9911796707
TMI Blog2022 (12) TMI 424X X X X Extracts X X X X X X X X Extracts X X X X ..... of appeal is that records pertaining to this case were not traceable mainly due to shifting of office from main building to rented building which caused delay of 69 days. The delay in filing appeal is neither intentional nor willful, but for the unavoidable reasons, therefore, delay may be condoned in the interest of justice. 3. Having heard both sides and considered reasons given by the learned DR, for condonation of delay, we are of the considered view that reasons given by the Revenue for not filing the appeal within the time allowed under the Act comes under reasonable cause as provided under the Act, for condonation of delay and hence, delay in filing of appeal is condoned and appeal filed by the Revenue is admitted for adjudication. ITA No.567/Chny/2016 (Assessee's appeal): 4. The first issue that came up for our consideration from the assessee appeal is transfer pricing adjustment of Rs.3,67,52,455/- in respect of international transactions pertaining to payments made to Associated Enterprises for receipt of Headquarter services on the ground that same were not at arm's length price. The facts with regard to impugned dispute are that the assessee is a domestic company en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... basis of evidences filed by the assessee, as per which except agreement and few e-mail correspondence, the assessee could not file any evidence to justify rendering of services. The learned DR further submitted that the learned DRP has called for remand report on the issue and at this stage also, the assessee could not file any evidences. Therefore, the DRP has rightly concluded that when intra-group services are considered to be sham, question of bundling all transactions, including payments for shared services cannot be made. 7. We have heard both the parties, perused material available on record and gone through orders of the authorities below. The assessee claims to have made certain payments to AE for Headquarter services. As per agreement between the assessee and its AEs, the assessee claims to have availed certain services, including services in pursuant to Standard WHQ agreement between Eaton Corporation and the assessee, Shared services agreement between Eaton (China) Investment Company Ltd. and Shared Internal Audit Services Agreement with Eaton (China) Investment Company Ltd. and with Moller Electric Pte Ltd. We find that except need based agreement for rendering servic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... should be upheld. 11. We have heard both the parties, perused materials available on record and gone through orders of the authorities below. The assessee claims to have paid management fees to Eaton Technologies Pvt. Ltd. towards various services, including providing services for human resources development and administration, services with regard to audit, finance and statutory compliance services, legal support services, corporate communication and marketing support services etc. The Assessing Officer as well as DRP disallowed management fees paid to AE on the ground that the assessee could not prove rendering of services and benefit derived from service rendered by AE to justify payment of management fees. We find that except certain flow chart showing various corporate services of enterprises, the assessee could not file any evidence to justify rendering of services to justify management fee paid to sister concern. Although, the assessee has filed certain e-mail communication between the assessee and sister concern, but nothing is available from such e-mail correspondence to ascertain whether AE has rendered certain services. It is well settled principle of law by the decisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns without appreciating fact that the assessee has claimed deduction towards provision made for warranty expenses as well as actual expenditure incurred for warranty expenses. The learned DR referring to financial statements for the assessment year 2011-12 submitted that in Schedule 15 'operating expenses,' the assessee has debited a sum of Rs.2,33,15,603/- under the head 'warranty' and claimed that it pertains to provision made for warranty expenses in light of decision of the Hon'ble Supreme Court in the case of M/s. Rotork Controls India Pvt.Ltd. Vs. CIT (314 ITR 62). Further, the assessee had once again, claimed deduction towards actual expenditure incurred towards warranty amounting to Rs.3,20,60,542/-. In other words, the assessee has claimed deduction towards provision made for warranty as well as actual amount incurred towards warranty expenses, contrary to its own accounting principles followed for earlier assessment years, where it was claiming deduction towards warranty expenses only on actual basis, but not on provisions. The Assessing Officer, after considering relevant facts has rightly disallowed provision made for warranty expenses amounting to Rs.2,33,15,603/-, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar 2010-11, although, the assessee made provision for warranty expenses in the books of account on accrual basis, but such provision has been added back to total income in the statement of total income and deduction is claimed towards actual expenditure incurred for warranty on utilization basis. Further, from the impugned assessment year, the assessee has claimed deduction towards warranty expenses on the basis of provision created in the books of account and also on the basis of actual utilization in the statement of total income. Therefore, the Assessing Officer has disallowed deduction towards amount claimed on the basis of provision for warranty expenses, but allowed deduction for warranty expenses on utilization basis, because the assessee has not added back provision in the statement of total income like in earlier financial years. We find merit in reasons given by the Assessing Officer to disallow provision for warranty expenses for simple reason that when the assessee is all along claiming deduction towards warranty expenses on actual utilization, then there is no reason for the assessee to claim deduction towards warranty expenses on the basis of provision created in the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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