The Delhi High Court upheld the order of the Income Tax Appellate Tribunal (ITAT) on deletion of disallowance of engineering fees as there was no material basis for discrediting debit notes.
By the instant appeal, the appellant/revenue sought to assail the order passed by the Income Tax Appellate Tribunal (ITAT). The only issue which has been raised by the appellant/revenue concerns the deletion of the disallowance of engineering fees paid by the respondent/assessee to its head office. The disallowance in this respect is quantified at Rs.6,34,83,482/-.
The record showed that the Assessing Officer (AO) has disallowed the engineering fees paid by the respondent/assessee to its head office on the ground that the time log sheets were not filed.
The Tribunal, however, has reversed the view of the CIT(A) and in this behalf, has returned the following findings of fact: (i) The respondent/assessee has incurred its expenses in executing a project concerning Delhi Metro Rail [“DMRC”]. The debit notes, which were furnished, indicated the names of the employees, the nature of duties and the number of hours that were apportioned to the work carried out. (ii) The Transfer Pricing Officer (TPO) while carrying out his inquiry concluded that the transactions between the respondent/assessee and the head office were at Arm’s Length Price (ALP) and the Tribunal concluded that there was no material basis for discrediting the debit notes furnished by the respondent/assessee.
A Division Bench comprising Justices Rajiv Shakdher and Girish Kathpalia observed that “The respondent/assessee only remitted the engineering fee to the head office. There is no dispute with regard to the fact that the debit note provided sufficient information as noted above, not only concerning the names of the employees, but also as to the nature of duties and number of hours that they spent on the job assigned to them.”
“The Tribunal is the final fact-finding authority, no interference is called for, especially in the circumstance where the appellant/revenue has not proposed any question which is indicative of the fact that any of the findings returned by the Tribunal is perverse” the Court concluded.
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