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TMI Blog2021 (12) TMI 1255X X X X Extracts X X X X X X X X Extracts X X X X ..... overted by the Revenue before us. Hence, we hold that there is no question of sharing of bad debts written off with the holding company. Once, it is found that assessee had indeed offered the fee income in earlier years in its entirety, any non-realisation of the said fee which resulted in bad debt would be eligible for deduction if the same is written off in the books of accounts. In the instant case a sum of ₹ 1,79,66,908/- remain irrecoverable and the same was duly written off by the assessee in its books in A.Y.2011-12, which becomes squarely eligible for deduction in the hands of the assessee company. There is no question of sharing the same with the holding company. This fact has been duly appreciated by the ld. CIT(A). Accordingly, the ground No.2 raised by the Revenue is dismissed. Disallowance of bonus paid to employees including the key management persons - HELD THAT:- Certain employees who have been made Director or Managing Director of specific department inside the company. They are not the Directors of the assessee company as per the Companies Act. The assessee also furnished the list of Directors of the assessee company to justify this contention. Hence, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... economy and sectors to its institutional clients. The assessee company share fee received by it with the holding company and availed services of research, financial advisory and other institutional services. As per para 8 of Memorandum of Understanding (MOU) dated 01/10/2007 between the assessee and IDFC Securities Ltd., (holding company), the assessee had to share the success fee received from the client in equal ratio towards availing of various services provided by the holding company. This is more of a profit sharing arrangement entered into by the assessee with the holding company. The assessee had to bring and manage client and the holding company had to render services of research, financial advisory and other distribution services. The assessee was sharing revenue as well as expenses in equal ratio with the holding company. The assessee booked sales of ₹ 54,13,23,772/- in its books where it had collaborated with IDFC Securities Ltd., (holding company). The assessee had debited expenses of ₹ 6,88,48,564/- in its books in respect of collaboration project. Out of the net income of ₹ 47,24,75,209/- which is termed as success fee, the assessee had paid 50% ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es Ltd., (holding company) in the project of Sterlite Technologies Ltd., and accordingly had not shared any fees in respect of the same with the holding company. Hence, the presumption of the ld. AO that fee had been shared with holding company is factually incorrect and hence, there is no question of sharing of bad debts written off with the holding company. We find that the ld. CIT(A) had rightly appreciated the contention of the assessee that it had availed services of holding company only in respect of some assignments and not for all the assignments carried out by the assessee. 4.2. The assessee had furnished the ledger account of Sterlite Technologies Ltd., for F.Yrs. 2009-10 and 2010-11 and also the details of fee shared with the holding company in F.Yrs. 2009-10 and 2010-11. From the same, the ld. CIT(A) observed that fee receivable from Sterlite Technologies Ltd., was not to be shared at all with the holding company and that the assessee company had not shared the same with the holding company, as no services had been availed by the assessee company from holding company in respect of Sterlite Technologies Ltd project. This categorical factual finding of the ld. CIT(A) h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent on adhoc basis and made disallowance of ₹ 6,43,94,230/- in the assessment. 5.2. We find that assessee vide letter dated 12/03/2015 filed before the ld. AO had indeed furnished the details of bonus paid to various employees which are in excess of ₹ 10 lakhs together with their PAN and their respective employment number. The assessee also pointed out that similar payments made in earlier years. It was pointed out that assessee company had got a bonus policy pursuant to which it calculates regular pay, variable pay under strict professional compensation process to all the employees. The company s compensation programme is market focussed and that the individual bonus payments are made on the personal rating and overall ability to pay of the company. Performance in this context is profitability of the company and contribution of key personnel for the same. The company is in service industry and employees are driving business force. The bonus is allocated on the basis of profit earned by the company and for retention of key talent. The assessee also pointed out that similar bonus payments were made in earlier year to the tune of ₹ 22,72,40,000/- which worked out ..... X X X X Extracts X X X X X X X X Extracts X X X X
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