ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE -7, , PUNE vs. TATA AUTOCOMP HENDRICKSON SUSPESNSIONS PVT.LTD,, PUNE

आदेश / ORDER

PER S.S. VISWANETHRA RAVI, JM :

5. Heard both the parties and perused the material available on record. We note that the AO discussed the issue in Para No. 5. For not furnishing documentary evidences in support of claim held the administrative service charges paid by the assessee to TACO are not allowable. The CIT(A) discussed the same in Page No. 8 at Para No. 4 of the impugned order and by following the order of ITAT for A.Y. 2012-13 in assessee’s own case held the same are allowable. We note that this Tribunal considered the issue in detail from A.Ys. 2007-08 to 2011-12 and held the assessee has received services from TACO for which the administrative service charges were paid. Further, we note the Tribunal for A.Ys. 2012-13 and 2014-15 which is at Page No. 153 of the paper book by following the order of Co-ordinate Bench of this Tribunal in assessee’s own case for A.Y. 2006-07 held the issue in favour of the assessee. The relevant portions of the said order at Para Nos. 13 to 15 are reproduced here-in-below for ready reference :

“C. Adjudication of the issue- Administrative Service Charges: 13. The Ld. Sr. Counsel for the assessee invited our attention to Page 498 of the Paper book in the case of Tata Johnson Controls Automotive Limited Vs. The Dy. Commissioner of Income Tax, in and cross appeal in ITA No.1454/PN/2011 for the assessment year 2006-07 decided on 09.12.2015 and therein, in the assessee‟s appeal, ground No.2 is as follows: "2. The learned CIT(A) erred in confirming the disallowance of administrative service charges paid to Tata Autocomp Systems Ltd. ("TACO") to the extent of Rs.1,50,63,122 out of Rs.2,00,84,162 under section 40(A)(2)(b) of the Income-tax Act on the grounds that the same is excessive and unreasonable having regard to services rendered by TACO and the legitimate business needs of the appellant." The facts relates to the issue that the assessee therein had claimed an expenditure of Rs.2,00,84,162/- on account of payment made to Tata Autocomp Systems Ltd ( in short „TACO‟) on account of Administrate Support Services taken. That on this issue, the Tribunal has held as follows: "32. Now, coming to the case of quantum of remuneration to be allowed in the hands of assessee, where the CIT(A) has allowed expenditure @ 25% of total expenses and no basis has been given by the CIT(A) to allow the said expenditure @ 25% of the total. There is no basis for measuring such services and in the absence of any evidence brought on record to establish that the expenditure incurred by the assessee was excessive i.e. more than market value of the said services, we find no merit in the orders of authorities below in invoking provisions of section 40A(2)(a) of the Act. Accordingly, we modify the order of CIT(A) and direct the Assessing Officer to allow the expenditure in totality in the hands of the assessee as the said expenditure has been laid down in terms of the agreement agreed upon between the parties and is for carrying on of the business of the assessee more efficiently and is allowable as business expenditure. The grounds of appeal

No.2 and 3 raised by the assessee are allowed and ground of appeal No.2 raised by the Revenue is dismissed." 13.1 The Ld. Sr. Counsel for the assessee further submitted that in this case referred before us (supra.), the Ld. CIT(Appeals) has given partial relief to the assessee whereas, the Tribunal reversing the said order of the Ld. CIT(Appeals) gave full relief to the assessee allowing the said expenditure in totality as business expenditure. The Ld. Sr. Counsel for the assessee further referred to the decision of the Pune Bench of the Tribunal in another case in & Ors for the assessment year 2006-07 in the case of DCIT Vs. Tata Toyo Radiator Pvt. Ltd., the copy of which is annexed at Page No.541 onward in the Paper book. Therein also in the assessee‟s appeal in ITA No.1034/PN/2013, the ground No.1 was as follows: "The learned CIT(A) erred in confirming the disallowance of administrative service charges paid to Tata Autocomp Systems Ltd. ("TACO") to the extent of Rs.2,79,24,130 out of Rs.3,72,32,173 under section 40(A)(2)(b) of the Income-tax Act, 1961 ("the Act") on the grounds that the same is excessive and unreasonable having regard to services rendered by TACO and the legitimate business needs of the appellant. The Pune Bench of the Tribunal on the issue had held and observed as follows: "16. Admittedly, the issue arising before us is identical to the issue before the Tribunal in Tata Johnson Controls Automotive Ltd. Vs. DCIT (supra) and following the same parity of reasoning, we hold that the said expenditure is to be allowed in entirety in the hands of assessee being paid in accordance with the terms of the Agreement agreed upon between the parties and for the purpose of carrying on the business of assessee more efficiently. It may be pointed out herein that the assessee had initially entered into an Agreement with TACO in 1997 and the said expenditure had been allowed in the hands of assessee from year to year. However, the assessee renewed the Agreement in 2006 and the expenditure for the first time was not allowed in the hands of assessee in assessment year 2006-07. We find no merit in the orders of authorities below in this regard and accordingly, we modify the order of CIT(A) and direct the Assessing Officer to allow the expenditure in entirety in the hands of assessee. It may be pointed out herein only that the issue vide grounds of appeal No.1 and 2 raised by the assessee in assessment year 2006-07 and grounds of appeal No.1 and 2 raised by the Revenue are similarly raised by both the parties in assessment years 2007-08 to 2009-10. Accordingly, we allow the claim of assessee vis-à- vis the said expenditure in all the years i.e. assessment years 2006-07 to 2009-

10. The grounds of appeal No.1 and 2 raised by the assessee in all the appeals are thus, allowed and the grounds of appeal No.1 and 2 raised by the Revenue in all the appeals is thus, dismissed." 13.2 The Ld. Sr. Counsel for the assessee further submitted that all through out on this issue, a constant view has been taken by the Pune Bench of the Tribunal in favour of the assessee. That even, the Hon‟ble Bombay High Court in the case of Pr. Commissioner of Income Tax Vs. M/s. Tata Toyo Radiator Pvt. Ltd. In ITA No.342 of 2017 and Ors have approved these payments and have given ruling in favour of the assessee.

CO No. 2/PUN/2022, A.Y. 2016-17 (filed by the assessee)

Order pronounced in the open court on 06th June, 2022.