INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “D”: NEW DELHI BEFORE SHRI M. BALAGANESH, ACCOUNTANT MEMBER AND SHRI VIMAL KUMAR, JUDICIAL MEMBER (Assessment Year: 2022-23)

(Assessment Year: 2022-23)

(Assessment Year: 2022-23)

(Assessment Year: 2022-23)

(Assessment Year: 2022-23)

(Assessment Year: 2022-23)

(Assessment Year: 2022-23)

(Assessment Year: 2022-23)

(Assessment Year: 2022-23)

(Assessment Year: 2022-23)

(Assessment Year: 2022-23)

(Assessment Year: 2022-23)

(Assessment Year: 2022-23)

(Assessment Year: 2022-23)

O R D E R

PER M. BALAGANESH, A. M.:

1. The appeal in ITA No. 1034/Del/2025 for AY 2012-13, arise out of the order of the Commissioner of Income Tax (Appeals)-42, New Delhi [hereinafter referred to as ‘ld. CIT(A)’, in short] in Appeal No. 24/15- 16/CIT(A)-42 A.Y. 2012-13 dated 24.10.2016 against the order of assessment passed u/s 143(3) of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’) dated 26.05.2015 by the Assessing Officer, ACIT, Circle-1(3)(1), International Taxation, New Delhi (hereinafter referred to as ‘ld. AO’).

2. The assessee has raised the following grounds of appeal before us:-

“1. That having regard to the facts and circumstances of the case, the impugned order passed by the Ld. AO under Section 143(3) read with Section 144C of the Act is bad both in the eyes of law and on facts. 2. That having regard to the facts and circumstances of the case, Ld. AO has erred in making the disallowance of cost of goods sold and expenses aggregating to Rs. 1,69,10,832/- to the returned income of the appellant that too by disregarding clear directions of the Dispute Resolution Panel and therefore it is liable to be deleted.

3. That having regard to the facts and circumstances of the case, the Ld. AO has erred in law in making addition of Rs. 1,69,10,832/- ignoring the provisions of sections 37(1) of the Income Tax Act, 1961 as well as provisions of Article 7(2) and (3) of DTAA between India and Singapore and thus the disallowance/ addition being wholly erroneous on law and facts is liable to be deleted in toto.

4. That having regard to the facts and circumstances of the case, the findings arrived at by the Ld. AO is perverse and based on erroneous assumptions in as much as the Ld. AO failed to appreciate that the branch office is established and working since last many years as Branch Office in India, and nexus of the costs/ expenses being core part of the main activities of the Appellant, has always been well established and allowed in all the years and thus impugned assessment order passed on the basis of incorrect understanding of facts and law contained in the Income Tax Act, 1961 read with provisions of DTAA between India and Singapore is not sustainable under law on the face of it.

5. (i) That the Ld. AO has erred in not appreciating and disregarding well established fact that the cost/expenses of Rs. 1,69,10,832/- in the hands of Appellant were incurred wholly and exclusively for the purpose of its business of Indian Branch and the same was simply a reimbursement of the costs/expenses incurred by the Head Office for and on behalf of its Branch Office in India.

(ii) That the Ld. AO has erred in not considering the documentary evidences placed on record by the Appellant in respect of the cost of the services incurred by the Head Office for the furtherance of the business of the Branch Office in India on actual Cost-to-Cost basis.

6. That Ld. AO has erred in passing the assessment order by recording incorrect facts and without opportunity of hearing and in violation of principles of natural justice.

7. That the order passed by the Ld. AO and additions/ disallowances made therein are not sustainable on various factual and legal grounds and deserve to be quashed.

8. (i) That having regard to the facts and circumstances of the case, the Ld. AO has erred in law in failing to consider the deeming fiction created in Article 7(2) treating the permanent establishment in India as a separate and independent entity for the purpose of de