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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 ..... the circumstances of the case and in law, the Ld. CIT(A) is justified in deleting the addition of Rs. 2.04 crores routed through balance sheet on account of Dealers incentive - this is the area of contention because the assessee could in no proceeding justify that this expense pertain to the assessment year in question." Heard both the parties. 3. Case file suggests that instant lis is in the nature of consequential proceedings arising from the tribunal's first round remand direction in ITA No.1063/Kol/2006 decided on 20.04.2007. Learned co-ordinate bench had restored the impugned dealers incentive issue back to the Assessing Officer as follows:- "3. The assessee is a widely held domestic company engaged in the business of manufacture and sale of batteries. The assessee company made a provision in its books of accounts of a sum of Rs. 3,85,00,000/- on account of incentive payable to its dealers. The company thereafter claimed an additional amount of Rs. 2,04,21,638/- as deduction in computation filed along with the revised return. The assessee was asked to explain along with details of such claim. In this respect the assessee's reply was as under : "the amount of Rs. 2,04,21 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claimed by the assessee lacks the characteristics of the term 'expenditure'. (ii) The dealers do not have any knowledge about the amount credited to them since the assessee had not credited the individual accounts of the dealers. (iii) The appellant had not issued any credit notes on account of such incentives. (iv) The most important condition for a claim to be eligible for deduction is that it should have gone out of the pocket of the assessee irretrievably and that the appellant had not parted with a single rupee." The case laws relied on by the assessee company were distinguished by the Ld. CIT(A) while enhancing the income of the assessee. 6. Aggrieved by this order of the Ld. CIT(A) now the assessee is in appeal before us. 7. At the time of hearing the Ld. Counsel for the assessee reiterated the stand taken by him before the lower authorities. He further submitted that the Assessing Officer was not correct in stating that the details regarding this claim were not filed before him. Referring to page nos. 7, 8, 11 to 159 of the paper book the Ld. Counsel for the assessee submits that the total amount of credit notes issued in relation to the commission pertaining ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accrual basis. Once an income or expenditure has accrued it has to be taken into consideration while computing the total income. In the instant case there is no doubt that the dealer's incentives have accrued since the sales had been affected by the dealers within the F.Y. 2001-02 and, therefore, there remains no doubt that the same should be taken into consideration while computing the total income. It is settled principle that if the liability has accrued and arisen the same should be allowed in that year irrespective of the fact that such expenditure is actually accounted and discharged in the subsequent year. The general rule is that the deduction can be permitted in respect of those expenses or losses which have accrued in the relevant accounting year. In making these submissions, he relied on the following decisions: "i) CIT -Vs- Govardhan Lal (1968) 69 ITR 675 (SC); ii) Bharat Earth Movers -Vs- CIT 245 ITR 428 (SC); iii) Calcutta Co. Ltd. -Vs- CIT 37 ITR 1 (SC); iv) CIT -Vs- Swadeshi Mining Manufacturing Company Ltd. 112 ITR 276 (Cal) and v) Hukumchand Jute & Industries Ltd. -Vs- CIT 241 ITR 517 (Cal). 8. Concluding his arguments and further making reliance on a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o become accrued and due to the dealers. 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. This view finds support from the judicial principles laid down by the various High Courts and Hon'ble Supreme Court in the cases relied on by the Ld. Counsel for the assessee. However, since the incentive scheme was not before the Assessing Officer, we deem it proper that to verify whether the assessee's claim is as per the scheme or not i.e. for quantification of the incentive claimed by the assessee, the matter is restored back to the Assessing Officer. Therefore, this ground is disposed of accordingly." 4. The Assessing Officer took up consequential proceedings. The assessee placed on record its dealers incentive scheme dated 07.06.2001 in compliance to above remand directions. It expl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is an undisputed fact that the appellant had filed incentive scheme, computation of incentive on sample basis for seven regions and numerous credit notes before the Ld. AO verification, in terms of the direction of the Hon'ble ITAT. The Ld. ARs have filed the above documents in this forum also and the same are on record. The Ld. AR explained in detail how the incentive has been worked out. I find that the details of computation of incentive are mentioned in the credit note itself, and are amenable for verification. A few of these were test checked on a sample basis also, and are found to be in order. Therefore, it is seen that the appellant had computed incentives in terms of the incentive scheme and as such the same is allowable in terms of the decision of the Hon'ble ITAT, Finally, in the order, the Ld. AO once again placed reliance on the decision of the Hon'ble Supreme Court in the case of Indian Molasses Co Private Ltd v CIT (supra) and rejected the claim of the appellant. In this connection, it is to be mentioned that the Hon'ble ITT has already held that the decision of the Hon'ble Apex Court in the case of Indian Molasses Co Private Ltd was not applicabl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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