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TMI Blog2015 (9) TMI 946X X X X Extracts X X X X X X X X Extracts X X X X ..... preferred to accept a lesser amount than what was invoiced. In these circumstances, the debit notes raised by the assessee will either relate to the expenses reimbursable by the assessee to its client or the debt that has become bad which the assessee has written off in its books of accounts. From these facts, it is crystal clear that the assessee is forced to incur the expenditure or accept the same as bad debt. Apparently the assessee has also debited the expenditure account and credited M/s. S & V Industries Inc.,USA account, thereby satisfying the conditions laid by the Hon’ble Apex Court in the case TRF LTd. Vs. Ld. CIT (2010 (2) TMI 211 - SUPREME COURT) as pointed out by the Ld. A.R. Therefore, we do not have any hesitation to accept ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt was completed on 29.12.2010 u/s.143 (3) of the Act wherein the Ld. AO invoked the provisions of Section 40(a)(ia) of the Act and disallowed the expenditure relating to the debit notes raised by M/s.S V Industries Inc., USA and also by treating the same as unexplained expenditure. 3.2 During the course of assessment proceedings, it was noticed by the Ld. Assessing Officer that the assessee had made payment to M/s. S V Industries Inc. USA towards re-work and other manufacturing expenses on account of supply of defective castings. It was explained by the assessee that these payments were made outside the country for the services rendered overseas and therefore the tax was not deducted at source. However, the Ld. Assessing Officer invok ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rlier instances. He further submitted that the assessee had exported the goods to USA. The foreign buyer had carried out minor repairs on the products exported by the assessee and raised debit notes against the assessee. Though the assessee has disputed against the debit notes raised, the foreign buyer viz., M/s. S V Industries Inc., USA agreed to pay the sale proceeds only af ter deducting the same. Hence the amount of sale proceeds to the extent of the debit note raised by M/s. S V Industries Inc., USA had to be written off. The Ld. A.R. also placed reliance in the case TRF Ltd. Vs. CIT reported in 323 ITR 397 and also the decision of case CIT Vs. De Beers Minerals India P Ltd reported in 346 ITR 467 and CIT Vs. KKK West Germany repor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies Inc., USA and credited sales account. The apprehensions of the Revenue was that it is not clear as to where the services were rendered by M/s. S V Industries Inc., USA, ie., in India or abroad and what was the nature of service rendered for which they were paid or their accounts credited because no agreements or relevant documents were produced. Therefore, the Revenue made the following presumptions observations:- i) The expenditure incurred by the assessee due to the debit notes raised by M/s. S V Industries Inc., USA, is not genuine or not explained with cogent evidence. ii) The services rendered by M/s. S V Industries Inc., USA against which its accounts were credited, is not made clear as to where the service was rende ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... than what was invoiced. In these circumstances, the debit notes raised by the assessee will either relate to the expenses reimbursable by the assessee to its client or the debt that has become bad which the assessee has written off in its books of accounts. From these facts, it is crystal clear that the assessee is forced to incur the expenditure or accept the same as bad debt. Apparently the assessee has also debited the expenditure account and credited M/s. S V Industries Inc.,USA account, thereby satisfying the conditions laid by the Hon ble Apex Court in the case TRF LTd. Vs. Ld. CIT (supra) as pointed out by the Ld. A.R. Therefore, we do not have any hesitation to accept the contention of the Ld. A.R and accordingly we hereby delete ..... X X X X Extracts X X X X X X X X Extracts X X X X
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