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TMI Blog2010 (12) TMI 733X X X X Extracts X X X X X X X X Extracts X X X X ..... Special Bench of the Tribunal in Amway India Enterprises vs. DCIT (2008 -TMI - 64346 - ITAT DELHI-C).Respectfully following the precedent, we set aside the impugned order on this issue and restore the matter to the file of the A.O. Repairs and renovation expenses carried out at lease premises, - The expenditure incurred in renovation and repairs and maintenance on the lease property is to be treated as revenue expenditure and accordingly the ground is allowed. Addition is deleted. bad debts which are written off as irrecoverable - 36(1)(vii) read with section 36(2)- if the amounts are written off in the books of account it is sufficient to allow the amount under the provisions of section 36(1)(vii) r.w.s. 36(2). - therefore, we are of the view that this issue can be re-examined by the A.O. and allow the amounts after due verification. Revised computation of income - the AO has no power to admit fresh claim otherwise than revised return but appellate authorities including CIT(A) and ITAT have power to admit such claim. Without prejudice to the above finding, we admit the assessee's claim which is in accordance with the judgment of the Apex Court in the case of Goetz India Ltd. ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on profit sharing basis. It was submitted that the total bill raised by the assessee on SBI LIFE was Rs.3,67,89,416/- whereas the total bill amount of RMG David Communications P. Ltd. was to the tune of Rs.3,52,43,695/-. The supply cost for the above activity was Rs.3,38,16,084. Thus the sister concern, RMG David Communications P. Ltd. had a profit of Rs.14,27,611/- whereas the assessee had a profit of Rs.15,45,721/- in the hoarding business with SBI LIFE. It was explained by the assessee that on the total volume of Rs3.67 crores the profit earned by the assessee company was 4.20% whereas the profit margin earned by the sister concern was 3.88%. The A.O. was of the opinion that in the industry of advertising hoarding business was done at a margin of 15% and since the assessee has received 8.08% in all, this calls for realization of 6.92% in the business. However, the A.O. considered the said margin under section 40A(2)(b) by working out as under:- "5.5 The assessee has therefore, concealed a margin of remaining 6.92% earned from this business by making excess payment to its sister concern thereby attracting the intervention of provisions of Sec.40A(2)(b) of the I.T. Act. Since ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the profit margin varied from 5.71% to 15% except in the case of one client (name withheld) on which there was a margin of 44%. It was the contention that the assessee has not concealed any percentage and different profit ratios were arrived at with different companies keeping in view the importance of the client and the advertisement campaign conducted by it and the margins allowed by the clients. It was submitted that the contract with SBI LIFE was very competitive and the percentage of margin was 8.08%, which was comparable with other companies. It was further submitted that there is no basis for arriving at 15% margin uniformly on all companies and further the A.O., while accepting that the work was done by the sister concern, wrongly brought an amount of so called G.P. to tax rather than disallowing the amount paid to the sister concern under section 40A(2). It was submitted that section 40A(2) are not applicable at all. 6. The learned D.R., however, relied on the orders of the A.O. and the CIT(A) as far as the facts are concerned. 7. We have considered the issue. As seen from the action of the A.O. and the order of the CIT(A) we are of the opinion that both the Re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not sustainable in any other way considering the facts of the case. In view of this, we delete the addition so made. Assessee's ground on this is allowed. 8. Ground No. 1(b) pertains to the issue of software expenses. Assessee has spent an amount of Rs.23,05,104/- on software. The A.O. disallowed the above amount as capital in nature and it was the submission that similar issue was restored in A.Y. 2004-05 to the A.O. by the ITAT in ITA No.924/Mum/2009 dated 13th October 2010. 9. After considering the rival submissions and perusing the relevant material on record it is found that similar issue was raised in assessee's own case in A.Y. 2000-01 and 2004-05 and in these years the matter was remanded to the file of the A.O. for taking a fresh decision in accordance with the view taken by the Special Bench of the Tribunal in Amway India Enterprises vs. DCIT 111 ITD 112 (SB)(Del). Respectfully following the precedent, we set aside the impugned order on this issue and restore the matter to the file of the A.O. for taking fresh decision in accordance with the view taken by the Special Bench. Matter is restored for reconsideration of the A.O. Ground is considered allowed. 10. Gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay to day business of the assessee. It was her explanation that sometimes the clients do not pay full amount due to excessive billing/hoarding not up to the standard/variations in size, etc. and these are sort of remission, trade discount or settlement which could not be recovered but on which incomes were offered in earlier years. Therefore, the amount is allowable either as bad debts or as business loss. It was also further submitted that the assessee has furnished many of the bills to the A.O. but they are not considered in the right spirit. With reference to the legal aspects of the claim it was her submission that the bad debts are allowable once they are written off in the books of account as considered by the Hon'ble Bombay High Court in the case of Oman International Bank 313 ITR 128 and also by the Hon'ble Supreme Court in the case of TRF Ltd. 323 ITR 397. 14. The learned D.R. relied on the orders of the A.O. and the CIT(A). 15. After considering the rival submissions and examining the orders on record, we are of the opinion that the A.O. has considered the provisions of bad debts wrongly on the amounts written off. A bad debt will arise only in the case when debt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 84 ITR 323. 17. On consideration of the arguments we hold that the decision of the Hon'ble Supreme Court in the case of Goetze (India) Ltd. vs. CIT 284 ITR 323 makes it clear that a return cannot be revised unless the assessee files a revised return. However, the powers of the Tribunal as laid down by the Hon'ble Supreme Court in the case of National Thermal Power Co. Ltd. 229 ITR 383 are not affected by this decision. Even the CIT(A) has the power to entertain the claim as he has power to enhance the income as well. This issue was discussed in detail in the Coordinate Bench order in the case of M/s. Asian Paints Ltd in for A.Y. 2003-04 and held as under:- "21. We have heard the learned representatives of the parties and perused the record. ................................ In this appeal, the prel iminary question that falls for consideration relates to scope of powers of CIT(A) whether the CIT(A) was having power to admit assessee's claim without filing revised return of income. To properly appreciate the issue, we would like to reproduce the finding given by Hon'ble Supreme Court in case of Goetz India Ltd. cited supra, reads as under:- "The decision in question is th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount of ostensible transactions in hundi loans shown by the assessee. On appeal, the AAC, while sustaining the aforesaid addition also took notice of 10 other items of ostensible hundi loans amounting to Rs.2,30,000 and directed that the total income be enhanced by the sum of Rs.2,30,000. The Tribunal, however, deleted the said addition holding that the AAO had exceeded his jurisdiction. The High Court placing reliance on the decision of the Supreme Court in Addl. CIT v. Gurjargravures (P.) Ltd. [1978] 111 ITR 1 held that the AAC had no jurisdiction to consider the new entries which were not considered at all by the ITO and to add the amount of Rs.2,30,000 to the total income of the assessee. According to the High Court, the items representing the said amount constituted new sources of income which were not the subject-matter of assessment before the Assessing Officer and, therefore, it was not open to the AAC in appeal to consider the new sources and to assess them. 21.3 On appeal to the Supreme Court, The Supreme Court has held as under:- "(Pages 612 to 614)" In Jute Corpn. of India Ltd. 's case (supra) this Court has referred to the earlier decision of this Court in CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 693) Taking note of the decision in Gurjargravures (P.) Ltd.'s case (supra), the Court has said: "... Apparently, this view taken by the two Judge Bench of this Court appears to be in conflict with the view taken by the three Judge Bench of this Court in Kanpur Coal Syndicate case [1964] 53 ITR 225. It appears from the report of the decision in the Gujarat case that the three Judge Bench decision in Kanpur Coal Syndicate case [1964] 53 ITR 225 (SC) was not brought to the notice of the Bench in Gurjargravures (P.) Ltd. [1978] 111 ITR 1 (SC). In the circumstances, the view of the Larger Bench in Kanpur Coal Syndicate case [1964] 53 ITR 225 (SC) holds the field...." (p. 694)" Having regard to the decision in Jute Corpn. of India Ltd.'s case (supra), it must be held that the High Court was in error in holding that the appellate power conferred on the AAC under section 251 was confined to the matter which had been considered by the ITO and the AAC exceeded his jurisdiction in making an addition of Rs.2,30,000 on the basis of the other 10 items of hundis which had not been explained by the assessee." 21.4 In the light of the above discussion, we find that the AO has no ..... X X X X Extracts X X X X X X X X Extracts X X X X
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