Payment of Management Fees to ATS can be added to Income of Assessee: Delhi HC upholds Deletion of Disallowance [Read Order]
Delhi HC upholds deletion of disallowance and noted that the payment of management fees to ATS Infrastructure can be added to the income of the assessee
![Payment of Management Fees to ATS can be added to Income of Assessee: Delhi HC upholds Deletion of Disallowance [Read Order]](https://www.taxscan.in/wp-content/uploads/2024/01/Payment-Management-Fees-ATS-Income-of-Assessee-Delhi-HC-Deletion-of-Disallowance-TAXSCAN.jpg "Payment of Management Fees to ATS can be added to Income of Assessee: Delhi HC upholds Deletion of Disallowance [Read Order]")
The Delhi High Court upheld the deletion of disallowance and noted that the payment of management fees to ATS Infrastructure can be added to the income of the assessee, Anand Divine Developers Private Limited. Via the instant appeals, the appellant/revenue seeks to assail the order passed by the Income Tax Appellate Tribunal (ITAT). The Tribunal, while disposing of the appeals preferred...
The Delhi High Court upheld the deletion of disallowance and noted that the payment of management fees to ATS Infrastructure can be added to the income of the assessee, Anand Divine Developers Private Limited.
Via the instant appeals, the appellant/revenue seeks to assail the order passed by the Income Tax Appellate Tribunal (ITAT). The Tribunal, while disposing of the appeals preferred by the appellant/revenue, concerning the aforementioned AYs, considered the facts obtaining in AY 2013-14 as the issue was common. We intend to do the same.
In AY 2013-14, the respondent/assessee had filed its Return of Income (ROI) and declared a loss amounting to Rs. 3,12,21,967/-. During the assessment proceedings, the Assessing Officer (AO) noted that the respondent/assessee had paid management fees to ATS. The amount paid was Rs. 3,37,08,000/-.
Post-scrutiny, the AO disallowed the expenses concerning management fees paid to ATS as being excessive and unreasonable. This amount was then added to the income of the respondent/assessee. Being aggrieved by the addition, the respondent/assessee preferred an appeal before the CIT(A). The CIT(A), via order dated 25.04.2017, deleted the disallowance made by the AO.
The appellant/revenue, being dissatisfied, preferred an appeal with the Tribunal. This resulted in the passing of the impugned order.
Prashant Meharchandani, senior standing counsel, who appeared on behalf of the appellant/revenue, vehemently argued that both the Commissioner of Income Tax (Appeals) [“CIT(A)”] and the Tribunal failed to appreciate that the respondent/assessee did not discharge its onus in proving that ATS Infrastructure Ltd. [“ATS”] did, indeed, render services to it.
A Division Bench comprising Justices Rajiv Shakdher and Girish Kathpalia observed that “Having regard to the finding of fact returned by CIT(A), and sustained by the Tribunal, we are of the view that no interference is called for with the impugned order since no perversity has been pointed out in the order passed by the CIT(A).”
To Read the full text of the Order CLICK HERE
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