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2021 (1) TMI 604 - AT - Income TaxDisallowance of fees and service charges paid - Service charges and fees paid to related concerns of assessee - Whether AO has disallowed fees and service charges paid to two parties on ad-hoc basis and has also applied provisions of section 35D and amortized remaining expenditure over a period of five years - HELD THAT - Appeal filed by the assessee for the assessment year 2008-09 has been set aside by the Tribunal to the file of learned CIT(A) and directed the CIT(A) to decide issue after considering additional evidences filed by the assessee. The assessee claims before us that issue in present appeal is linked to disallowance made by Assessing Officer towards fees and service charges paid to above two concerns for the assessment year 2008-09 and finding or outcome of the appeal for assessment year 2008-09 would have bearing on the present appeal. Considering the facts and circumstances of this case and consistent with the view taken by the co-ordinate Bench for assessment year 2008-09 2015 (12) TMI 1844 - ITAT MUMBAI we set aside the appeal to the file of learned CIT(A) and direct him to reconsider the issue in accordance with law, after considering outcome of appeal filed by the assessee for assessment year 2008-09. Appeal filed by the assessee is allowed for statistical purposes.
Issues:
Disallowance of fee and service charges paid to Saint-Gobain Placo SAS for assessment year 2012-13. Analysis: The assessee challenged the order of the CIT(A) regarding the disallowance of fee and service charges paid to Saint-Gobain Placo SAS. The grounds of appeal included contentions that the expenditure was incurred for business purposes and should be allowed under section 37(1) of the Act. The CIT(A) upheld an ad hoc disallowance of 20% of the charges as non-business expenditure and treated the remaining 80% as enduring in nature, disallowing it. The appellant argued against the concept of deferred revenue expenditure, citing specific sections of the Act. Additionally, the appellant pointed out that the Supreme Court has held that revenue expenditure incurred in a particular year must be allowed in that year. The CIT(A) was directed to reconsider the issue in accordance with the law and the outcome of the appeal for the assessment year 2008-09. The dispute revolved around the fees and service charges paid to related concerns of the assessee, namely Saint GobainMateriaux De Construction (SGMDC) and Saint GobainPlaco SAS, France (SG Placo). The Assessing Officer disallowed these charges for the assessment year 2008-09 on an ad hoc basis and applied provisions of section 35D of the Income Tax Act, amortizing the remaining expenditure over five years. The Tribunal set aside the appeal for the assessment year 2008-09 to the file of the CIT(A) for reconsideration after considering additional evidence. The issue in the present appeal was deemed linked to the disallowance made by the Assessing Officer for the assessment year 2008-09. Therefore, the appeal was set aside to the file of the CIT(A) for a fresh decision in line with the law and the outcome of the appeal for the assessment year 2008-09. In conclusion, the appeal filed by the assessee was allowed for statistical purposes, and the order was pronounced in open court on 28th December 2020.
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