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TMI Blog2019 (5) TMI 1254X X X X Extracts X X X X X X X X Extracts X X X X ..... refore see no reason to interfere with the CIT(A) s findings deleting the impugned disallowance in tune with tribunal s first round remand directions in these peculiar facts and circumstances - Decided in favour of assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... ers and distributors of the company was ₹ 5,89,21,638/- for the financial year 2001-02. The differential amount of ₹ 2,04,21,638/- (₹ 5,89,21,638/-) was charged to the profit and Loss account for the financial year 2002-03, which actually related to the financial year 2001-02." 4. However, the Assessing Officer was of the view that the assessee has not furnished the details to show that the actual amount of ₹ 5,59,21,638/- pertains to the assessment year 2002-03. But he allowed the amount provided in the accounts amounting to ₹ 3,85,00,000/- and the additional claim of ₹ 2,04,21,638/- as per revised return was disallowed. 5. Aggrieved by this order of the Assessing Officer the assessee went in appeal before the first appellate authority who enhanced the income of the assessee by disallowing the amount of ₹ 3,85,00,000/-, relying on the decision of Hon'ble Supreme Court in the case of Indian Molasses -Vs- CIT reported in 37 ITR 66 which has been allowed by the Assessing Officer. Thus, the total disallowance after the order of the Ld. CIT(A) stands at ₹ 5,89,21,638/-. The grounds on which the entire dealers' incentive was disallowed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... affected by the dealers but could not be correctly quantifies due to lack of actual data. Therefore, the reliance placed by the Ld. CIT(A) on this case is misplaced. The second and third grounds on which the Ld. CIT(A) has made this disallowance are that the assessee did not credit the individual accounts of the dealers and did not issue credit notes. In this connection, the Ld. Counsel's submissions were that since quantification of the actual incentives payable to each dealer was not possible as on 31st March, 2002 the individual accounts of the dealers could not be credited. However, all the individual accounts of the dealers were credited with the actual incentives payable to them for the sales affected by them during the F.Y. 2001-02 in the immediately next F.Y. 2002- 03 and the entire list of incentives amounting to ₹ 5.89 crores have been furnished to the Assessing Officer as well as the Ld. CIT(A). The last ground for making this disallowance by the Ld. CIT(A) was that the assessee had not parted with the money. According to the Ld. Counsel for the assessee this ground of Ld. CIT(A) is not in accordance with the mercantile system of accounting. After the introductio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the incentive scheme, the records of Ld. CIT(A) were called for and found that assessee did submit the copy of credit policy, incentive scheme and deferred discount policy for the F.Y. 2001-02 and the same was available with him. Copies of which are also available at pages 369 to 391 of the paper book filed by the assessee before us. At this stage, the argument of Ld. Departmental Representative was that since this incentive scheme was not before the Assessing Officer the matter should be restored back to the file of the Assessing Officer to ascertain whether the incentive claimed by the assessee is as per the scheme or not. In reply, the Ld. Counsel for the assessee submitted that he has no objection if the matter is restored back only for verifying the quantification of the incentive claimed by the assessee. 10. Heard both the parties, perused the records relied on by the Ld. Counsel for the assessee in the form of credit notes, the incentive scheme and the case laws relied on by both the parties. We find that there is no dispute about the fact that commission pertains to the sales affected during the year under appeal and since the Assessing Officer has accepted the sales mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion:- "06. DECISION: 1. I have carefully gone through the submissions filed by the appellant and the observation of the Ld. AO in the order. I find that in terms of the direction of the Hon'ble ITAT "A" AO was required to verify the quantification of the incentive payable to dealers with the incentive scheme. 2. The Hon'ble ITAT has decided the issue on merits by holding that "Simply because the assessee could not estimate the amount correctly and had provided a lower figure in its P&L account and differential figure was ascertained at a later stage and provided in the subsequent year the allowable deduction cannot be denied to the assessee. In our considered view the amount had accrued during the year under appeal and the assessee had rightly claimed the said amount, the same should have been allowed by the Assessing Officer." Hence, the disallowance of the same by the Ld. AO on merits tantamount to gross violation of the decision of the Hon'ble ITAT and the same is not permissible. In view of the above, the disallowance of dealers' incentive by the Ld. AO on the ground that the same has not crystallized during the relevant year is not sustainable since the same ..... X X X X Extracts X X X X X X X X Extracts X X X X
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