9911796707
TMI Blog2024 (5) TMI 1244X X X X Extracts X X X X X X X X Extracts X X X X ..... HER the Ld. ITAT was legally and factually justified in deleting the additions made by the Ld. Assessing Officer (AO) with respect to "reimbursement of expenses" towards purported "software costs", despite the prima facie falsity of claim found by the Ld. TPO and disproven "incurring of software costs"? iii. WHETHER on the facts and in the circumstances of the case, the Ld. ITAT perversely and unlawfully deleted the additions made for purported reimbursement of expatriate salaries and payment for royalty, by failing to make an independent finding and determination on the "double deduction" nature of the claim for such purported expenses along with "reimbursement of software expenses" with near identical details, use, functions and purposes purportedly served? iv. WHETHER the Ld. ITAT has erred in law and on facts in deleting the addition made on account of lease Registration charges by ignoring the fact that balance expenses of lease registration charges belong to other years? v. WHETHER the Ld. ITAT was correct in law in deleting all the additions made by the concerned Ld. Assessing Officer by merely relying on the perverse and erroneous findings of the Ld. CIT(A), contra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .4 Quality control Benetton India ensures that the products manufactured by the vendors are according to the specifications and global quality standards prescribed by the Benetton Group. 4.4.2.5 Logistics Benetton India is responsible for ensuring timely shipments of goods front India. The function becomes all the more critical in view of the fact that the AEs have pre decided schedules for launch of such products in the upcoming collection of Benetton Group. The functions performed by Benetton India and its AEs are summarised in the table given below: Name of associated enterprise Benetton India AEs Product development Co-ordination only Yes Purchasing activities/ supplier identification Co-ordination only Yes Contracting with suppliers Co-ordination only Yes Quality control Yes No Logistics Yes No On the basis of above it can be seen that the vendor identification is the function performed by the AE. If the Sourcing Head is performing this function, than he is clearly performing this function for the AE and not for the assessee. In such a situation the remuneration of the Expat is to be paid by the AE and not by the assessee. Mor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ransaction is at AIP since it is only a cost-to-cost transaction with respect to the employee's salaries by doing this, I am of the opinion that the appellant had discharged the onus of establishing ALP of the transaction. In order to dislodge the claim of the appellant, TPO has to bring on record evidence. The only thing which the TPO has brought out is that the "vendor identification" was the function of the AE and therefore, if anybody else - to be more specific if appellant - does this function with the help of seconded employees, then those employees were working not for the appellant but for AE. This was the argument for the denial of the claim of the 'appellant' with respect to Ettore Cadamore who worked in India for AY 2006-07. It is not clear how TPO came to this conclusion that vendor identification is the function of the AE. Appellant had employed him for sourcing the materials. xxxxx xxxxx xxxxx I have no hesitation to state that the appellant has fully discharged its onus by providing the documentation with regard to the fact that these employees worked in the relevant period m India and also by giving the description of their functions. TDS was deducted at so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and for that purpose it had entered into various lease agreements with the owners of such properties. Most of such leases are for 5-10 years. The appellant had paid stamp duly for lease registration amounting to Rs. 35,16,757 which was claimed as a revenue expense. 4.2. However, out of the total claim of lease registration charges amounting to Rs. 35,16,757, the AO disallowed a sum of Rs. 30,31,188 as he was of the opinion that the same needs to be spread over the total period of lease. The AO allowed the lease registration charges to the extent of Rs. 485,569 only and disallowed the balance charges amounting to Rs. 30,31,188 on the ground that the latter have not been incurred for the subject year. The relevant extract of the AO's order has been reproduced as under: "On further examination, it has been noted that these charges related to mainly 9 years rental lease registration charges of retail showrooms and accordingly 1/9th(or as per specific case) of these expenses accrued during the year." 4.3. The appellant has stated that it paid stamp duty for registration of the lease premises taken for the purpose of its business of selling of its products like Garments, Le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he case of CIT vs Gopal Associates (supra). The relevant part of the decision is reproduced below: "1. Whether on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was right in law holding that the expenditure incurred, on stamp duty and registration charges at the time of execution of lease agreement for taking on lease of the fruit processing plant for seven years, was allowable as revenue expenditure." The brief facts necessary for decision of the case are that during the assessment year 1994-95 the assessee took on lease of a fruit processing plant from the HPMC. The lease deed was executed on December 27, 1993, for a period of seven years. It is not disputed that in fact the lease deed was terminated with effect from March 17, 1994. The assessee had spent a sum of Rs. 3,44,251 as stamp duty and registration charges on the lease deed. The Assessing Officer treated this expenditure as capital expenditure by relying upon the judgment of the Karnataka High Court reported, in the case of Hotel Rajmahal v. CIT [1985] 152 ITR 218. On the other hand, the assessee relying upon the judgments of the Madras, Kerala and Gujarat High Courts reported in ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
