ORDER

PER BEENA A PILLAI, JUDICIAL MEMBER

Present appeals have been filed by revenue against order dated 13/ 10/ 15 passed by Ld.CIT(A)-1, New Delhi, for AY 2010- 11 and order dated 27/ 01/ 2016 for A.Y. 2011-12, on following grounds of appeal:

ITA 205/ Del/ 16 AY 2010-11

“1. On the fact and the circumstances of the case, the Ld.CIT(A) has erred in deleting the addition made by the A.O. amounting to Rs.1,76,41,309/ - on account of disallowance of expenses u/ s 40(a)(ia) of Income Tax Act, 1961.

2. The appellant craves leave for reserving the right to amend, modify, alter, add or forego any ground(s) of appeal at any time before or during the hearing of this appeal.”

ITA 1256/ Del/ 16 AY 2011-12

1. On the fact and the circumstances of the case, the Ld.CIT(A) has erred in deleting the addition made by the A.O. amounting to Rs.1,45,99,745/ - on account of disallowance of expenses u/ s 40(a)(ia) of Income Tax Act, 1961.

2. The appellant craves leave for reserving the right to amend, modify, alter, add or forego any ground(s) of appeal at any time before or during the hearing of this appeal.”

2. Brief facts of the case are as under:

We are taking appeal for A.Y. 2010-11 first, as the issue involved in both AYs is same.

Assessee filed its return of income declaring loss of Rs.3,17,32,199/ -. Return was processed under section 143 (1) of the Income Tax Act, 1961 (the Act), and case was selected for scrutiny. Accordingly, notice under section 143 (2) of the Act, was issued on 24/ 08/ 11 to assessee followed by notice under section 142 (1) along with questionnaire. In response to statutory notices, representative of assessee appeared before Ld.AO and filed necessary details as called for.

2.1. Ld.AO observed that assessee is engaged in the business of investment consulting and strategic communication services.

During the assessment proceedings Ld.AO observed that assessee claimed expenses of Rs.1,76,41,309/ -on account of book charges under the head ‘ administrative and other expenses’. Accordingly, Ld.AO called upon assessee to show cause as to why group charges should not be disallowed for non- deduction of TDS. After considering submissions of assessee, Ld.AO was of the opinion that, assessee was required to deduct tax at source under section 195 of the Act, for payments made to non-resident, and accordingly, made disallowance of Rs.1,76,41,309/ -under section 40 (a) (i) of the Act.

3. Aggrieved by addition made by Ld.AO, assessee preferred appeal before Ld.CIT(A), who allowed claim of assessee, by observing as under:

“I have considered the submission of the appellant and observations made by the Assessing Officer. It is seen that during the year under consideration appellant made payment to various overseas group entities towards reimbursement of actual cost incurred on various corporate, administration, finance support, human resources, marketing and legal support functions. The details of the expenses reimbursed to the overseas group entities are as under:

It is submitted by the appellant that overseas group entities had provided administrative support services, financial support services, information technology services, human resources support system and marketing support services to the appellant company in India. The nature of services provided by the overseas group entities on each spare of activities are summarized hereunder:

- Administrative support services: These services involve providing strategic direction, communication and vision to APCO India, assisting APCO India in development and coordination of strategic business planning activities and ensuring that the same is aligned to the global business strategy, supporting in APCO India’s business development efforts (through support in client development and research, evaluation of new b