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IV. Direct Taxes Case Law:
1. ACIT Vs. M/s. True Developers Pvt. Ltd., I.T.A. No. 5318/Del./2015, Date of Pronouncement: 03.10.2018, ITAT - Delhi
Issue:
Whether AO can complete the assessment merely on conjectures and
surmises and completes the assessment by sitting on the arm chair of
assessee?
Held:No,
Brief Facts:
The Assessing Officer noticed that during the year under assessment,
the assessee has debited an amount of Rs.1,41,29,993/- on account of
General Management Fees paid to Ascendas Services (India) Pvt. Ltd.for
providing overall management leadership and advice to the owner. During
assessment, AO disallowed 50% of the management Fees amounting to
Rs.70,65,000/-declining the contentions raised by the assessee and
concluded that since no business activities have been carried out by the
assessee as per P&L account during the year, and was having only
interest income, there was no need for any skilled manpower and thereby
added the same back to the income of the assessee. Assessee filed an
appeal before the Ld.CIT (A) who has deleted the addition made by the AO
by allowing the appeal.
Feeling aggrieved, the Revenue has come up before theTribunal by way of filing the present appeal.
Held:
The Tribunal held that the assessee is developing a Special Economic
Zone (SEZ) project at Coimbatore for which it has claimed to have
availed the services of Ascendas Services (India) Pvt. Ltd.From the
perusal of impugned order passed by the ld. CIT(A), it goes to prove
that the evidence was there on record to prove that 8 skilled personnel
were at the disposal of the assessee to look after the work of the
assessee’s company for SEZ in Coimbatore. Also, the CIT(A) scrutinized
the tenders invited by the Ascendas Services (India) Pvt. Ltd. It is
held that Revenue authorities are not permitted to complete the
assessment by sitting on the arm chair of businessman/assessee and it is
for the assessee to decide which ofthe services are necessary for
carrying out its business activities and thus, disallow the appeal.
The appeal is in favour of the assessee and against the revenue.
(Please click here for judgment)
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