9911796707
TMI Blog2012 (11) TMI 89X X X X Extracts X X X X X X X X Extracts X X X X ..... t is engaged in the business of providing services to students who desire to study in Australia. For achieving this purpose, it inter-alia offers advice and information on course, study destination, application service in respect of over 300 Australian Educational Institutions, compilation of documents for the student visa applications, accommodation advice etc. These services are provided to the students free of cost. The case of the assessee had been that it set up liaison offices (LO) in New Delhi, Chennai, Mumbai, Chandigarh, Bangalore, Ahmedabad and Hyderabad with the previous approval of the Reserve Bank of India (RBI) conveyed in its letter dated 29.6.1995. The LO were not allowed to undertake any business activity as it was authorized solely to carry out liaison activities, i.e., to assist students in India for enrolling themselves in Australian Educational Institutions. Therefore, the expenditure of the LO was met out of remittances received through banking channel. However, this position was not accepted in past, as profit was attributed to the activities carried on by the LO in India. As per Transfer Pricing (TP) study conducted for this year, the profit was computed on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fit has been computed thereon. Ground No. 2 is against attributing head office expenses to the LO and computing profit thereon on cost plus basis. 3. Before us, Ld. Counsel referred to paragraph No. 8 of the asstt. Order, in which the issue regarding visit of representatives of Australian Educational institutions has been discussed and the cost has been worked out at Rs. 4,79,25,675/-. For the sake of ready reference, this paragraph is reproduced below :- 8. "It remains a fact that the assessee who is owned by 38 Australian Universities and providing service to over 300 Australian Education Institutions cannot conduct the interaction and interviews with the prospective students seeking admission in Australian Education Institutions, without the support of representative/visitors from Australian Institutions. But inspite of repeated requisitions the assessee kept on denying having incurred any expenses on visitors from Australia and did not provide the list of visitors and details of expenses incurred on them in India. As the activities of the assessee remain the same and admission rush to Australia is growing from year to year, in the absence of requisite details, I take the figu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... representatives of Australian Universities, Educational Institutions, I find no reasons to include the cost of boarding and lodging of representatives of Australian University/Educational Institutions in the total cost base of the appellant while applying mark up of 15% to arrive at the income. Therefore, Ld. AO is directed to exclude the amount of Rs. 4,69,34,181/- from the total cost, while calculating income of the appellant at the net margin rate of 15% of total cost." 3.2 Finally he drew our attention towards the decision of the Ld. DRP, rendered on 20.7.2010. This decision has been rendered prior to the order of the Ld. CIT(A) made on 22.8.2011. Ld. DRP has interalia mentioned that the AO, on the basis of available information, estimated that 175 representatives visited India in this year and the interviews lasted from 10-12 days conducted twice a year. The AO has made addition following the rationale of the addition made in astt. Year 2006-07. It is argued that the benefit of the decision of the Ld. CIT(A) was not available to the Ld. DRP and the addition was sustained by following the logic furnished by the AO in the order for asstt. Year 2006-07. This logic no longer surv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r, it does not mean that the assessee has incurred the cost of boarding and lodging. The reasonable view still will be that as in earlier year the expenditure was incurred by educational institutions unless some evidence is brought on record to prove that the assessee, in fact, incurred the cost in this year. Further, the Ld. Counsel has made a statement at bar that the appellate order for asstt. Year 2006-07 has been accepted by the revenue and no appeal has been filed against this order. In such a situation, it will be appropriate to assume that the expenditure has not been incurred by the assessee in this year also looking to the factual position that the expenditure was incurred by the institutions last year. Therefore, it is held that there is no evidence on record to come to a conclusion that assessee incurred the expenditure in respect of stay of representatives of Australian Educational Institutions in India. Accordingly, it is held that no income is attributable to the Indian offices on this ground. 5.1 In the result ground No. 1 is allowed. 6. Ground No. 2 is in relation to expenses incurred by the head office in respect of operations conducted in India. The facts are t ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
