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2016 (7) TMI 833 - ITAT DELHIDisallowance u/s 14A - Held that:- When the AO has not recorded his dis-satisfaction nor disputed the audited books of account, he was not justified in invoking the provisions contained under Rule 8D. So, in these circumstances, we are of the considered view that CIT (A) has erred in sustaining the disallowance u/s 14A to the extent of ₹ 5,00,000/- In face of the fact that the assessee has suo motu made a disallowance u/s 14A to the extent of ₹ 2,60,564/- being the salary paid to the Executive (Finance) employed for managing the investment for mutual funds and dividend income, no disallowance can be made. Unascertained liability addition - Held that:- The amount of ₹ 4,21,087/- treated as unascertained liability by the AO includes an amount of ₹ 3,64,453/- on account of expenses actually incurred in respect of cost of raw material, packing material, electricity, power & fuel, wages, repair and maintenance expenses and amount transferred from general expense ledger to specific ledger for FOC and complimentary and as such, an amount of ₹ 4,21,087/- is actually incurred as expenses on account of FOC and complimentary bottles given in the market as samples all over India. Ld. CIT (A), after noticing the factual mistake committed by the AO in treating the amount of ₹ 4,21,087/- as unascertained liability, has rightly deleted the same. So, finding no illegality or perversity in the order passed by the ld. CIT (A), we hereby decide ground against the revenue. Addition on commission - Held that:- CIT(A) deleted the addition of ₹ 70,000/- made by the AO on the ground that the assessee has paid the commission to M/s. Paras Commercial Corporation, Cuttack, a consignment agent on 02.09.2008 on a monthly commission of ₹ 10,000/- per month and the assessee company has raised the bill and paid it after deducting TDS. From the perusal of agreement and Form 16A it is apparently clear that since the agent has not raised any bill since March 2009, the assessee on the basis of agreement provided an amount of ₹ 70,000/- from September, 2008 to March, 2009 after deducting the tax at source i.e during the relevant financial year. So, the mistake committed by the AO has been rectified by the CIT (A) and the findings returned by CIT (A) need no interference. - Decided against the revenue. Addition u/s 41 - Held that:- It is settled principle of law that a company can write off any bad debts in its account in any year including the first year of business without proving the fact that the debt has actually become bad. Assessee has rightly claimed provision for discount and rebate written back of ₹ 3,07,88,306/- duly disclosed in Schedule 18 of the tax audit report of the composite amount of ₹ 5,24,10,339/-. When the write back of ₹ 5,05,09,122/-, which includes the amount of ₹ 3,07,88,306/-, was duly credited in profit & loss account in the form of adjustment of bad debt expenses in Schedule 18, question does not arise to invoke the provisions of section 41 of the Act. - Decided against the revenue. Disallowance of bad debt written off - Held that:- The assessee needs not to bring on record any material or evidence to write off any amount of bad debt as irrecoverable to prove the fact that the debt has actually become bad. When the AO has not disputed the books of account and the assessee has duly recorded the written off amount of debt of ₹ 19,01,217/- in the profit & loss account and after complying with the conditions contained u/s 36(1)(vii) read with section 36(2), the addition made by the AO has been rightly deleted by the ld. CIT (A). - Decided against the revenue.
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