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2014 (7) TMI 1309 - HC - Income TaxDisallowance of service charges - nature of the arrangement between the Assessee Company and the brand owners whereby the Assessee was saddled with such expenses which would be liability of the foreign company owning the brands and the trademarks - disallowance of prior period marketing expenses - disallowance of unverified marketing expenses - HELD THAT - Registrar (Judicial) / Registrar, High Court, Original Side, Bombay to ensure that the original record in relation to this Appeal is summoned from the Tribunal and offered for inspection of the parties. This paper book is treated sufficient for the purpose of admission of this Appeal. However, the Registry must further ensure preparation of complete paper book in accordance with the Rules. The Registry in the first instance must send intimation of admission of this Appeal enclosing therewith a copy of this order so as to enable the Tribunal to act accordingly.
Issues:
1. Disallowance of service charges 2. Nature of arrangement between Assessee Company and brand owners 3. Disallowance of prior period marketing expenses 4. Disallowance of unverified marketing expenses Analysis: 1. The High Court admitted the appeal based on substantial questions of law regarding the disallowance of service charges amounting to Rs. 74,298,465. The main issue was whether the Income Tax Appellate Tribunal was correct in law in deleting this addition. The Court will further examine the facts and circumstances surrounding this disallowance. 2. Another substantial question of law raised was regarding the true nature of the arrangement between the Assessee Company and the brand owners. The Court questioned whether the Tribunal correctly understood the arrangement where the Assessee was burdened with expenses that should have been the liability of the foreign company owning the brands and trademarks. This issue delves into the intricacies of the contractual relationship between the parties. 3. The Court also addressed the issue of disallowance of prior period marketing expenses. The Tribunal had restricted the addition to Rs. 4,11,61,718, while the details indicated a higher figure of Rs. 5,62,32,085 as admitted by the Assessee Company during the appellate proceedings. The Court will assess whether the Tribunal's decision was legally sound in light of these discrepancies. 4. Lastly, the judgment focused on the disallowance of unverified marketing expenses. The Tribunal had limited the addition to Rs. 31,19,919, despite the details showing a higher figure of Rs. 65,64,134 as acknowledged by the Assessee Company during the appellate proceedings. The Court will examine whether the Tribunal's decision aligns with the legal principles governing such disallowances. The Respondent waived service, and the Registrar was directed to summon the original record for inspection. The Court emphasized the need for a complete paper book in compliance with the Rules and instructed the Registry to inform the Tribunal of the appeal's admission. The judgment highlighted the meticulous procedural aspects to ensure a fair and thorough review of the issues raised in the appeal.
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