Business Service Charges paid to  Associate Concern for providing HR related Services  shall not be disallowed :ITAT [Read Order]

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) held that business service charges paid to  associate concern for providing Human Resource (HR) related services  should not be disallowed.

The assessee Jones Lang Lasalle Building Operation Pvt. Ltd  claimed business advisory services charges when filing return of income. During the scrutiny AO noted the claim  and asked the assessee to  show cause for the proposed disallowance of the same.

Assessee replied that the expenses were incurred on account of services provided by its associated concern JLLPC  for service related to HR services loan staff to the assessee company on need basis and IT support services etc.

Thereafter, the AO on reason of not filing supporting evidence on part of assessee disallowed the claim.

Aggrieved by the order, the assessee filed an appeal before the Commissioner of Income Tax (Appeal) (CIT(A)) who allowed the expenses- incurred by the assessee as business expenses under Section  37 of the Income Tax Act. Hence the aggrieved revenue filed appeal before the tribunal

It was argued by Salil Kapoor, Department Representative that the  invoices produced before the  bench as evidence does not mention  the name of the assessee.

Vivek Vardhan, Counsel for the assessee submitted that in the assessment order of Assessment Year 2018-19 an identical query was raised calling for documentary evidence in respect of business service charges and on the basis of similar evidence/ documents the said expenditure was allowed.

The tribunal while considering the submissions of the both parties  observed that Based on documentary evidence the CIT(A) was convinced with the claim and allowed the same as business expenses.

Further, the bench found that  before the first appellate authority the assessee has furnished demonstrative evidence/documents as mentioned elsewhere which were remitted to the AO calling for a remand report by the CIT(A) and the AO has not made any adverse comment on such evidence.

After reviewing the facts and submission, the two member bench of the tribunal comprising N. K. Billaiya (Accountant Member) and Saktijit Dey ( Judicial Member) allowed the appeal of the assessee and held that business advisory services charges should not be disallowed .

To Read the full text of the Order CLICK HERE

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