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TMI Blog2021 (6) TMI 402X X X X Extracts X X X X X X X X Extracts X X X X ..... to the CUP method applied by the assessee as the most appropriate method for benchmarking the SDT of rent payment, the assessee has given a comparable instance of rent paid @ ₹ 112 per sq.ft. by ICICI bank under a lease agreement dated 17.02.2012 for a nearby premises. As against that, the assessee paid rent @ ₹ 75.28 per sq.ft., which shows that the rent paid by the assessee was less in comparison with the comparable uncontrolled transaction. Thus, the ALP of the SDT of payment of rent cannot be disputed. Ergo, we are satisfied that the ld. CIT(A) was justified in deleting transfer pricing addition, which view is hereby countenanced. - ITA No. 400/PUN/2020 - - - Dated:- 11-6-2021 - SHRI R.S. SYAL, VICE PRESIDENT AND SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER Assessee by : Shri B.C. Malakar Revenue by : Smt. Divya Bhajpai ORDER PER R.S.SYAL, VP : This appeal by the Revenue is directed against the order dated 23.12.2019 passed by the ld. CIT(A) u/s.143(3) read with section 144C(3) of the Income-tax Act, 1961 (hereinafter also called the Act ) in relation to the assessment year 2013- 14. 2. This appeal was filed belatedly by 68 days. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch, Accounting, Auditing, Financing credit rating, Share registry, etc. were carried on. Meetings of board, Sales committee, Purchase committee, Audit and accounts, Finance Departments also took place at the corporate office only. The assessee also submitted that the premises taken on lease was equipped with two auto lifts and separate generators provided by the licensor. The TPO observed that building Sawant Corner was located at the junction of Katraj and primarily known as Head Office of Educational institutes held by the Sawant family i.e. Jaywant Shikshan Prasarak Mandal (JSPM). Since the assessee did not furnish point-wise information as desired, he deputed an Income-tax Inspector for conducting discreet enquiries about the tenants who were using the building. The Inspector submitted his report stating that he visited Sawant Corner building wherein the corporate office of the assessee was claimed to have been situated. The building consisted of five floors and name-boards appearing at the Reception of the building and also on various floors were checked but the name of assessee was found nowhere. He further gave details of name boards and occupants along with necessary ph ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... controversy revolves around the fact of the assessee having used or not used the Sawant Corner premises for which it paid the rent. The TPO rejected the assessee s CUP method and proceeded to apply the `Other method determining Nil ALP of the SDT of payment of Rent. Rule 10AB provides that: For the purposes of clause (f) of sub-section (1) of section 92C, the other method for determination of the arm's length price in relation to an international transaction or a specified domestic transaction shall be any method which takes into account the price which has been charged or paid, or would have been charged or paid, for the same or similar uncontrolled transaction, with or between non-associated enterprises, under similar circumstances, considering all the relevant facts. A bare perusal of the rule makes it graphically clear that the `Other method is a one which not only encompasses the price actually charged or paid for benchmarking but also the price which would have been charged or paid in a comparable uncontrolled transaction. Any potential price which could be charged or paid for similar goods/services, even though not actually transacted, can also be accepted for bench ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on or if at all, it mentions shop nos. 11 and 12, Ground floor, Sawant Corner, Pune, as its address, which was not let out to the assessee as per the Agreement. 9. Admittedly the photos taken by the Inspector and used by the TPO for drawing an adverse inference against the assessee were never confronted to the assessee. As such, these photos will have to be excluded from consideration in deciding the issue. Notwithstanding such photos, the assessee also filed a photo album showing the name of assessee on the Display boards of Sawant Corner. We refuse to take cognizance of the either set of the photographs. 10. On the other objection of the Revenue about shop nos. 11 12 at the ground floor of Sawant Corner which were not let out to the assessee as per the Agreement but used as its address, the assessee stated before the authorities below during the remand proceedings that the main trustee of JSPM was also the Chairman of the assessee company and he was looking after the work of assessee from shop nos. 11 and 12, which were owned by GPPL and in the legal possession of JSPM. 11. The assessee filed additional evidence before the ld. CIT(A) to substantiate its case of occupat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n if the building is let out. Then it is a matter of arrangement between the landlord and the tenant to share the tax. The ld. AR stated that the assessee paid its share in the property tax and duly recorded the same in its books of account. 15. Another relevant additional evidence is a letter dated 09.12.2011 from Punjab National Bank addressed to the Chairman of assessee company with the address of 3rd Floor, Katraj, Pune. This letter talks of sanctioning credit limits of ₹ 100 crore in favour of assessee. This letter also fairly proves that the bank was communicating with the assessee at 3rd Floor address of Sawant Corner, which falls within the area let out to the assessee as per the Agreement. 16. The next additional evidence is a Credit Rating Certificate dated 17.02.2012 issued by Credit Analysis and Research Limited, which has again been addressed to the Chairman of assessee company with address of Sawant Corner. 17. The next additional evidence is a letter dated 1.5.2012 written by Union Bank of India to the assessee company with 3rd floor address of Sawant Corner, Katraj, Pune. This letter refers to certain Pledge loan accounts. This also reaffirms that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s a whole. The raison d`etre is that valid and legal tax consequences of a bona fide transaction or a set of transactions cannot be averted even if the arrangement ends up in paying lower tax, so long as such an arrangement is within the framework of law and valid. The Department s case is that the property was, in fact, in occupation of JSPM and not the assessee and the assessee was simply paying rent without occupying the same. In such circumstances, the onus was upon the Revenue to prove that apparent was not real, which it failed to discharge. If the Department was convinced that whatever external evidence the assessee had filed to prove its case were make-believe, it had and always has a very wide powers to unearth the reality even beyond the assessment proceedings. 22. Once it is held that the Sawant Corner property was used by the assessee for its business purpose and the Revenue brought no contrary reliable evidence on record, the case of the TPO applying `Other method and determining Nil ALP on the ground that no independent party would have paid any rent for not having occupied the premises, fails. Reverting to the CUP method applied by the assessee as the most approp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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