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Income Tax Appellate Tribunal, DELHI BENCH ‘A’ : NEW DELHI
Before: SHRI R.K. PANDA & SHRI KULDIP SINGH
IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH ‘A’ : NEW DELHI) BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER and SHRI KULDIP SINGH, JUDICIAL MEMBER ITA No.3062/Del./2015 (ASSESSMENT YEAR : 2011-12) M/s. Amserve Consultants Ltd., vs. ADIT, Circle 2 (1), 1st Floor, Elegance Tower, Plot No.8, International Taxation, Non Hierarchical Commercial Centre, New Delhi. Jasola, New Delhi – 110 025. (PAN : AAACM2303F) (APPELLANT) (RESPONDENT) ASSESSEE BY : Shri C.S. Aggarwal, Senior Advocate REVENUE BY : Shri Sanjay Goel, CIT DR Date of Hearing : 25.10.2018 Date of Order : 29.10.2018
O R D E R
PER KULDIP SINGH, JUDICIAL MEMBER :
The appellant, M/s. Amserve Consultants Ltd. (hereinafter referred to as ‘the assessee’) by filing the present appeal, sought to set aside the impugned order dated 09.02.2015 passed by Ld. CIT (Appeals)-I, New Delhi qua the assessment year 2011-12 on the grounds inter alia that :-
“1. That on facts and in law, CIT(A) erred in upholding the disallowance of Data Processing Charges of Rs. 28,55,85,573/- paid by the appellant to M/s Amway India Enterprises.
1.1 That on the facts and in law, the CIT(A) erred in upholding the action of AO in applying the provisions of section 40A(2) of the Act to the facts of instant case.
That on the facts and in law the AO/CIT(A) erred in holding: (a) that the appellant received only Rs. 5,6001- per policy as service income but paid service processing charges of Rs. 5,778/- per policy to MIs Amway India Enterprises. (b) that it was an after thought to decide as to how much payment was require to be made to MIs Amway India Enterprises.
3. That on facts and in law the AO/CIT(A) erred in ignoring the transfer pricing report submitted by the appellant to justify the arm's length nature of the transaction for payment of Data Processing Charges to MIs Amway India Enterprises. 4. That on facts and in law the orders passed by Assessing Officer {herein above referred to as the "AO") and the Commissioner of Income Tax (Appeals) {herein above referred to as the "CIT(A)"} are void ab intio and bad in law.” 2. Briefly stated the facts necessary for adjudication of the controversy at hand are : The assessee is into the business of providing advisory and consulting business support services to companies and also engaged in the business of general insurance and life insurance. Assessing Officer made addition of Rs.28,55,85,573/- i.e. 75% of the payment claimed to have been paid by the assessee on account of data processing charges to M/s.
Amway India Enterprises for new insurance policy business on the ground that the payments made by assessee to M/s. Amway India Enterprises are excessive and unreasonable as regards legitimate needs of business or benefits derived by it.
Assessee carried the matter by way of appeal before the ld. CIT (A) who has confirmed the addition on account of disallowance made by the AO by dismissing the appeal. Feeling aggrieved, the assessee has come up before the Tribunal by way of filing the present appeal.
We have heard the ld. Authorized Representatives of the parties to the appeal, gone through the documents relied upon and orders passed by the revenue authorities below in the light of the facts and circumstances of the case.
At the very outset, the ld. AR for the assessee contended that the issue in controversy is covered in assessee’s own case for AYs 2009-10 and 2010-11, copy of orders are available at pages 185 to 213 of the paper book. However, on the other hand, the ld. DR for the Revenue relied upon order passed by the AO as well as ld. CIT (A).
It is nowhere case of the Revenue that the assessee company has evaded any payment of tax. Moreover, M/s. Amway India Enterprises has duly disclosed the amount received from the assessee company on account of data processing charges and paid tax thereon and has brought on record written confirmation of M/s. Amway India International Pvt. Ltd. along with copy of their ITR- V for AYs 2009-10, 2010-11 and 2011-12, available at pages 180 to 184 of the paper book, which shows that M/s. Amway India Enterprises has duly disclosed and offered for the tax the amounts received from the assessee. Furthermore, the assessee company has come up with transfer pricing study, available at pages 55 to 110 of the paper book, and found its transactions qua payment made to M/s. Amway India Enterprises at arm’s length.
Moreover, perusal of the order passed by the coordinate Bench of the Tribunal in assessee’s own case for AYs 2009-10 and 2010-11, available at pages 185 to 213 of the paper book, goes to prove that the issue in controversy in this case was directly and substantially in question and was decided in favour of the assessee company. Coordinate Bench of the Tribunal by relying upon the decision of CIT vs. B. Dalmia Cement (P) Ltd. (2001) 254 ITR 377 (Del.) and decision rendered by Hon’ble Supreme Court in CIT vs. M/s. Glaxo Smithkline Asia (P) Ltd. – 236 CTR 113 concluded that when the expenditure incurred by the assessee company towards data processing charges was at arm’s length and not excessive and unreasonable, disallowance made by the AO is not sustainable. Furthermore, it is brought to the notice of the Bench by the ld. AR for the assessee that decision rendered by the coordinate Bench of the Tribunal in assessee’s own case for AY 2009-10 and 2010-11 has been accepted by the Revenue in subsequent assessment years 2012-13 and this factual position has not been controverted by the Revenue.
In view of what has been discussed above and by following the decision rendered by the coordinate Bench of the Tribunal in assessee’s own case for AYs 2009-10 and 2010-11, we are of the considered view that when the data processing charges paid by the assessee company to M/s. Amway India Enterprises have been found to be at arm’s length as per TP study which has gone uncontroverted, the same cannot be treated as excessive and unreasonable and as such, no disallowance could be sustained thereon. Consequently, the disallowance of data processing charges incurred by the assessee to the tune of Rs.28,55,85,573/- is ordered to be deleted and appeal filed by the assessee is hereby allowed. Order pronounced in open court on this 29th day of October, 2018.