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TMI Blog2016 (8) TMI 760X X X X Extracts X X X X X X X X Extracts X X X X ..... t expenses are incurred as incentive to the dealers against bulk orders to push sales which can be seen from the increase turnover of the assessee. Therefore, the Ld. First Appellate Authority has rightly deleted the addition in dispute and there is no need to interfere in the well reasoned finding given by the ld. First Appellate Authority, hence, we uphold the order of the Ld. CIT(A) on the issue in dispute and decide the same in favour of the Assessee and against the Revenue. Addition u/s. 40A(2)(b) - Held that:- Nature of transaction is genuine and in the absence of any revenue loss, and rightly deleted the disallowance by passing a well reasoned order which does not need any interference on our part, hence, we uphold the same. Accordingly, this ground raised by the Revenue is decided in favour of the Assessee and against the Revenue. - ITA No.1947/Del/2014 - - - Dated:- 1-7-2016 - SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER FOR THE DEPARTMENT : Sh. P. Dam Kanunjnja, Sr. DR FOR THE ASSESSEE : None ORDER PER H.S. SIDHU : JM The Revenue has filed the present appeal against the impugned order dated 21/1/2014 passed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5. None Appeared on behalf of the assessee. However, notice by RPAD was issued to the assessee for 21.6.2016 and in response to the same, neither the assessee nor its Authorized Representative/Counsel appeared and nor filed any application for adjournment. Keeping in view of the facts and circumstances of the present case, we are of the view that no useful purpose would be served to adjourn the case. Therefore, in the interest of justice, we are deciding the issue in dispute exparte assessee, after hearing the Ld. DR and perusing the records. 6. We have heard the Ld. DR and perused and considered the relevant records available with us especially the orders passed by the revenue authorities. 6.1 Apropos deletion of addition of ₹ 4,21,394/- :- The AO noted in the assessment order that the assessee incurred sales promotion expenses of ₹ 4,21,394/- without purchase of any gift items as can be seen from the bank book. On a query by the AO the assessee explained that these expenses are incurred as per business and management decision to increase sales. The AO did not accept the explanation of the assessee and in the absence of any evidence regarding genuineness of the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... incentive to the dealers against bulk orders to push sales which can be seen from the increase turnover of the assessee. Therefore, the Ld. First Appellate Authority has rightly deleted the addition in dispute and there is no need to interfere in the well reasoned finding given by the ld. First Appellate Authority, hence, we uphold the order of the Ld. CIT(A) on the issue in dispute and decide the same in favour of the Assessee and against the Revenue. 7. Apropos deletion of addition of ₹ 1,07,87,411/- u/s. 40A(2)(b) of the I.T. Act, 1961: The AO noted that, in the Tax Audit Report, the auditors have mentioned about payment of ₹ 1,07,87,411/- as rebate and discount to a sister concern of the assessee named M/s Media Industries Ltd. In response to the query of the AO, the assessee submitted that the expenses are incurred as per commercial expediency to increase sales. Similar rebate and discounts were offered to other dealers of the business as well as the sister concern Media Industries Ltd.. The assessee also submitted that there is no particular advantage in transfer of profit from one company to other company when both companies are earning profit and paying tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to all dealers, the FMV is not violated. The intention behind the provision of Section 40A(2)(a) is to prevent the intentional reduction in tax liability by certain assessee's by diverting business profits to close relatives and concerns in the form of excessive payments for goods and services received. The facts and circumstances of the case does not indicate any such tax evasion plan. Both the companies are the tax -paying entities at the same rate of tax. So long as the arrangement is genuine and bona fide and the intention is not to evade taxes, it cannot be disregarded for the purpose of determining the taxability of the respective entity. 8.5 this juncture, reliance may be placed on the decision of Hon'ble High Court in the case of CIT Vs. Mis Gautam Motor (2010) 194 Taxman 21 (Delhi) also 334 ITR 326 (Del). Wherein it is held that, There is no case made out by the Department that any tax avoidance has been attempted by these arrangements. We, therefore, see no justification to hold the additions made by the Ld. AO and sustained by the CIT(A), the same is directed to be deleted and this ground of appellant is allowed. In the case of Glaxo Smith kline As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the services rendered. Since the level of discount given is same to all dealers, the FMV has not been violated. The intention behind the provision of Section 40A(2)(a) is to prevent the intentional reduction in tax liability by certain assessee's by diverting business profits to close relatives and concerns in the form of excessive payments for goods and services received. The facts and circumstances of the case does not shows any such tax evasion plan. Both the companies are the tax -paying entities at the same rate of tax. So long as the arrangement is genuine and bona fide and the intention is not to evade taxes, it cannot be disregarded for the purpose of determining the taxability of the respective entity. We further note that Ld. CIT(A) relied upon the decision of Hon'ble High Court in the case of CIT Vs. M/s Gautam Motor (2010) 194 Taxman 21 (Delhi) also 334 ITR 326 (Del) wherein it was held that, There is no case made out by the Department that any tax avoidance has been attempted by these arrangements. We, therefore, see no justification to hold the additions made by the Ld. AO and sustained by the CIT(A), the same is directed to be deleted and this ground of ap ..... X X X X Extracts X X X X X X X X Extracts X X X X
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