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TMI Blog2018 (9) TMI 1406X X X X Extracts X X X X X X X X Extracts X X X X ..... Calcutta High Court in case of Exide Industries Ltd.. [2007 (6) TMI 175 - CALCUTTA HIGH COURT]. As the issue is pending before the Hon’ble Supreme Court with regard to allowability of claim of provision for leave encashment, we direct the AO to decide the issue only after the decision of Hon’ble Supreme Court on this issue. We direct accordingly. Disallowance of provision for post retirement benefits u/s.43B(b) - Held that:- Thus issue is squarely covered by the decision of Delhi High Court in the case of Ranbaxy Laboratories Ltd., [2011 (3) TMI 1032 - DELHI HIGH COURT] as held that the pension scheme of the assessee did not envisage any regular contribution to any fund or trust or any other entity. The pension scheme provided that pension would be paid by the assessee to its employee on his or her attaining the retirement age or resigning after having rendered services for a specified number of years. Thus, where the liability on this account accrued from year to year, it was payable on retirement/resignation of the eligible employees. It could not be disallowed under section 43B. where the liability on this account accrues from year to year, the same is payable on retirement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ese are the cross appeals filed by assessee and Revenue against the order of CIT(A)-2, Mumbai dated 01/02/2003 for the A.Y.2007-08, 2008-09 2011-12 in the matter of order passed u/s.143(3) of the IT Act. 2. The following grounds have been taken by the Revenue:- A.Y.2008-09:- 1. On the facts and in the circumstances of the case and in law, the Ld. CIT (A) has erred in directing the AO to allow the entire DMA commission of ₹ 1,10,90,73,765/- as a deduction in the year under consideration without appreciating that the assessee has itself amortized the said expenditure in its accounts on a matching principle i.e. Revenue is recognized and expenses are claimed on a matching principle. 1.1 On the facts and in the circumstances of the case and in law, the Ld. CIT (A) erred in directing the AO to allow the entire DMA commission as a deduction against the income of the year without appreciating the ratio of the decision of the Apex Court in the case of Madras Industrial Investment Corporation [225 ITR 802] in which it was held that only proportionate expenditure vis-a-vis revenue on a matching principle should be allowed, since allowing the entire expenditure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Madras Industrial Corporation (225 ITR 802). 2. On the facts and in circumstances of the case and in Law, the Ld. CIT(A) erred in allowing the claim of the assessee that on booking of contracts for financing of vehicles purchase, DMA commission incurred during the year be allowed in entirety in computing total income of the assessee, and thereby overruling the Assessing Officer who held that the assessee would be entitled only to the lower amount actually debited by in its P L account in accordance with its accounting policy of deferring the DMA Commission incurred, in its books over the period of the contract. 3. The following grounds have been taken by assessee A.Y.2008-09 The appellant being aggrieved by the order passed by learned Commissioner of Income Tax (Appeals) - 2 (hereinafter referred to as the learned CIT(A) ) has preferred this appeal on the following ground, which are without prejudice to each other: 1. Disallowance of expenditure U/S.14A The learned CIT (A) has erred in law and in facts in confirming the disallowance u/s. 14A of the Income Tax Act, 1961 ( the Act ) read with rule 8D of the Income Tax Rules, 1962 ( the Ru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has further been confirmed in the below judgements CIT vs. Fortis Health Care (2009) 181 Taxmann 257 (Del) HC JDIT vs. Krupp UDHE GMBH (2010) 1 ITR 614 ITAT Mum Mahindra Mahindravs. DCIT (2009) 22 DTR 361 ITAT Mum (SB) Cairn Energy India Pvt. Ltd. vs. ACIT (2009 TIOL 220 ITAT -Mad) CIT vs. Tata Engineering and Locomotive Company Limited (2000 245 ITR 823 Bombay) DIT (IT) vs. Krupp UDHE GMBH (2010-TIOL-214-HC-MUM-IT) Further the photocopy of Invoices can be made available as and when required. The Appellant craves leave to add, to alter, delete or substitute all or any of the aforesaid grounds of appeal. 4. Rival contentions have been heard and record perused. 5. Facts in brief are that the assessee is a Non Banking Financial Company (NBFC] engaged in the business of financing the vehicles. The assessee e-filed its return of income for A.Y. 2008-09 on 30.09.2008 declaring total income of ₹ 56,96,93,100/-. In the assessment order u/s 143(3) dated 09.12,2010, the Assessing Officer added the following amounts with the returned income : i) Excess depreciation claim disallowe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Assessee of amortizing it . Respectfully following the decision of the Hon ble Supreme Court in case of Taparia Tools Ltd., (supra), wherein proposition laid down in the case of Madras Industrial Investment Corporation have already been considered, we do not find any infirmity in the order of CIT(A) for allowing deduction of Direct Marketing Agent s commission paid to the Direct Marketing Agent. As the facts and circumstances in all the three assessment years i.e., 2007-08, 2008-09 and 2011-12 are same, following the reasoning given hereinabove, the ground taken by the Revenue is dismissed. 10. In the A.Y.2008-09, Revenue is aggrieved by the action of CIT(A) for allowing of NCD issue expenses. The CIT(A) has allowed assessee s claim by relying on the decision of Rajasthan High Court wherein SLP filed by the department was dismissed by the Hon ble Supreme Court in the case of Udaipur Milla Ltd., ITA No. 8/2007 order dated 20/11/2008 (321 ITR 611). 11. We have considered rival contentions and found that the A.O. noted that the above NCD 's are redeemable over a period of 4 years. Hence, as the expense involve benefit of enduring nature spread over a period of 4 years ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve no application as this has been claimed only on the basis of a scientifically determined actuarial valuation and not as a contribution to any fund. 19. We have considered rival contentions and found that issue is squarely covered by the decision of Delhi High Court in the case of Ranbaxy Laboratories Ltd., wherein Hon ble High Court held that the pension scheme of the assessee did not envisage any regular contribution to any fund or trust or any other entity. The pension scheme provided that pension would be paid by the assessee to its employee on his or her attaining the retirement age or resigning after having rendered services for a specified number of years. Thus, where the liability on this account accrued from year to year, it was payable on retirement/resignation of the eligible employees. It could not be disallowed under section 43B. 20. We have considered rival contentions and also gone through the decision of Delhi High Court wherein Hon ble Delhi High Court observed that the pension scheme of the assessee does not envisage any regular contribution to any fund or trust or any other entity. The pension scheme provides that pension would be paid by the assessee to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the parties to whom reimbursement has been made at the time of payment made by them. The finding so recorded by AO and CIT(A) has not been controverted by learned AR by bringing any material on record. Accordingly, we do not find any reason to interfere in the findings so recorded by lower authorities. Hence ground taken by assessee is dismissed. 26. In the result, appeal for A.Y.2007-08 is allowed in part in terms indicated hereinabove. 27. In the A.Y.2008-09 assessee is aggrieved by the action of the AO for disallowing administrative expenditure u/s.14A by invoking Rule 8D(2)(1) of the IT Rules. It was contention of learned AR that the Assessing Officer's invocation of Rule 8D(2)(i) is patently erroneous. If at all any disallowance is called for it can be made only under Rule 8D(2)(iii) of the Rules, PROVIDED THAT the conditions of Rule 8D(2){iii) of the Rules are met. 28. In view of the above, we restore the matter back to the file of the AO with a direction to compute disallowance of administrative expenses in terms of 8D2(iii). We direct accordingly. 29. Assessee has also raised additional ground for claim of adjustment on account of delinquency support rec ..... X X X X Extracts X X X X X X X X Extracts X X X X
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