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TMI Blog2018 (2) TMI 1851X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee's own case [2017 (5) TMI 1597 - RAJASTHAN HIGH COURT] has admitted that bills and vouchers of expenses, as desired, were produced for verification which was test checked. The observation of AO that services has been received by the assessee against these payment and therefore he should have deducted tax at source on the value of the gift is ill founded in as much as the payment is not against the services but against the sale of goods to the distributors and therefore TDS provisions are not applicable disallowance made by the AO on this account is deleted. Disallowance of miscellaneous expenses - claim neither verifiable as no supporting evidence was available and also the same could not be established to have been incurred wholly and exclusively for the purpose of business - HELD THAT:- As decided in assessee's own case [2017 (5) TMI 1593 - RAJASTHAN HIGH COURT] AO has made the disallowance without specifying any particular expenses which is not verifiable or not incurred wholly and exclusively for the purpose of business when he has given a finding at Page 2 of the order that bills and vouchers of expenses as desired were produced for verification and examined on tes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7; 5,79,30,029/- made on account of inventories written off specifically when neither any details were furnished by the company nor there was any supporting evidence to justify and establish that the sam deduction was not claimed by it earlier as cost of goods sold? (6) Whether the Tribunal was legally justified in deleting the addition of ₹ 37,08,461/- made on account of traveling and conveyance expenses specifically when the company neither specified the nature and purpose of expenses nor any supporting evidence was filed to justify the claim? (7) Whether the Tribunal was legally justified in deleting the addition of ₹ 84,92,509/- made on account of miscellaneous expenses which were neither verifiable as no supporting evidence was available and also the same could not be established to have been incurred wholly and exclusively for the purpose of business? 3. The facts of the case are that the respondent assesse derives income from manufacturing and trading of razors, blades and other shaving systems, grooming products, torches dry battery cells etc. In this case draft assessment order u/s.143(3) read with section 144C(1) was passed on 27.02.2015 where ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed on 23.5.2011. 5.1 He contended that issue no.7 of appeal no.40/2017 is now covered by the decision in DBITA No.33/2016 decided on 23.5.2016. 5.2 Counsel for the respondent has relied upon the following decisions:- 5.3 In Commissioner of Income Tax-3, Mumbai vs. General Atlantic (P) Ltd. reported in (2016) 68 taxmann.com 88 (Bombay). 5.4 In CIT Alwar vs. M/s Sakata Inx (India) Ltd. D.B. ITA No.72/2015 decided on 18.5.2017. 6. In that view of the matter, both the issues no.6 7 are answered in favour of the assessee and against the department. 6.1 Regarding issue no.1,2, 3, tribunal while considering the expenses of the associated enterprise (AE) for creating marketing intangibles and promoting the brand name of its AE, it is for the marketing people to look new products which has competition in the national level or grass route level and International level. It is always for the Company to decide on what ratio the expenses are to be incurred at grass route and on that ratio for promoting their product. 6.2 In that view of the matter, unless the amount which was found to be not genuine merely because excess amount has been spent on advertisement, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AEs. In the instant case where the assessee is not charging any interest from AE as well as non-AEs then the only difference between the two transactions which can be considered is average period allowed alongwith outstanding amount to AE and non-AEs. The Revenue has not brought any material on record to suggest that the average period in realization of the export proceedings is at variance and vastly different. Further it is noted that the Coordinate Bench in the case of Bousch Lomb Eyecare (India) Pvt. Ltd. (supra) wherein the identical issue was raised and the contentions regarding the amendment of explanation to section 92B was also raised, has followed the decision of Bombay High Court in the case of Indo American Jewellery Ltd. (Supra). 6.14 In light of above respectfully following the Bombay High Court s decision in case of Indo American Jewellery and the Co-ordinate bench decision in the case of Bousch Lomb Eyecare (India) Pvt. Ltd., we are of the view that there is complete uniformity in the act of the apellant in not charging interest from both AE s and non-AEs and adjustment in realization to notional interest on outstanding receivable cannot be made. In the res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... para 6.3 where the Tribunal summarizing the same observed as under: 6.3 After considering the rival submission, we find that Group M Media India Pvt. Ltd. is an Indian Co. as is evident from the company master details placed at Paper Book Page 17. From the same, it is noted that this company is incorporated on 29.11.2001 having registered office at Mumbai. Therefore, it is an Indian Co. as defined u/s 2(26) and is a company resident in India u/s 6(3). All payment made to this company towards advertisement charges is in Indian currency. Tax is deducted at source on such payment u/s 194C. Sec. 195 is applicable when payment is made to a non resident. Admittedly, payment to Group M Media India Pvt. Ltd. is a payment to resident and not a non resident. Therefore, section 195 is not attracted. The AO has not disputed the genuineness of the payment and therefore only because there is no agreement for the advertisement work with this company cannot be viewed adversely. Therefore, the disallowance of ₹ 36,70,04,056/- made by the AO is incorrect, against law and the same is deleted. So far as expenses on trade incentive is concerned, we find that similar incentives given as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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