Bureau Veritas Consumer Products Services (India) Pvt. Ltd.
Parties Involved
Facts Summary
The appellant, Bureau Veritas Consumer Products Services (India) Pvt. Ltd., is engaged in the business of Testing and Analysis services, inspection, and social audit for Indian affiliates of various multinational companies (MNCs). The discounts and rebates offered to customers are decided at a global level based on the total worldwide turnover from a particular customer. The overseas group entities recover these discounts from their affiliates, including the appellant. The appellant raised invoices and received payments from Indian affiliates of MNCs, then received a service fee credited to its profit and loss account. For the rebate and discount related to services rendered in India, the overseas group entities raised debit notes to recover the discount payable to MNCs. The appellant incurred expenses of Rs. 2,58,38,722/- towards rebate and discount for the year under consideration, which were disallowed by the Assessing Officer (AO) under Section 37(1) of the Income Tax Act, 1961, on the grounds that such expenses were a device to transfer profit to the holding company and not incurred for business purposes.…
Decision in favour of
Assessee
Legal Issues
- 1. Whether the expenses of Rs. 2,58,38,722/- towards rebate and discount are allowable under Section 37(1) of the Income Tax Act, 1961.
Judgment Outcome
Decided in favour of Assessee.
Precedents Relied Upon
2 precedents cited in this judgement.
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