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TMI Blog2019 (8) TMI 504X X X X Extracts X X X X X X X X Extracts X X X X ..... ich does not require specific adjudication. 3. Ground No. 2 to 4 are related to the disallowance of consultancy charges paid by the assessee to its Associated Enterprises (AEs). During the assessment proceedings, the Assessing Officer (AO) found that the assessee has made the payment of Rs. 88,91,065/- to M/s I.T.Lokam Services which is a subsidiary of the assessee company and the Directors/share holders in both the companies are one and the same.The assessee submitted that it had outsourced some of the works and the payment was made by the company for the services rendered by the I.T. Lokam Services. The assessing officer viewed that there is no nexus with the business of the assessee and accordingly disallowed the entire expenditure paid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so asked to bring out the nexus between the consultancy and the specific receipt of income along with the relevant correspondences with regard to the consultancy received and its correlation with the project undertook by the assessee or the service rendered by the assessee towards its client. In reply thereto, the assessee had submitted as under: The Assessee company has outsourced some of its Domestic project work to M/s IT Lokam Private Limited and TDS was made on the said turnover. The consultancy is towards services rendered by the personnel in the fields of software such as Java/J2EE, DB2, Websphere technologies etc. The revenue from the supporting services is received from Indian Software Companies. The assessee company engages its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... personnel from other company to meet its support service obligations, then it would have obviously correlated the specific skills (trend manpower/human resource) obtained to the specific Service area where they are deployed rather than giving a vague and general reply as the one reproduced above. In this regard, reliance was also placed in the case of Emson Tools Manufacturing Corporation Ltd. vs CIT 296 ITR 304 (P&H) which squarely applies to the instant case. In view of the assessee's inability to specifically demonstrate the nature of consultancy service obtained from its subsidiary, M/s.IT Lokam Services Pvt. Ltd., it was held that the alleged expenditure towards consultancy charges purportedly paid to M/s IT Lokam Services Pvt. Ltd. ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade by the A. 0. by holding that the impugned expenses have not been proved to be incurred wholly and exclusively for the purpose of assessee's business. Therefore, we set aside order passed by the CIT(A) and direct the A.0. to allow consultancy charges paid by the assessee for the assessment years 2009-10 to 2011-12." 5.2. Respectfully following the decision in appellants own case, the Assessing Officer is directed to delete the addition of Rs .88,91,065/- 5.3. The second issue is disallowance of employees contribution of PF not paid within due date of PF act. This issue is also decided in the same order as under: "Considering the facts and circumstances of the case and also respectfully following the coordinate bench decision, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; Total 5,37,791/- 6.1. The AO made the addition u/s 36(1)(va) r.w.s.2(24)(x) of the Act, stating that in the case of employees' contribution to PF, the employer would get deduction only if the payment is made before the due date as prescribed under the respective Act, Rule or Notification governing such funds. The AO further observed that this provision is to ensure that the beneficial legislation in favour of the employees is complied with strictly as the contribution was made by the employees. It is only in the case of employer's contribution to PF, to which provisions of sec.43B are attracted and the deduction is allowable under the first proviso to section 43B if it is paid on or before the due date for filing the return of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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