A Division Bench of the Delhi High Court has admitted a department appeal as to whether deletion of additions of expat reimbursements and royalty amounts to double deduction.
The following questions were framed against the Income Tax Appellate Tribunal (ITAT) decision by the department –
“i. WHETHER on the facts and circumstances of the case, the Ld. ITAT perversely and unlawfully deleted the addition made for purported “reimbursement of expenses” towards software costs to AE despite proven failure of the respondent to prove the actual receipt of such software and use thereof by the respondent in India in the subject AY for its business purposes?
ii. WHETHER the Ld. ITAT was legally and factually justified in deleting the additions made by the Ld. Assessing Officer (AO) with respect to “reimbursement of expenses” towards purported “software costs”, despite the prima facie falsity of claim found by the Ld. TPO and disproven “incurring of software costs”?
iii. WHETHER on the facts and in the circumstances of the case, the Ld. ITAT perversely and unlawfully deleted the additions made for purported reimbursement of expatriate salaries and payment for royalty, by failing to make an independent finding and determination on the “double deduction” nature of the claim for such purported expenses along with “reimbursement of software expenses” with near identical details, use, functions and purposes purportedly served?
iv. WHETHER the Ld. ITAT has erred in law and on facts in deleting the addition made on account of lease Registration charges by ignoring the fact that balance expenses of lease registration charges belong to other years?
v. WHETHER the Ld. ITAT was correct in law in deleting all the additions made by the concerned Ld. Assessing Officer by merely relying on the perverse and erroneous findings of the Ld. CIT(A), contrary to applicable law as mandated by the Income Tax Act, 1961 and the ratio of the Hon‟ble Jurisdictional High Court in the case of CIT vs. Jansampark Advertising & Marketing (P) Ltd. (2015) 56 taxmann.com 285 (Delhi)?
vi. The appellant craves leave to add, alter or amend any/all of the grounds of appeal before or during the course of the hearing of the appeal.”
The bench observed that, “The ITAT has in our considered opinion without assigning sufficient reasons upheld the aforesaid view that had been expressed. We would thus hold that question (iii) as proposed would merit further consideration.”
The bench of Justice Yaswanth Varma and Justice Purushaindra Kumar Kaurav will now analyze whether deleted the additions made for purported reimbursement of expatriate salaries and payment for royalty, by failing to make an independent finding and determination on the “double deduction” nature of the claim for such purported expenses along with “reimbursement of software expenses” with near identical details.
The appeal was thus admitted by the High Court with the following question of law: —
“Whether on the facts and in the circumstances of the case, the ITAT perversely and unlawfully deleted the additions made for purported reimbursement of expatriate salaries and payment for royalty, by failing to make an independent finding and determination on the “double deduction” nature of the claim for such purported expenses along with “reimbursement of software expenses” with near identical details, use, functions and purposes purportedly served?”
The matter is now listed to be heard on 13 August, 2024.
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