2019 (1) TMI 1690 - AT - Income Tax

Deduction u/s 80-O - services rendered to MLINT - HELD THAT - No addition would be sustainable in law merely on the basis of suspicion conjectures or surmises. The assessee had placed on record sufficient documentary evidences to substantiate its claim u/s 80-O with respect to services rendered to MLINT. The claim was duly supported by the confirmatory letter of MLINT as well as RBI approval letter which specifically prohibited devolvement of foreign exchange to the assessee. On the contrary except for mere suspicion allegation nothing was brought on record by Ld. AO to counter the assessee s claim. It is beyond doubt that the assessee was acting as co-lead manager in the aforesaid issues but the allegations of Ld.AO that the fee was received in that capacity through MLINT is without any corroborative evidences. Therefore the conclusion of Ld. CIT(A) could not be faulted with and hence concurring with the same we dismiss the appeal filed by the revenue.

Summary

Issues:
- Dispute over the assessee's claim under section 80-O for Assessment Year 1995-96.
- Whether the receipt of a specific amount from Merrill Lynch Ltd. should be treated as a fee for services rendered or as an underwriting commission.

Analysis:
1. Dispute over Section 80-O Claim:
- The revenue disputed the assessee's claim under section 80-O, arguing that the amount received from Merrill Lynch Ltd. was for co-lead manager services, not for commercial and technical services as required under section 80-O.
- The reassessment proceedings revealed discrepancies in the claimed deduction, leading to a reduction in the eligible amount under section 80-O.
- The revenue contended that the assessee did not provide any evidence of services rendered to Merrill Lynch, and the transactions were deemed a colorable device.
- The reassessment order concluded that the assessee received commission from Raymond, not for services to Merrill Lynch, resulting in a reduction of the claimed amount under section 80-O.

2. CIT(A) Decision and Appeal:
- The CIT(A) accepted the assessee's claim, stating that the fees were received for services rendered as per the agreement with Merrill Lynch, supported by a confirmatory letter.
- The CIT(A) noted the absence of evidence proving that the fee was received in the capacity of co-lead manager, providing relief to the assessee.
- The revenue appealed the CIT(A) decision, arguing against the eligibility of the assessee for section 80-O deduction.
- The appellate tribunal upheld the CIT(A) decision, emphasizing that the assessee substantiated its claim with documentary evidence and that the revenue failed to provide concrete evidence to counter the claim.

3. Assessee's Appeal:
- The assessee's appeal was against the order related to rectification under section 154, which was not pressed during the proceedings.
- As the revenue did not object, the appeal was dismissed due to the admitted position.

4. Conclusion:
- Both the appeals by the revenue and the assessee were dismissed by the appellate tribunal, affirming the CIT(A) decision in favor of the assessee regarding the section 80-O claim.
- The tribunal's decision highlighted the importance of substantiating claims with documentary evidence and the burden of proof on the revenue to counter such claims effectively.