9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2019 (7) TMI 1620 - AT - Income TaxTDS u/s 194H - reimbursement of trade scheme to promoters was in the nature of incentives and discounts to retailers and did not contain any element of commission - HELD THAT - The matter has been accordingly restored by the Tribunal to the AO for factual verification whether the transaction is only of reimbursement. Now the assessee in additional ground claiming that reimbursement is of trade discount and therefore not liable for deduction of tax at source. Now the assessee wants to decide this issue by the Tribunal, whereas the learned DR is of the view that this issue should also be restored back to the AO for deciding along with the earlier direction of the Tribunal. We agree with the view of the Ld. DR, because once the Tribunal has taken the decision for verification of the transaction whether it is reimbursement, then, it is appropriate to restore for verification whether the reimbursement is for trade discount. In our opinion the issue raised in additional ground is connected with the issue raised in the original ground and thus may be examined by the Assessing Officer along with the verification of the ground restored by the Tribunal (supra). We note that assessee has claimed before us that the trade discount was given by the sale promoters to the retailers and the assessee has reimbursed the same to the sale promoters. In this regard, we direct the Assessing Officer to verify the trade schemes floated by the assessee for giving trade discounts to the retailers and agreement among the assessee, sale promoters and retailers if any in respect of trade discount. The Assessing Officer may also verify from the accounts of the sale promoters as well as the retailers to ascertain whether the reimbursement was for trade discounts. If on verification, it is found so, then no disallowance would be required in view of no liability of deducting tax at source on trade discounts. Transfer Pricing adjustment on account of Advertisement, Marketing and Sales Promotion Expenses AMP - HELD THAT - It can be seen that the operating margin excluding AMP and selling and distribution expenses of the assessee for the year under consideration is 28.03% whereas that of the comparables is 10.60% which is much higher and if the operating margin including all the operating expenses is taken, the same is 7.04% in the case of the appellant and 5.11% in the case of comparables. The margin excluding AMP expenses only is 27.04% in the case of the appellant and 6.63% in the case of comparables. In the light of the recisions of the Hon ble High Court discussed elsewhere and in the of the factual matrix exhibited hereinabove, we are of the considered opinion that the impugned addition on account of AMP expenditure is uncalled for and deserves to be deleted. Disallowance of provision for transit breakages on the ground that same is contingent in nature - HELD THAT - AO shall allow the actual transit breakages for AY 2001-02 as revenue expenditure consistent with the settled legal position. The Assessees would also be permitted to get the benefit of the reversal of the provision for transit breakages made in the AYs in question accordance with law. Disallowance of being trade scheme reimbursement to sales promoters for non-deduction of tax under section 40(a)(ia) - HELD THAT - Ground remanded back to the file of the Assessing Officer for verification of the documentary evidences filed by the assessee and decide whether the impugned disbursement were reimbursement and if found so, the same might be allowed as deduction. The respective grounds of the appeal are accordingly allowed for statistical purposes. Disallowance u/s 40(a)(ia) - reimbursement made to the sale promoters were in respect of trade discount and therefore the assessee was not required to deduct tax at source and thus no disallowance was required - HELD THAT - Since we have already adjudicated the additional ground raised by the assessee in assessment year 2007-08, to have consistency in our decision on the issue in dispute, the additional ground raised in all the respective appeals are restored back to the file of the Assessing Officer with directions identical to the directions issued in assessment year 2007-08. Thus, the additional grounds raised by the assessee are accordingly allowed for statistical purposes. Disallowance u/s 40A(3) for payment made in cash on the basis of the documents seized from the premises of Sri Sameer Goyal - HELD THAT - It is nothing but a dumb document which requires no consideration. Moreover, it is an undisputed fact that the documents were seized from the premises of Samir Goyal and, therefore, any relevance to be deduced from the same has to be in the case of Samir Goyal and not the assessee keeping in mind that the assessment has been framed u/s 153A of the Act. We, accordingly, do not find any merit in the addition and direct the Assessing Officer to delete the same. Disallowance u/s 40A(3) - HELD THAT - Such payments do not attract the provisions of section 40A(3) of the Act. Moreover, the assessee has also furnished the ledger account of M/s Sky View in the books of the assessee for the period 01.04.2007 to 31.03.2011. It appears that the Assessing Officer has not examined the details from correct perspective. In the interest of justice and fair play, we restore this issue to the file of the Assessing Officer. The Assessing Officer is directed to verify from the ledger account of Sky View and verify whether payments have been made by A/c payee cheques/RTGS and after satisfying himself, no addition need be made u/s 40A(3). Disallowance of payment made to certain parties under section 37(1) due to nonverification or nonproduction of the parties - HELD THAT - As per details in the chart furnished by the ld. counsel for the assessee, it can be seen that in respect of four parties, the assessee has done no transaction. Therefore, there is no point in issuing notice u/s 133(6) of the Act to these parties. In respect of other parties, since the assessee has furnished complete details in the form of invoice, agreement, CST registration certificates and copies of ledger account, the Assessing Officer should have pointed out specific errors/defects in these direct evidences. In our considered opinion, assessment has been framed without proper verification. We, therefore, restore this issue to the file of the Assessing Officer with the direction to examine the documentary evidences furnished by the assessee and if necessary, can verify the transaction from the recipient parties. Disallowance of cash payment u/s 40A(3) - HELD THAT - Issue in dispute need verification by the Assessing Officer as to whether the payment has been made by the cheque and if found so, the Assessing Officer is directed to delete the addition. The issue in dispute is accordingly restored to the file of the Assessing Officer for necessary verification from the bank statement of the assessee. The assessee is directed to produce necessary evidence in support of its claim before the Assessing Officer. The ground of the appeal is accordingly allowed for statistical purposes. Undisclosed sales - HELD THAT - Contention of the assessee regarding breakage of bottled cases during transit and reconciliation of the same with records of the Excise Authorities have not been verified by the lower authorities. Accordingly, we restore the issue in dispute to the file of the learned Assessing Officer for verification of the claim of the assessee and decide the issue in dispute in accordance with law. Though, the issue should have been restored to the Ld. Dispute Resolution Panel, however, to avoid proceedings in the case at multiple stages, we have restored this issue to the file of the Assessing Officer. The ground of the appeal is accordingly allowed for statistical purposes.
