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2020 (12) TMI 215 - AT - Income TaxAddition made on account of Social Forestry Expenses and Amortization of social forestry expenses - HELD THAT - Considering the consistent decision of Tribunal on similar set of fact, we are in agreement with the submission of learned AR of the assessee that this ground of appeal is covered in favour of the assessee by the decision of Tribunal in earlier years. Hence, we affirm the order of ld. CIT (A). No contrary facts or law is brought to our notice to take the other view. Addition on account of sundry creditors - assessee failed to file the confirmation for verification and the genuineness of transaction - assessee failed to explain the creditors of standing for more than 3 years with supporting evidence - HELD THAT - CIT (A) the deleted additions correctly by following the order of earlier year and taking view that creditors are old in respect of which the purchases were made in the earlier years. There is no much variation in facts for the year under consideration. Addition of excess process stock - HELD THAT - On almost similar fact on similar ground of appeal in appeal for assessment year 2005- 06,this ground of appeal is covered by the decision of Tribunal in earlier years. Hence, we affirms the order of ld CIT(A). No contrary facts or law is brought to our notice to take the other view. Respectfully following the same, this ground of appeal raised by revenue is dismissed. Exclusion of expenses of Orisha unit on the basis of turnover of the whole company and TG-3 unit for which assessee claimed deduction under section 80IA - HELD THAT - while allocating the expenses for power generation unit considered the overall cost of employee and other expenses , which consist of employee cost and other expenses of Orisha unit. CIT (A) after considering the submission of assessee that the Orisha unit has no connection with the generation of power by TG-3 unit, directed the assessing officer to reallocate the expenses by excluding the expenses of Orisha unit. No contrary fact or evidence is brought to our notice that the expenses incurred in Odis are unit have any casual connection with the cost incurred in power production in TG-3 unit, therefore, we do not find any justification to interfere with the order of learned CIT(A) thus, we affirm the same. In the result this ground of appeal is dismissed. Disallowance being commission paid to Directors - AO was of the view that passing of resolution by board is not sufficient to prove the genuineness of the commission paid to the Directors other than the Managing or whole time Directors of the assessee - HELD THAT - AO made ad-hock disallowances on the doubt of genuineness of the commission expenses. The assessing officer not accepted the contention of the assessee. The learned CIT(A) granted relief to the assessee by taking view that expenses were incurred in accordance with the provisions of Companies Act. The commission expenses were paid by passing the Board s resolution. And in earlier years such commission expenses were claimed and allow to the assessee. The assessing officer made disallowance on ad- dock basis which is not sustainable. Before us, no contrary fact or law is brought to our notice, therefore, we do not find any justification to interfere with the order of learned CIT(A), which we affirm. In the result this ground of appeal is also dismissed. Disallowance of commission paid to the agents - assessee failed to produce copy of any agreement with the commission agent to whom the commission was paid and the nature of services rendered by them - AO reasonably disallowed 10% of such commission - HELD THAT - The assessee provided the complete details regarding sale and the commission paid to the dealers as recorded by learned CIT(A) in para 12.2 of his order. The genuineness of the expenses was not doubted by the assessing officer. Considering the fact that genuine business expenses are allowable, and the learned CIT(A) after considering the fact that in earlier years similar commission expenses were allowed, allowed relief to the assessee. Before us no contrary fact or evidence is brought to take other view. Therefore, we do not find any reason to interfere with the order of learned CIT(A), which we affirm. In the result this ground of appeal is dismissed. Disallowance of 5% of various expenses - HELD THAT - AO has not brought any adverse evidence against the expenses incurred by the assessee. The assessing officer has not doubted that the expenses are not genuine. And without specifying any reason made disallowance @ 5% of the total expenses. The assessing officer simply concluded that the arguments of the assessee company are considered in but the same are not acceptable without specifying any reason - CIT(A) while granting relief to the assessee noted that assessing officer has not even try to deal with the expenses under different head and merely made ad-hock disallowance which is not sustainable. We have noted that like other ad-hock disallowances which were ultimately deleted by learned CIT(A), no contrary fact or evidence is brought to our notice to take other view. Disallowance of 5% of employee