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TMI Blog2023 (7) TMI 457X X X X Extracts X X X X X X X X Extracts X X X X ..... f payment of management fees paid to NLC by NLT and therefore the same having been made entirely for business consideration incurred wholly and exclusively for the purposes of business. Hence no addition was held to be sustainable for the assessment year 2010-2011. Disallowance made u/s 40A (2) (b) on account of payment of administrative charges paid to TACL - excessive or unreasonable expenditure - Tribunal recorded that the AO had failed to discharge the onus as per the mandate of the provisions of Section 40A (2) - assessee i.e NLT had received services from TACL in respect of which payment had been made as per documentary evidence on record and thus, there was no warrant for disallowance paid to TACL by the assessee when the payme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Arm's Length Price of International transaction related to the payment of management consultancy fee to its Associate Enterprises M/s Nippon Leakless Corporation Japan as Nil against Rs. 2,99,52,717/- claimed by the assessee. ii) Rs. 1,49,76,358/- made on account of disallowance of management fee paid to M/s TalBros Automative component u/s 40A(2) of the Act. The TPO vide order dated 24.01.2014 held that the ALP of international transactions related to payment of management consultation fees to its AE M/s Nippon Leakless Corporation, Japan as nil against Rs.2,99,52,717/- claimed by the appellant. The Assessing Officer based on the order of TPO passed a draft assessment order under Section 143 read with Section 144 C of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... harges to its associate enterprises and thus was not required to pay any amount for the same activity. ii) Whether on the facts and circumstances of the case the Hon'ble ITAT has erred in law and facts in applying the provisions of section 40(A)(2)(b) of the Income Tax Act, to the case of the assessee and in disallowing the management fees worth Rs. 1,49,76,358/- paid to related party despite the fact that no reasonableness has been proved by the assessee with regard to the fair market value of the services/facilities, legitimate needs of the business and benefits accrued for the services/facilities for which the payment is made. The Tribunal failed to appreciate that the assessee company is not paying any management fees in its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the financial year 2011-12. The major international transactions undertaken by assessee with its AE and during the financial year 2011-12 are as under:- Sr. No. International Transaction Amount Method 1. Purchase of raw material, tools dies etc 26,13,34,425/- TNMM 2 Management consultancy fees 3,27,00,000/- TNMM 3 Royalty paid 1,08,60,348/- TNMM 4 Purchase of machinery 6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g Officer passed under Section 143 (3) read with Section 144 C of the Income Tax Act by holding that the Transfer Pricing Officer for the Assessment year 2008-2009, 2009-2010 2011-2012 has accepted the transcation of payment of management fees paid to NLC by NLT and therefore the same having been made entirely for business consideration incurred wholly and exclusively for the purposes of business. Hence no addition was held to be sustainable for the assessment year 2010-2011. Similarly in respect of disallowance made under Section 40A (2) (b) on account of payment of administrative charges paid to TACL, the Tribunal recorded that the Assessing Officer had failed to discharge the onus as per the mandate of the provisions of Section 40A (2) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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