Issues Involved:
1. Disallowance under Section 40(a)(ia) for non-deduction of TDS on reimbursements to sales promoters. 2. Transfer pricing adjustments on account of AMP expenses. 3. Disallowance of brand expenses under Section 37(1). 4. Disallowance of provision for transit breakages. 5. Disallowance of trade scheme reimbursements for non-deduction of TDS. 6. Disallowance under Section 14A in the absence of exempt income. 7. Disallowance of unexplained expenses under Section 37(1). 8. Disallowance under Section 40A(3) for cash payments. 9. Disallowance of payments to certain parties under Section 37(1) due to non-verification. 10. Initiation of penalty proceedings under Section 271(1)(c). 11. Disallowance of cash payment under Section 40A(3). 12. Addition on account of undisclosed sales due to stock discrepancies. Detailed Analysis: 1. Disallowance under Section 40(a)(ia) for Non-Deduction of TDS on Reimbursements to Sales Promoters: The assessee contended that the amount paid to sales promoters was for reimbursement of trade schemes and not commission, hence not subject to TDS under Section 194H. The Tribunal restored the issue to the Assessing Officer (AO) for verification of whether the payments were indeed reimbursements. If found to be reimbursements, no disallowance under Section 40(a)(ia) would be warranted. 2. Transfer Pricing Adjustments on Account of AMP Expenses: The Tribunal referred to the Delhi High Court's decision in Sony Ericsson Mobile Limited, which discarded the Bright Line Test (BLT) for determining AMP expenses. The Tribunal emphasized that the existence of an international transaction must be established before undertaking benchmarking of AMP expenses. The Tribunal deleted the AMP adjustment, stating that the Revenue failed to demonstrate the existence of an international transaction. 3. Disallowance of Brand Expenses under Section 37(1): The Tribunal followed the Delhi High Court's decision, which held that brand expenses do not result in an enduring benefit and should not be treated as capital expenditure. The disallowance was directed to be deleted. 4. Disallowance of Provision for Transit Breakages: The Tribunal noted that the Delhi High Court had upheld similar disallowances in previous years. However, it directed the AO to allow actual transit breakages as revenue expenditure and consider any reversals in the provision. 5. Disallowance of Trade Scheme Reimbursements for Non-Deduction of TDS: The Tribunal restored the issue to the AO for verification of whether the payments were reimbursements. If found to be so, no disallowance under Section 40(a)(ia) would be required. 6. Disallowance under Section 14A in the Absence of Exempt Income: The Tribunal followed the Delhi High Court's decision in Cheminvest Ltd., which held that no disallowance under Section 14A is warranted if there is no exempt income. The disallowance was directed to be deleted. 7. Disallowance of Unexplained Expenses under Section 37(1): The Tribunal referred to its earlier decision, which deleted similar disallowances based on seized documents. The Tribunal directed the AO to delete the disallowance. 8. Disallowance under Section 40A(3) for Cash Payments: The Tribunal noted that the disallowance was based on a dumb document with no date or year. It directed the AO to delete the disallowance, as the document did not pertain to the relevant assessment year. 9. Disallowance of Payments to Certain Parties under Section 37(1) due to Non-Verification: The Tribunal restored the issue to the AO for verification of documentary evidence provided by the assessee. The AO was directed to verify transactions with the recipient parties and make a decision accordingly. 10. Initiation of Penalty Proceedings under Section 271(1)(c): The Tribunal dismissed these grounds as premature. 11. Disallowance of Cash Payment under Section 40A(3): The Tribunal restored the issue to the AO for verification of whether the payment was made by cheque. If verified, the AO was directed to delete the disallowance. 12. Addition on Account of Undisclosed Sales due to Stock Discrepancies: The Tribunal restored the issue to the AO for verification of the assessee's claim regarding breakage of bottled cases during transit and reconciliation with Excise records. The AO was directed to decide the issue in accordance with law. Conclusion: The Tribunal allowed several grounds for statistical purposes, restoring issues to the AO for verification and decision in accordance with law. The Tribunal also directed the deletion of certain disallowances based on precedents and lack of evidence for the Revenue's claims.
|
