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Income Tax Appellate Tribunal, “C” BENCH, MUMBAI
Before: SHRI PRASHANT MAHARISHI, AM & SHRI KULDIP SINGH, JM
These are two appeals filed by The Assistant Commissioner Of Income Tax – 4 (1) (1), Mumbai (The Learned Assessing Officer) for assessment year 2014 – 15, 2015 – 16 in case of the assessee involving similar issue.
We take up the appeal of the learned assessing officer for assessment year 2014 – 15. This appeal is filed by the learned assessing officer against the order of National faceless appeal Centre, Delhi (the learned CIT – A) dated 7/3/2023 for a by 2014-15 wherein the appeal filed against the assessment order passed under section 143
The learned assessing officer has raised following grounds of appeal:-
“whether on the facts and in the circumstances of the case and in the law, the learned CIT (A) was justified in deleting the addition of ₹ 64,087,601/– being 20% of expenses incurred by the assessee for services rendered to M/s Cigna TTK during the year whether on the facts and in the circumstances of the case and in law, the learned CIT (A) was justified in accepting the claim of the assessee that there was no profit element involved in the transaction wherein the assessee had provided a highly technical and professional services to the other party, that too by utilising its own funds whether on the facts and circumstances of the case and in law, the learned CIT (A) was justified in not appreciating the fact that the functions (by the assessee company involved not only highly technical and professional skill but also the expert eyes of its directors et cetera, which cannot be believed to have been carried out without charging any professional fees or service charges.”
Brief facts of the case shows that assessee is a company engaged in providing marketing research in health insurance and healthcare services system. It filed its return of income on 29/11/2014 for assessment year 2014
The learned AO is aggrieved with the decision of learned CIT – A – and is in appeal.
The learned departmental representative reiterated the facts stated by the learned assessing officer and submitted that when the assessee is providing services to its sister concern which is highly technical, not charging the mark- up over the same, is not correct. Therefore the learned assessing officer has decided the mark-up at the rate of 20% of the expenditure incurred by the assessee. It was further stated that assessee has incurred the expenditure throughout the year but has received only advances which
The learned authorised representative vehemently submitted that identical issue arose in case of the assessee for assessment year 2013- 2014 wherein the coordinate bench has decided the issue in favour of the assessee. He referred to the copy of the decision placed at page number 215 – 226 of the paper book. The learned authorised representative also referred to the submission filed before the learned assessing officer placed at page number 1 – 86 and also the submission before CIT (A) at serial number 87 – 214 of the paper book. Thus he claimed that the issue is squarely covered in favour of the assessee and there is no change in the facts and circumstances of the case. The learned CIT – A has followed the decision of the coordinate bench in assessee’s own case for earlier years and therefore same deserves to be upheld.
We have carefully considered the rival contention and perused the orders of the lower authorities as well as the submission made before us. We find that in case of the assessee for assessment year 2013 – 14 coordinate bench has decided identical issue in ITA number 1117/M/2019 (A) & 1650/M/2019 ( By AO ) by order dated 25/11/2020 wherein identical ground was raised by the revenue before the coordinate bench as per Para number 8. The “12. We have heard the rival submissions and perused the relevant materials on record. Giving that the assessee received development cost for developing and transferring the initial infrastructure to Cigna TTK, the transaction is not expenditure in the hands of the assessee. For the assessee (the recipient of the amount) the provisions of specified domestic transaction would not be applicable.
Further we find that (i) the vendor agreement between the assessee and Cigna TTK has been entered at cost and no income has been earned by the assessee, (ii) there is neither any evidence nor allegation that assessee has received any consideration over and above to what is mentioned in the aforesaid agreement.
In Calcutta Discount Co. Ltd. (supra), the assessee company transferred certain shares held by it to its subsidiary company at loss than their book value. Though the ITO had not found that the assessee has made secret profits, he held that the assessee must be deemed to have made a profit amounting to the difference between the market price of the shares and their book value. The Hon'ble Supreme Court held that when one trader transfers his goods to another trader at a price less than the market price, the taxing authority cannot take into consideration, the market price of those goods, ignoring the real price fetched. Unless the officer was able to come to the conclusion, on the material before him, that the 12.1 In view of the above factual scenario and position of law we affirm the order of the Ld. CIT(A) deleting the addition of Rs. 3,68,97,011/-made by the AO.”
We find that there is no change in the facts and circumstances of the case compared to assessment year 2013 – 14. As the issue has already been decided by the coordinate bench in assessee’s own case for assessment year 2013 – 14, respectfully following the decision of the coordinate bench we also direct the learned assessing officer to delete the addition made in this year being 20% of the expenditure incurred by the assessee. Accordingly, the order of the learned CIT – A is confirmed and appeal of the learned assessing officer is dismissed.
Accordingly appeal of the learned AO for assessment year 2014 – 15 is dismissed.
The fact in appeal for assessment year 2015 – 16 is identical. Both the parties also agreed that there is no
As we have followed the decision of the coordinate bench in assessee’s own case for assessment year 2013 – 14 while deciding the appeal of the learned AO for assessment year 2014 – 15, there is no reason to deviate from the same. Therefore respectfully following the decision of the coordinate bench in assessee’s own case for assessment year 2013 – 14, we direct the learned assessing officer to delete the addition and confirmed the order of the learned CIT – A. Accordingly appeal of the learned AO is dismissed.
Accordingly appeal of the learned AO for assessment years 2014 – 15 and 2015 – 16 are dismissed.
Order pronounced in the open court on 24.07. 2023.