welfare expenses and other benefits - HELD THAT - has not examined the details furnished by the assessee. AO has not find any defects in the books of account maintained by assessee. The assessing officer has not specified even a single discrepancy either in the documents or in the reply furnished by assessee. CIT(A) while granting relief to the assessee recorded that the assessing officer has not doubted that these expenses were not genuine. Even before us no contrary fact or law is shown to take other view except to raise the plea that the disallowances were made on reasonable basis. Therefore, we do not find any infirmity in the order passed by learned CIT(A), which we affirm. In the result this ground of appeal is also failed. Disallowances on account of adjustment of MAT credit entitlement while computing book profit - HELD THAT - No disallowance can be made beyond the adjustment provided under section 115JB. Further we have noted that similar adjustment while computing book profit was made in AY 2006-07 and 2008-09, however, on appeal before Tribunal the same was deleted. Disallowance being expenses incurred for the purpose of exempt income while computing book profit - HELD THAT - The Special Bench of Delhi Tribunal Vireet investment 2017 (6) TMI 1124 - ITAT DELHI held that computation under clause (f) of Explanation 1 to section 115JB(2), is to be made without resorting to computation as contemplated under section 14A. Considering the aforesaid discussions, we do not find any merit in this ground of appeal. Disallowance on account of bad debts - HELD THAT - AO made addition by taking that assessee failed to punish any evidence which established that the debts have become irrevocable. The learned CIT(A) granted relief to the assessee by following the decision of honourable Supreme Court in CIT versus TRF Ltd 2010 (2) TMI 211 - SUPREME COURT wherein it has been held that assessee is not required to establish that debts s has become irrevocable in that particular year and it is enough if the bad debts written off as irrevocable in the accounts of the assessee. No contrary fact or law is brought to notice to take any other view, therefore we affirm the order of learned CIT. In the result this ground of appeal is dismissed. TDS u/s 195 - assessee made foreign remittance to non-resident on account of export commission, on which no tax was deducted at source - HELD THAT - The non-resident to whom such commissions were paid in the year under consideration does not have any business connection or permanent establishment in India and therefore, no income accrue or arise or deem to arise in India in terms of section 9(1)(i) of the Act. Such income is not chargeable to tax India as per section 195 - CIT(A)following the decision of honorable Supreme Court in CIT versus Toshoku Limited 1980 (8) TMI 2 - SUPREME COURT deleted the entire disallowance. Club expenses allowed - as decided in Otis Elevator Co. Ltd. 1991 (4) TMI 53 - BOMBAY HIGH COURT TDS u/s 195 - disallowance under section 40 a (i) - seminar fees paid to London School of Economics -assessee submits that assessee paid fee for attending seminars and recipient has no business connection in India, thus no income accrues or arise to them in India within the meaning of section 9(1)(i) - The services for which the assessee made payment were rendered outside India. - HELD THAT - In absence business connection in India, no income accrues or arise to them in India within the meaning of section 9(1)(i) of Income Tax Act. Therefore, on the services for which the assessee made payment were rendered outside India, the assessee was not required to deduct tax at source. However, the ld CIT(A) has categorically held that no that no details about the payment was made to London School of Economics was furnished the veracity of claim could not be verifiable. Hence, we direct the assessing officer to verify the details of the expenses and grant the relief to the assessee. In the result this ground of appeal is allowed for statistical purpose.
Issues Involved:
1. Deletion of addition on account of Social Forestry Expenses. 2. Deletion of addition on account of unexplained creditors. 3. Deletion of addition on account of excess process stock. 4. Exclusion of expenses of Orisha unit for the purpose of deduction under section 80IA. 5. Deletion of disallowance of commission paid to Directors. 6. Deletion of disallowance of commission paid to agents on sales. 7. Deletion of disallowance of 5% of various expenses. 8. Deletion of disallowance of 5% of employee welfare and other benefits expenses. 9. Deletion of disallowance on account of adjustment of MAT Credit entitlement. 10. Deletion of disallowance of expenses incurred for exempt income while computing book profit. 11. Deletion of disallowance on account of bad debts. 12. Deletion of disallowance made under section 40(a)(i). 13. Deletion of disallowance of club expenses. 14. Addition on account of income from FCCB funds. 