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TMI Blog2015 (7) TMI 838X X X X Extracts X X X X X X X X Extracts X X X X ..... riptions paid for acquiring membership in clubs. The A.O. disallowed the above amount on the ground that the admission fee gives benefit of enduring nature and hence the same is capital expense in nature. The A.O. has also relied on the decision of Hon'ble Bombay High Court in the cases of CIT vs. W.I.A.A. Club Ltd,136 ITR 569 and also the decision rendered in the case of CIT vs. Diners Business Services Private Limited, 263 ITR 1. The ld. DRP confirmed the same. 4. At the time of hearing before us, the ld. Representatives of both sides agreed that an identical issue was considered by the Co-ordinate bench in the case of Skol Breweries Ltd. vs. ACIT (claimed to be present assessee's old name) in ITA No. 6175/Mum/2011 dated 18-01-2013 [(2013) 142 ITD 49] and the same was decided in favour of the assessee as under:- "We further note that similar disallowance made by the Assessing Officer for the AYs 2004-05 to 2006-07 has been deleted by the Commissioner of Income tax (Appeals) and the revenue has accepted the order of the Commissioner Of Income Tax (Appeals. The assessing Officer has not brought out on record that there is a change in the facts and circumstances with respect to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tor is in the nature of 'Principal to Agent' and hence the assessee had to deduct taxes on the payments made to the distributors. 8. The ld. Representatives of both the sides agreed that an identical issue was considered by the Tribunal in the case of Skol Breweries Ltd. (supra), as modified in M.P. No.136/Mum/2013 dated 04-10-2013 and the Tribunal, after discussing the issue in detail, has set aside this issue to the file of the A.O. to re-examine the same afresh. It is pertinent to note that the Tribunal, vide paragraph 9.4 of the order has held that the relationship between the parties, as per the agreement, in relation to sale and purchase of the product is on principal to principal basis and to that extent the decision of Hon'ble Delhi High Court rendered in the case of Mother Diary (249 CTR 559) is applicable. However, the Tribunal took the view that the scheme under which the impugned benefit/incentive is given needs to be examined in order to give a finding as to whether the impugned payment is commission or not. Hence, the matter was set aside to the file of the AO with a direction to verify and examine relevant record and decide the same as per law. Consistent with the v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 13) 142 ITD 49 (Mumbai). We find that the Tribunal has considered an identical issue and decided the same in favour of the assesee by observing as under:- "16.3 The deduction u/s 32 is not in respect of the amount paid or payable which is subjected to TDS; but is a statutory deduction on an asset which is otherwise eligible for deduction of deprecation. Depreciation is not an outgoing expenditure and therefore, the provisions of sec. 40(a) (i) of the Act are not attracted on such deduction. This view has been fortified by the decision of the Hon'ble Punjab & Haryana High Court in the case of M/s Mark Auto Industries Ltd (supra) in pars 5 & 6 as under .............." In view of the above, we direct he A.O to delete this disallowance. 11. The next issue urged by the assessee relates to the disallowance made u/s 40(a)(i) of the Act of software charges amounting to Rs. 33,60,435/- for non-deduction of tax at source. During scrutiny assessment, the A.O. observed that the assessee has paid a sum of Rs. 33,60,435/- to SABMiller A & A (Pty) Ltd. towards the expenditure incurred on account of Syspro license fees, Report Generation charges in Syspro, customizing Syspro so as to enabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... going to be brought in by Finance Act, 2012, when the impugned payment was made in Financial year 2007-08 and hence the provisions of sec. 40(a)(i) should not be applied on the payments that were hit by prospective amendment. We agree with this contention of the assessee and accordingly direct the AO to delete this disallowance. 14. The next issue urged by the assessee relates to the disallowance of interest on advances given to group entities u/s 36(1)(iii) of the Act amounting to Rs. 36,56,856/-. 15. During the course of assessment proceedings, the A.O. observed that the assessee had paid advances to two group companies viz: MBL Investments Ltd, and SABMiller India Limited (Now SKOL Beer Manufacturing Co. Ltd.). The A.O. also observed that the assessee had borrowed loans from various banks at a higher rate of interest ie. @ 12% whereas it has charged interest @ 6% from its group companies. Accordingly, the A.O. required the assessee to explain as to why the proportionate amount of interest should not be disallowed. The A.O. after considering the submissions made by the assessee, disallowed the proportionate amount of interest @ 6% on the sum of Rs. 11,79,47,601/- which worked o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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