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TMI Blog2016 (4) TMI 653X X X X Extracts X X X X X X X X Extracts X X X X ..... e Supreme Court in the case of Prakash Cotton Mills P. Ltd. v. Commissioner of Income Tax, (1993 (4) TMI 3 - SUPREME Court], on the contrary, supports the case of the respondent assessee. - Decided in favour of assessee - TAX APPEAL NO. 364 of 2016 - - - Dated:- 6-4-2016 - MS. HARSHA DEVANI AND MR. G.R.UDHWANI, JJ. FOR THE APPELLANT : MR SUDHIR M MEHTA, ADVOCATE ORAL ORDER (PER : HONOURABLE MS.JUSTICE HARSHA DEVANI) 1. In this appeal under section 260A of the Income Tax Act, 1961 (hereinafter referred to as the Act ), the appellant revenue has challenged the order dated 21.08.2015 passed by the Income Tax Appellate Tribunal, B Bench, Ahmedabad (hereinafter referred to as the Tribunal ) in ITA No. 1298/Ahd/2012, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer also noticed that the acceptance of this payment by the Transfer Pricing Officer at arm s length price was irrelevant for determining the correct total income of the assessee and therefore, added such amount to the total income of the assessee. The assessee carried the matter in appeal before the Commissioner of Income Tax (Appeals), who allowed the appeal. The revenue carried the matter in further appeal before the Tribunal, but did not succeed. 4. Mr. Sudhir Mehta, learned Senior Standing Counsel for the appellant, assailed the impugned order by submitting that the Tribunal has failed to appreciate that the assessee company was not a party to the contract and hence, there was no reason to make payment to the group com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resulting from breach of contract to compensate other parties. The facts of the transaction are that the assessee is a group company of the Exide group which operates worldwide. The Group, while selling its separator business to Deramic Group, in order to assure business and in order to maintain quality of the product, had agreed with Deramic Group that all the entities of Exide Group shall purchase specified battery separators only from Deramic Group. However, the assessee had purchased separators from another company and hence, under the agreement, Exide Technologies had to pay damages for breach of the contract. Since, these damages were occasioned on account of breach of contract of the assessee, the same were reimbursed by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urchased separators from some other company. On account of such breach, Exide Technologies was required to pay the aforesaid amount to Deramic Group which would be in the nature of a compensatory amount. Since, the amount was required to be paid by Exide Technologies for the default of the assessee; the assessee was required to reimburse the Exide Technologies in respect of such amount. Thus, the amount paid by the assessee is directly related to the amount paid by the Exide Technologies to Deramic Group on account of default on the part of the assessee and would squarely fall within the ambit of the term expended wholly and exclusively for the purposes of the business or profession as contemplated under sub-section (1) of section 37 of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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