15. Disallowance under section 40(a)(i) of seminar fees paid to London School of Economics. Detailed Analysis: 1. Deletion of Addition on Account of Social Forestry Expenses: The Tribunal noted that similar additions were made in previous assessment years (2002-03 to 2009-10) and were deleted by the Tribunal. The assessee's activities, including the development of saplings and technical assistance to farmers, were considered business expenses. The Tribunal affirmed the CIT(A)'s order, dismissing the revenue's appeal. 2. Deletion of Addition on Account of Unexplained Creditors: The Tribunal found that similar additions were made in previous years (2005-06, 2009-10) and were deleted by the Tribunal. The creditors were old and related to purchases made in earlier years. The Tribunal upheld the CIT(A)'s order, dismissing the revenue's appeal. 3. Deletion of Addition on Account of Excess Process Stock: The Tribunal noted that the assessee maintained books of accounts on a day-to-day basis, and the stock valuation for the bank was on an estimated basis. Similar additions in previous years (2005-06) were deleted by the Tribunal. The Tribunal upheld the CIT(A)'s order, dismissing the revenue's appeal. 4. Exclusion of Expenses of Orisha Unit for the Purpose of Deduction Under Section 80IA: The Tribunal found that the expenses of the Orisha unit were unrelated to the power generation unit TG-3. The CIT(A) directed the reallocation of expenses by excluding the Orisha unit's expenses. The Tribunal upheld the CIT(A)'s order, dismissing the revenue's appeal. 5. Deletion of Disallowance of Commission Paid to Directors: The Tribunal noted that similar commission expenses were allowed in earlier years. The CIT(A) granted relief, finding the disallowance ad-hoc and unsupported by evidence. The Tribunal upheld the CIT(A)'s order, dismissing the revenue's appeal. 6. Deletion of Disallowance of Commission Paid to Agents on Sales: The Tribunal found that similar commission expenses were allowed in earlier years. The CIT(A) granted relief, finding the disallowance ad-hoc and unsupported by evidence. The Tribunal upheld the CIT(A)'s order, dismissing the revenue's appeal. 7. Deletion of Disallowance of 5% of Various Expenses: The Tribunal noted that the assessing officer had not examined the genuineness of the expenses and made an ad-hoc disallowance. The CIT(A) granted relief, finding the disallowance unsustainable. The Tribunal upheld the CIT(A)'s order, dismissing the revenue's appeal. 8. Deletion of Disallowance of 5% of Employee Welfare and Other Benefits Expenses: The Tribunal found that the assessing officer had not specified any discrepancies in the expenses and made an ad-hoc disallowance. The CIT(A) granted relief, finding the disallowance unsustainable. The Tribunal upheld the CIT(A)'s order, dismissing the revenue's appeal. 9. Deletion of Disallowance on Account of Adjustment of MAT Credit Entitlement: The Tribunal noted that similar adjustments were deleted in previous years (2002-03 to 2008-09). The CIT(A) granted relief, following the Tribunal's earlier decisions. The Tribunal upheld the CIT(A)'s order, dismissing the revenue's appeal. 10. Deletion of Disallowance of Expenses Incurred for Exempt Income While Computing Book Profit: The Tribunal noted that similar adjustments were deleted in previous years (2009-10). The CIT(A) granted relief, following the Tribunal's earlier decisions. The Tribunal upheld the CIT(A)'s order, dismissing the revenue's appeal. 11. Deletion of Disallowance on Account of Bad Debts: The Tribunal found that the CIT(A) granted relief by following the Supreme Court's decision in CIT vs. TRF Ltd. (323 ITR 397 SC), which held that it is enough if the bad debts are written off as irrecoverable in the accounts of the assessee. The Tribunal upheld the CIT(A)'s order, dismissing the revenue's appeal. 12. Deletion of Disallowance Made Under Section 40(a)(i): The Tribunal noted that the CIT(A) granted relief by following the Supreme Court's decision in CIT vs. Toshoku Ltd. (125 ITR 525 SC), which held that commission amounts earned by non-residents for services rendered outside India cannot be deemed to be income accruing in India. The Tribunal upheld the CIT(A)'s order, dismissing the revenue's appeal. 13. Deletion of Disallowance of Club Expenses: The Tribunal found that the CIT(A) granted partial relief, noting that the club expenses were incurred for business purposes. The Tribunal directed the assessing officer to allow all club expenses, following decisions of higher courts. The Tribunal dismissed the revenue's appeal and allowed the assessee's appeal. 14. Addition on Account of Income from FCCB Funds: The assessee did not press this ground of appeal. The Tribunal dismissed the ground. 15. Disallowance Under Section 40(a)(i) of Seminar Fees Paid to London School of Economics: The Tribunal found that the CIT(A) held that no details about the payment were furnished, making verification impossible. The Tribunal directed the assessing officer to verify the details and grant relief if justified. The Tribunal allowed the ground for statistical purposes. Conclusion: The appeals for AY 2010-11, 2011-12, and 2012-13 by the revenue were dismissed, and the appeal for AY 2012-13 by the assessee was partly allowed. The Tribunal consistently upheld the CIT(A)'s orders, finding no contrary facts or laws to take a different view.
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