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TMI Blog2018 (10) TMI 799X X X X Extracts X X X X X X X X Extracts X X X X ..... facts drawn adverse inferences in the hands of the assessee. We thus, are unable to persuade ourselves to subscribe to the observations of the lower authorities. Still further, we find that as observed by the CIT(A), disallowances of expenses involving identical facts was made by the A.O in the case of the assessee for A.Y 2009-10 and A.Y 2010-11, which were upheld by the CIT(A). - Decided in favour of assessee. Computing the tax liability of the assessee - not allowing credit for the tax deducted at source - application under Sec. 154 seeking rectification of the said mistake with the A.O, however, the same despite a specific direction by the CIT(A) to dispose of the same, is still pending - Held that:- CIT(A) had vide his order dated 26.05.2016 directed the A.O to dispose off the rectification application of the assessee by way of speaking order in a time bound manner. We are of the considered view, that as the failure on the part of the A.O to comply with the directions of the CIT(A) emerges from the impugned order, and has been assailed by the assessee before us, thus, in all fairness direct that the A.O while giving appellate effect to our order shall allow credit of the T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cometax (Appeals) ought to have directed the Assessing Officer as such. 2.3 The Appellant prays that the Assessing Officer be directed to allow the credit for tax deducted at source of ₹ 28,97,906/-. 3. General : 3.1 Each of the above grounds of appeal is without prejudice to the other. 3.2 The Appellant craves leave to add to, alter, amend, vary, omit or substitute any of the aforesaid grounds of appeal or add a new ground or grounds of appeal at any time before or at the time of hearing of the appeal as it may be advised. 2. Briefly stated, the assessee company which is engaged in the business of providing technical know-how for manufacturing chemical products for pulp paper products had e-filed its return of income for A.Y 2011-12 on 29.11.2011, declaring income of ₹ 10,93,203/-. Subsequently, the case of the assessee was selected for scrutiny assessment under Sec. 143(2) of the Act. 3. On a perusal of the profit loss account, it was observed by the A.O that the assessee was in receipt of Royalty income of ₹ 2,62,72,942/-; Service fee income of ₹ 3,73,31,027/-; and Other income of ₹ 5,06,36,724/-. It was ob ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt of ₹ 2,99,85,844/- was incurred for earning of service income . Similarly, out of the total administrative and other expenses amounting to ₹ 1,90,52,281/-, an amount of ₹ 24,75,919/- was incurred for earning of service income . The assessee furnished the calculation of the service income with the A.O, as under: Particulars Amount (in Rs.) Employee Cost 2,99,85,844/- Administrative and other expenses 24,75,919/- Total Service cost 3,24,61,763/- Add: Mark Up @15% 48,69,264/- Service fee 3,73,31,027/- 8. However, the A.O declined to accept the claim of the assessee that employee cost and other expenses were incurred also for earning royalty income and undertaking marketing and business development activities. Further, being of the view that the entire employee cost of ₹ 4,59,46,708/- , 50% of the administrative expenses of ₹ 95,26,140/-, interest cost of ₹ 24,00,419/-, and depreciation of ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in appeal before us. The ld. Authorised representative (for short A.R ) taking us through the orders of the lower authorities submitted, that the issue involved in the appeal was covered by the order passed by the Tribunal while disposing off the appeal of the assessee for A.Y 2010-11 (copy placed on record). It was averred by the ld. A.R, that the Tribunal while disposing off the aforesaid appeal had followed its earlier order passed in the assesses own case for A.Y 2009-10. Further, the ld. A.R requested, that necessary directions be issued to the A.O to allow credit of the TDS on the royalty income in the hands of the assessee. Per contra, the ld. Departmental representative (for short D.R ) did not controvert the claim of the ld. A.R that the core issue involved in the present appeal was covered by the earlier orders of the Tribunal in the assesses own case for A.Ys 2009-10 and 2010-11. 11. We have heard the authorised representatives for both the parties, perused the orders of the lower authorities and the material available on record. We may herein observe that the very basis of recomputing of the cost attributable to the service income by the A.O, does not inspire any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and A.Y 2010-11 on a further appeal by the assessee had been set aside by the Tribunal and the disallowances of the expenses had been deleted. We thus, in the backdrop of the our aforesaid observations, and the view taken by the Tribunal in the assesses own case for the aforementioned preceding years, delete the disallowance of ₹ 2,54,61,231/- made by the A.O. 12. We shall now advert to the contention of the ld. A.R, that the A.O while computing the tax liability of the assessee had erred in not allowing credit for the tax deducted at source of ₹ 28,97,906/- by M/s Connel Brothers Company (India) Pvt. Ltd., while making the payment of royalty income of ₹ 2,62,72,942/- to the assessee. It is the contention of the ld. A.R, that though it had filed an application under Sec. 154 seeking rectification of the said mistake with the A.O, however, the same despite a specific direction by the CIT(A) to dispose of the same, is still pending even after lapse of more than two years from the date of the order of the CIT(A). The ld. A.R submitted that a suitable direction be issued to the A.O. We have deliberated on the issue, and find that the CIT(A) had vide his order dated ..... X X X X Extracts X X X X X X X X Extracts X X X X
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