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TMI Blog2019 (5) TMI 408X X X X Extracts X X X X X X X X Extracts X X X X ..... verify as to what statement has been given by Hindustan Motors in their accounts. We find some force in the argument of the assessee regarding the alternate contention. A perusal of the Consulting Service Agreement shows that the stamp paper was purchased on 26th March, 2013 and the date in the Consulting Service Agreement is blank. Since this certificate was furnished at the time of hearing and was not available before the AO or the CIT(A), therefore, we deem it proper to restore the issue to the file of the AO with a direction to obtain further information from Hyundai Motor India Ltd. regarding the nature of the agreement. He should also keep in mind the order passed u/s 143(3) in the subsequent assessment year. The grounds raised by the assessee are accordingly allowed for statistical purposes. - ITA No.6700/Del/2017 - - - Dated:- 30-4-2019 - Shri R.K. Panda, Accountant Member And Ms Suchitra Kamble, Judicial Member For the Assessee : Shri Salil Kapoor And Shri Shivansh Pandya, Advocates For the Revenue : Shri Surender Pal, Sr. DR ORDER PER R.K. PANDA, AM: This appeal filed by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also submitted the copy of agreement with M/s Hyundai Motors India Ltd., Chennai. 3. The Assessing Officer obtained information from Hyundai Motors India Ltd., who vide their reply dated 2nd February, 2016, submitted that they have paid an amount of ₹ 3,10,81,172/- to M/s Hyundai Capital India Pvt. Ltd. and the above amount was treated as expenditure in their books of account. Therefore, the question of advance does not arise. Since the payer company confirmed that during the year the payment was made against invoice No.201303/01 dated 31.03.2013 and payments were treated as expenditure in their books of account and not as advance, therefore, the Assessing Officer confronted the same to the assessee to explain as to why the total revenue during the year of a sum of ₹ 3,10,81,172/- should not be recognized. The assessee replied that the contract between HMI and the assessee clearly states that the income is to be recognized based on the total cost incurred plus a margin of 8%. Such income is restricted in terms of the agreement, the balance ad hoc installment amount remains as an advance. The assessee has accordingly correctly recognized the income at &# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e holding company in Korea as well as the payer company and payee company are related parties. Rejecting the various explanations given by the assessee, the Assessing Officer has addition of ₹ 2,11,27,581/- to the total income of the assessee. 6. In appeal, the ld.CIT(A) upheld the action of the Assessing Officer by observing as under:- 8. I have examined the materials on record. It is noticed that invoice dated 31.02.2013 has been raised on Hyundai Motors India Ltd for an amount of ₹ 3,10,81,172/- after deducting services tax of ₹ 38,41,633/-. TDS amounting to ₹ 34,92,281/- has been claimed by the appellant in its Return of Income. The account of Hyundai Motor India Ltd. in the books of appellant company for the period of 01.04.2012 to 31.03.2013 shows Fee Revenue of ₹ 99,53,591/- and Advance income of ₹ 2,11,27,581/-. It is clear that once invoice is raised, payment is legally due, service tax is accounted for, full credit for TDS is claimed, assessee cannot choose when how much is to be treated as income as per its whims and wishes. It is obvious that there is no uncertainty/ contingency with respect to the rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a stamp paper dated 26.03.2013 suggesting that the agreement is a product of after thought and making it clear that the insisted sanctity of the said CAS is misplaced. Accordingly, appellant's argument that Returned Income of appellant s argument that Returned income of the assessee was as per installment plan based on the income recognition terms of the CSA is not acceptable. Even if the said agreement is to be believed, the payment structure for the year under examination clearly shows that a sum of ₹ 3,10,81,172/- is the service fee for the period from December, 2012 to March, 2013, which is confirmed by the payment made and claimed as expenses by HMI in its Return of Income Tax A.Y. 2013-14. The case laws relied upon by the Appellant are not relevant in the facts circumstances of the case. 13. As regards, appellant's contention that as it has an arrangement of cost plus 8% with its client, on booking the revenue of ₹ 2,11,27,581/- the A.O. should have allowed an expense of ₹ 1,95,62,575/-, the same cannot be accepted as allowability of expenses cannot be on adhoc basis but on incurring of the same and on debiting to P L A/c. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder under section 143(3) of the Act, though the same method of recognition was consistently followed. 7. That without prejudice, the whole exercise of the Revenue is tax neutral as total amount of the contract has been credited as income in the subsequent year. 8. That the evidence filed and materials available on record have not been properly construed and judiciously interpreted, hence the addition made is uncalled for. 9. That the observation and the additions made are unjust, illegal, arbitrary, bad in law, highly excessive and based on surmise conjecture. 10. That interest U/s 234B, 234C and 234D of the Income Tax Act, 1961 has been wrongly and illegally charged and has been wrongly worked out. 11. That the applicant craves leave to add, amend, alter and/or delete any of the above grounds of appeal at or before the time of hearing. 8. The ld. counsel for the assessee strongly challenged the order of the CIT(A) upholding the action of the Assessing Officer. Referring to page 1 to 9 of the paper book, the ld. counsel drew the attention of the Consultancy Service Agreement entered into with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a direction to verify as to what statement has been given by Hyundai Motors. Referring to the invoice raised by the assessee to Hyundai Motors Ltd., he submitted that the invoice shows installments as per agreement for the month of December, 2012 to March, 2013 at ₹ 3,10,81,172/-. Referring to the decision of the Hon'ble Supreme Court in the case of CIT vs. Excel Industries Ltd., reported in 358 ITR 295 (SC), the ld. counsel for the assessee drew the attention of the Bench to para 32 of the order which reads as under:- 32. Thirdly, the real question concerning us is the year in which the assessee is required to pay tax. There is no dispute that in the subsequent accounting year, the assessee did make imports and did derive benefits under the advance licence and the duty entitlement pass book and paid tax thereon. Therefore, it is not as if the Revenue has been deprived of any tax. We are told that the rate of tax remained the same in the present assessment year as well as in the subsequent assessment year. Therefore, the dispute raised by the Revenue is entirely academic or at best may have a minor tax effect. There was, therefore, no need for the Revenue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... serving documents. 14. The ld. counsel for the assessee, in his rejoinder, submitted that the Assessing Officer has made the addition on the basis of the agreement. Now, that it has been clarified by both the sides that the agreement which was signed on 26th March, 2013 is binding on both the parties and, therefore, the addition made by the Assessing Officer and upheld by the CIT(A) is not sustainable. 15. We have considered the rival arguments made by both the sides and perused the relevant material available on record. We have also considered the various decisions cited before us. We find, the assessee, in the instant case, has shown an amount of ₹ 99,53,591/- as revenue from operations as against ₹ 3,10,81,172/- as per the TDS certificate and claimed credit of TDS at ₹ 34,92,281/-. The Assessing Officer made addition of ₹ 2,11,27,581/- being the difference between ₹ 3,10,81,172/- and ₹ 99,53,591/-. While doing so, he noted that the payer company M/s Hyundai Motor India Ltd. has accounted the bill amount as expenditure. The amount received from Hyundai Motor India Ltd., has been immediately remitted to the holding ..... X X X X Extracts X X X X X X X X Extracts X X X X
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