2015 (9) TMI 220 - AT - Income Tax

Disallowance of expenditure of Additional discount/rate difference - appellant has not furnished any evidence to support its claim - Held that - It is for the assessee to concide as per its agreements and the law in force. However whether on facts, it was demanded over and above the normal discount agreed to as per agreements this claim if made by the assessee has to be demonstrated by some cogent evidence. The arguments advanced is that the payments were withheld on the said aspect there is no evidence and the claim has been rejected for want of evidence. However if for moment it is presumed that the argument is correct in such an eventuality also the reasons on record for withholding should be supported by some evidence. This long chain of inference which the ld. AR wants us to draw is too far-fetched an inference without any independent evidence which the assessee would want to press for. It is for the assessee to know the actual facts which for reasons best known to the assessee he does not want to place on record. In the present proceedings we are not required to address the reasons why M/s Sudhir Gensets Ltd. does not want to come forward and the assessee is reluctant to place any evidence from the so-called affected party. The assessee s reluctance to address the same is a motive which we do not want to conjecture suffice it to conclude that the claim has rightly been rejected on facts. Since the payments were withheld the assessee could have claimed as a bad debt and the debit notes placed on record amount to the writing of these claims. These arguments have been opposed by the Ld. Sr. DR that no such claim was made before the AO and nor has it been raised by way of a ground and have only come as an afterthought deserve to be accepted. Since the so called dispute itself is not established before us we find that the claim put forth as an aftherthough has to be rejected as the evidence does not inspire any confidence. - Decided against assessee.

Issues Involved: Disallowance of "Additional discount/rate difference" expenditure, Deduction under section 80IB, and Acceptance of additional evidence.

Issue-wise Detailed Analysis:

1. Disallowance of "Additional discount/rate difference" expenditure:

The assessee, engaged in manufacturing electrical and electronics goods, claimed an expenditure of Rs. 46,00,000 as "Additional discount/rate difference" paid to M/s Sudhir Gensets Ltd. The Assessing Officer (AO) disallowed this claim, stating the expenditure did not pertain to the year under consideration and lacked supporting evidence of a dispute or commercial necessity. The AO noted that the transactions with Sudhir Gensets Ltd. occurred in earlier years (1999-2000, 2000-01, and 2001-02) and there was no agreement indicating a deferred discount payable after 3-4 years. The CIT(A) upheld the AO's disallowance, emphasizing the absence of evidence proving the expenditure was incurred for business purposes and the benefit derived from it. The Tribunal concurred, noting the lack of independent evidence demonstrating a dispute and the unilateral nature of the documents provided by the assessee, which did not inspire confidence in their authenticity or genuineness.

2. Deduction under section 80IB:

The assessee claimed a deduction of Rs. 27,28,194 under section 80IB, which the AO disallowed, arguing the deduction was only allowable for three years as per the initial registration certificate and the assessee failed to provide evidence of subsequent registration. Additionally, the AO cited that the transfer of the unit to M/s. SEG & Controls Ltd. before the expiry of the deduction period violated sub-section 12 of section 80IB. The CIT(A) accepted the assessee's claim, noting the commercial production started within the permitted time and the deduction was allowable. The AO, in the remand proceedings, admitted the deduction was permissible, leading the CIT(A) to direct the allowance of the deduction. The Tribunal upheld the CIT(A)'s decision, as the AO had conceded the point in the remand report.

3. Acceptance of additional evidence:

The Revenue contested the CIT(A)'s acceptance of additional evidence regarding the Rs. 6,71,415 additional discount paid to M/s Controls & Switchgears Co. Ltd. The AO initially disallowed this amount, considering it a mere provision and not an ascertained liability. However, the CIT(A), based on the remand report, found that the provision was made in the previous year and subsequently paid, thus allowing the deduction. The Tribunal upheld the CIT(A)'s decision, as the AO had accepted the evidence in the remand report.

Conclusion:

The Tribunal dismissed both the assessee's and the Revenue's appeals. The assessee's claim for the additional discount expenditure was rejected due to lack of evidence, while the Revenue's appeal against the deductions under section 80IB and the additional discount was dismissed based on the AO's admissions in the remand report. The Tribunal emphasized the importance of independent evidence and the genuineness of claims in tax assessments.

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