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2015 (9) TMI 275 - ITAT AHMEDABADDisallowance of incentive - change in the method of accounting - Held that:- The assessee changed the method of account for these expenses from cash to mercantile during the year under appeal, but still the assessee has claimed some of the expenses on cash basis and some of them on mercantile basis during the year itself. According to section 145 Hybrid System of accounting is not at all allowable now. Therefore, the finding of the ld. CIT(A) is hereby upheld - Decided against assessee. Disallowance in respect of payment of additional remuneration to Managing Director - expenditure has not accrued during the year under appeal - assessee submitted that the amount was subsequently rectified by the Ministry of Company Affairs - Held that:- The requisite approval by the Central Government (Ministry of Company Affairs) was received on 17/05/2007. The assessee has not placed any material on record suggesting that the approval so made by the Ministry of Company affairs was with retrospective effect. Therefore, we do not see any reason to interfere with the order of the ld. CIT(A), same is hereby upheld - Decided against assessee. Disallowance made in respect of advance written off u/s.37 - Held that:- The assessee has placed details with regard to the parties to whom the advances have been given, the authorities below have not made any inquiry from such parties, therefore, we are of the considered view that the disallowance made cannot be sustained in view of the judgement of the Hon’ble Apex Court rendered in the case of TRF Ltd. [2010 (2) TMI 211 - SUPREME COURT] - Decided in favour of assessee. Addition made on the provision for warranty - CIT(A) deleted the addition - Held that:- In view of the judgement of the Hon’ble High Court of Gujarat rendered in the case of CIT vs. Inductotherm (India) Pvt. Ltd. [2015 (9) TMI 218 - GUJARAT HIGH COURT] as held it is important here to mention that even if AO's contention is accepted that it is not possible to exactly determine the amount of liability and if no claims are lodged with the assessee, nothing would be required to be paid, then also I believe in that case the assessee would write back the whole amount of provision to its profit and loss account and there is section 41 in the statute to take care of such amounts if the same is granted as deductible here we do not see any reason to interfere with the order of the ld. CIT(A), same is hereby upheld. - Decided against revenue. Addition made on account of disallowance of penalty expenditure for breach of contract - CIT(A) deleted the addition - Held that:- There is no dispute with regard to the fact that the payments are at Arm’s Length Price (ALP) as held by the TPO. It is an undisputed fact that the contract included the “Affiliates”. It is also an undisputed fact that the expenditure is related to the business of the assessee. Therefore, we do not see any reason to interfere with the findings of the ld. CIT(A) on this issue, same are hereby upheld. -Decided against revenue.
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