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TMI Blog2016 (6) TMI 125X X X X Extracts X X X X X X X X Extracts X X X X ..... s to be excluded or not? The Assessing Officer after receiving the report from the DRP, shall pass order in conformity with the direction of the DRP as provided in Section 144C(13) of the Act. Disallowance towards sales commission - Held that:- On perusal of the direction of the Dispute Resolution Panel, it shows that the assessee has not produced the details of the service rendered, the names and address of the commission agents and the details of the commission paid, etc. Even before this Tribunal, the details of the agents, the payment of commission are not available. The assessee claims a lump sum payment of ₹ 10,50,000/-. In the absence of any details with regard to names and address of commission agents and the commission paid, this Tribunal is of the considered opinion that the disallowance has rightly been made. It is not in dispute that an identical disallowance was made in the earlier assessment year 2010-11 on identical set of facts. Therefore, this Tribunal do not find any reason to interfere with the order of the lower authority and accordingly, the same is confirmed. - Decided against assessee TDS u/s 194-I - non deduction of tds - Disallowance under Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consequent to the direction of Dispute Resolution Panel, for the assessment year 2011-12. 2. Shri Ajit Tolani, the Ld. representative for the assessee, submitted that the assessee-company engaged in manufacturing and service of wind turbine generators and sale of wind turbine components. According to the Ld. representative, the assessee is selling the wind turbine generators and its components in the domestic market as well as in the international markets. Referring to the objection raised before the Dispute Resolution Panel in the grounds of objection No.6, a copy of which is available at page 71 of the appeal folder, the Ld. representative submitted that the assessee claimed before the Dispute Resolution Panel that the Transfer Pricing Officer computed the sales of the assessee by excluding the income from annual maintenance service without excluding the corresponding cost of rendering such services. The Ld. representative further submitted that since the income from annual maintenance service is not included in the operating revenue, the corresponding cost also needs to be excluded from the total cost for computation of the operating margins. Referring to the direction of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be excluded while computing the profit from manufacture and sale of wind turbine generators. Therefore, it is obvious that the Transfer Pricing Officer has proposed to exclude the income from annual maintenance charges from the total income. Once the income was excluded, the expenditure for earning the annual maintenance income also needs to be excluded. As rightly submitted by the Ld. D.R., it is not clear either from the assessment order or TPO s order. This aspect was not considered by the Dispute Resolution Panel in their order. Therefore, this Tribunal is of the considered opinion that the matter needs to be verified by the Assessing Officer. Accordingly, the orders of the lower authorities are set aside and the Assessing Officer is directed to refer the issue of expenditure for maintenance charges to the Dispute Resolution Panel. In such reference, the DRP shall examine whether the expenditure said to be incurred by the assessee for earning income from annual maintenance is to be excluded or not? The Assessing Officer after receiving the report from the DRP, shall pass order in conformity with the direction of the DRP as provided in Section 144C(13) of the Act. 5. Now ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore, this Tribunal do not find any reason to interfere with the order of the lower authority and accordingly, the same is confirmed. 9. The next ground of appeal is with regard to disallowance of ₹ 3,87,91,750/- under Section 40(a)(i) of the Act. 10. Shri Ajit Tolani, the Ld. representative for the assessee, submitted that the parent company of the assessee, namely, Vestas Denmark, gave guarantee to the customers of the assessee who purchased windmill in India. The assessee has paid corporate performance guarantee fee of ₹ 3,87,91,750/- and claimed the same as expenditure. The Assessing Officer, however, found that the payment made by the assessee is in the nature of interest, therefore, the assessee is liable to deduct tax under Section 194-I of the Act . Referring to the order of the Tribunal in ACIT v. GMAC Financial Services India Ltd. in I.T.A. Nos.1509, 1537, 1538 1539/Mds/2009 dated 20.04.2011, the Ld. representative submitted that an identical payment was held to be not in the nature of interest. In fact, this Tribunal placed his reliance on the Double Taxation Avoidance Agreement between India and USA. In the case before us, the payment was made to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore, it is a business expenditure. 11. On the contrary, Dr. Milind Madhukar Bhusari, the Ld. Departmental Representative, submitted that the so-called guarantee said to be given by the parent company is in the nature of interest. Therefore, the Dispute Resolution Panel has rightly confirmed the order of the Transfer Pricing Officer. 12. We have considered the rival submissions on either side and perused the relevant material available on record. The Transfer Pricing Officer proceeded on the presumption that what was paid by the assessee is interest. A perusal of the Double Taxation Avoidance Agreement between India and Denmark clearly shows that what was paid by the assessee is not interest. It is a payment for the so-called guarantee said to be given by the parent company. The question arises for consideration is what kind of services are rendered by the parent company and whether such services are rendered in India and whether such payment is liable for taxation in India. This Tribunal is of the considered opinion that since the payment does not partake the character of interest, it would naturally be a business profit for the parent company. In the course of its business a ..... 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