ld. DR further submits that in subsequent years the assessee itself deducted TDS on the payments made towards managerial services to the entities in UK, Singapore and USA. The ld. Counsel for the assessee placed reliance on the order of the ld. CIT (Appeals). The ld. Counsel for the assessee further submits that even during the assessment year 2014-15 the issue was decided in favour of the assessee and the Revenue did not file appeal and accepted the order of the ld. CIT (Appeals). The ld. Counsel for the assessee further submits that the assessee has been making such management charges since 2006 through the Global Management Serv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, we sustain the order of the ld. CIT (Appeals) and reject ground No. (a) of grounds of appeal of the Revenue. 12. In ground No. (b) of the grounds of appeal of Revenue challenges the order of the ld. CIT (Appeals) in deleting disallowance of management charges disallowed by the Assessing Officer under section 37 of the Act. 13. On perusal of the order of the ld. CIT (Appeals) it is noticed that in the course of appellate proceedings remand report was called for by the ld. CIT (Appeals) on the additional evidences furnished by the assessee to prove whether the expenses were in fact incurred by the assessee for the purpose of its business. 14. The ld. CIT (Appeals) considering the remand report and the submissions of the assessee and the additional evidences furnished by the assessee deleted the disallowance of management charges made under section 37(1) of the Act observing as under:- 15. On careful reading of the order of the ld. CIT (Appeals) we find that the ld. CIT (Appeals) has examined the evidences furnished and came to the conclusion that the expenses incurred towards management services are for the purpose of business and such services are routine and rec ..... X X X X Extracts X X X X X X X X Extracts X X X X
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