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TMI Blog2012 (5) TMI 75X X X X Extracts X X X X X X X X Extracts X X X X ..... e Chip & Co. had rendered any services to the Assessee- Company; and 2. Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal, was right in law in allowing payment of Rs. 38,02,950/- made to the Corporate Management Division of M/s United Breweries Ltd., Banglore ignoring the fact that there was no evidence to show that the Corporate Management Division of M/s United Breweries Ltd. had rendered any services to the Assessee Company already had a Technical Assistant Agreement with M/s United Breweries Ltd. regarding provisions to the assessee of know how for manufacturing Beer and for marketing and Distribution of Beer thereby exhaustively covering all aspects of Business." 2. Brief facts of the case may first be set out to put the controversy in its proper prospective. The assessee- respondent was engaged in the manufacture and sale of beer of different brands. It was a closely held Company and a subsidiary of United Breweries Ltd. For the assessment year 1989-90 the Assessing Officer made a large number of additions. On the aforesaid two issues, the additions made are on account of payment made by the assessee- Company to M/s Blue Chi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appointment as C & F handling agent. Therefore, the entire sum of Rs.12,29,769/- was added to the declared income of the assessee. 3. On the aforesaid issue, the assessee filed appeal before the CIT (A), Ludhiana and the findings recorded by the Assessing Officer were upheld in paras 6.7 and 6.8 which reads as under: " 6.7 Considering the facts mentioned above and the reasons given by the ACIT and my order for the asstt. Year 1988-89 in appeal No. 41/IT/91-92/CII (A)(C) decided vide order dated 11.10.1991 the addition made is confirmed on the following grounds: i) Firstly that this L1 was earlier managed by the assessee company only and the results were much better at that time than when C & F has been given to Blue Chip and Co. and this has been forced upon the assessee by Mc Dowell and Co. at the instance of Chairman, Shri Vijaya Mallaya of U.B. group of Industries who has benefited by giving this business to M/s Blue Chip & Co. as has been proved by the ACIT. ii) Secondly, this is a sham transaction as the assessee's staff strength at Faridabad is not reduced by allotting the work to Blue Chip and Co. License fee for this L-I is also being paid by Punjab Breweries unlike in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iverting funds to Blue Chip and Company was to facilitate passing of funds as interest free loan to Shri Vijay Mallya and Smt. Samira Mallya. Agreement between the assesee- company and Blue Chip company has been found to be a sham transaction by the Assessing Officer as well as by the CIT (A). The Tribunal committed grave error by recording the impugned order as if it is a consent order whereas on the showing of the Tribunal itself, the department representative has categorically defended the order passed by the Assessing Officer as well as by the CIT(A). The aforesaid fact is clearly recorded by the Tribunal itself in paras 6 to 13 of the order which reads thus: " 6. The ld. Counsel at the outset stated that the Tribunal in the preceding Ays had decided both the grounds in favour of the assessee and necessary directions be given to the AO to allow necessary relief in accordance with the earlier orders of the Tribunal. The ld. DR did not oppose the aforesaid request in the light of the earlier orders of the Tribunal but hastened to add that he would support the orders passed by the tax authorities. 7. In the light of the accepted facts above, the AO is directed to allow ne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. The ld. CIT(A) has erred both in law and on facts in deleting the disallowance of Rs.899150/- made by the AO on account of commission/ service charges paid to Bombay Breweries." 13. Both the parties agreed and stated that the aforesaid grounds had been decided in favour of the assessee by the CIT (A) following her earlier orders which in turn had been confirmed by the Tribunal. The ld. DR hastened to sup;port the order passed by the AO." 6. We are further of the view that the orders of the Tribunal in the earlier assessment years have not gone un-challenged. In respect of assessment years 1987-88 and 1988-89, the Revenue has assailed the orders in Income Tax References. In that regard a reference has been made in para 5 of the memo of appeals and those are also pending before this Court. Therefore the findings recorded by the Tribunal are wholly erroneous, cryptic, perverse, laconic and perfunctory. 7. On the second question also regarding the payment of Rs.38,02,950/- made to the Corporate Management Division of M/s United Breweries Ltd. Banglore, the assessee- company claimed that the aforesaid amount was paid as its contribution to Corporate Management Division of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t on this company. iii) Thirdly, it has not given the man-hours spent on this particular company- what services were rendered to this company. iv) Fourthly, whether the services are rendered and the expenditure incurred is wholly and exclusively for business purpose. This has not been proved. v) The expenditure contributed by the assessee company towards CMD is not proved to be the expenditure relating to this company. All sums are divided on same basis which is not disclosed to the revenue and it is not proved that particular incurred by CMD has anything to do with the assessee company. vi) Sixthly, the details of expenditure show that most of the expenditure is not allowable under the I.T. Act like entertainment liquor quota, expenditure for personal use of car or is in the nature of perquisite to the Managing Director, Directors and the company executives & this exp. is indirectly claimed by row thing it through CMD. In-land Travel is equivalent to salary bill; for what purposes foreign travel has been made? vii) Last of all whatever the evidence the assessee furnished before the AO and CIT(A) at appellate stage in the nature of correspondence with the CMD it is covered by ..... X X X X Extracts X X X X X X X X Extracts X X X X
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