Baumer Technologies India Pvt. Ltd. Vs DCIT (ITAT Mumbai)
The Income Tax Appellate Tribunal (ITAT), Mumbai, allowed the assessee’s appeal against the order of the Commissioner of Income Tax (Appeals) for Assessment Year 2022-23, arising from an assessment completed under Section 143(3) read with Section 144B of the Income-tax Act, 1961.
The assessee challenged, among other issues, the addition of Rs.8,77,07,756 as unexplained expenditure under Section 69C in respect of payments made to Associated Enterprises (AEs) towards royalty, commission, and fees for technical services, as well as the addition of Rs.40,44,000 relating to Corporate Social Responsibility (CSR) expenditure. During the hearing, the assessee did not press the grounds relating to reference to the Transfer Pricing Officer and initiation of penalty proceedings, which were dismissed accordingly.
The assessee, engaged in the business of manufacturing pressure gauges and temperature calibrating systems and rendering related services, had filed its return declaring total income of Rs.16,88,24,130. The Assessing Officer observed that foreign remittances aggregating Rs.8,77,07,756 had been made to Associated Enterprises towards royalty, commission, and fees for technical services. According to the Assessing Officer, the assessee had failed to establish the business necessity of these services and had produced only agreements without substantiating the actual rendition of services. The expenditure was therefore treated as unexplained expenditure under Section 69C. The Assessing Officer also added Rs.40,44,000 on account of CSR expenditure, stating that the assessee had not furnished evidence of its actual incurrence. The Commissioner (Appeals) upheld the Section 69C addition and directed the Assessing Officer to verify whether the CSR expenditure had already been disallowed by the assessee while computing income and grant consequential relief if found correct.
