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TMI Blog2019 (6) TMI 428X X X X Extracts X X X X X X X X Extracts X X X X ..... ount of provision for leave encashment, for A.Y. 2011-12 at Rs. 70,06,297/- and for A.Y 2012-13 at Rs. 1,73,21,918/-. Since the issue involved in these two appeals are common and identical, therefore, these appeals have been heard together and a consolidated order is being passed for the sake of convenience and brevity. The assessee's appeal in I.T.A. No. 1344/Kol/2015, for assessment year 2011-12, is taken as a lead case. 3. At the outset itself, Ld Counsel for the assessee submitted before us that the issue involved in these two appeals relate to disallowance on account of provision of leave encashment of Rs. 70,06,297/- for assessment year 2011-12 and Rs. 1,73,21,918/- for assessment year 2012-13. The issue under consideration, i.e. provision for leave encashment, which is pending before the Hon'ble Supreme Court for adjudication and there is no finality on this issue. The ld Counsel submitted that the main grievance of the assessee is that the Ld. CIT(A) was erred in not appreciating that Clause (f) of section 43B of the Act, providing for allowance of leave encashment on payment basis is arbitrary and de horse the Supreme Court decision in the case of Bharat Earth Movers, as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It was pointed out by the ld. DR that the Hon'ble Apex Court in"SLP (Civil) 22889 of 2008 has stayed the operation of the decision of the Hon'ble jurisdictional High Court. In view of the above, we set aside the orders of the authorities below on this point and restore the matter back to the file of the AO with the direction that he will readjudicate this issue as per decision of the Hon'ble Apex Court in the case of M/s. Exide Industries Ltd. (supra)". Respectfully following the same we set aside the orders of authorities below on this point and restore the matter back to the file of Assessing Officer for adjudication as per the decision of the Hon'ble Apex Court in the case of M/s. Exide Industries Ltd.(supra)." In view of the above and respectfully following the same, we set aside the orders of the authorities below and restore the matter back to the file of Assessing Officer for adjudication as per the decision of Hon'ble Apex Court in the case of M/s. Exide Industries Ltd. (Supra). This Common ground of appeal of assessee (for both assessment years 2011-12 and 2012-13), is allowed for statistical purposes. 6. Now we shall take revenue's appeal in I.T.A. No. 1371 &1372/Kol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 494). 10. Aggrieved by the stand so taken by the Assessing Officer, the assessee carried the matter in appeal before the Ld. CIT(A) who has deleted the addition made by the Assessing Officer. Aggrieved by the order of the Ld. CIT(A) the Revenue is in appeal before us. 11. The ld. DR for the Revenue has primarily reiterated the stands taken by the Assessing Officer which we have already noted in our earlier para and the same is not being repeated for the sake of brevity and on the other hand, the ld. Counsel for the assessee has defended the order of theld CIT(A). 12.We have heard both the parties and perused the material available on record. We note that the assessee is a dealer of Caterpillar Inc., USA (Caterpillar). Caterpillar Inc. maintains a common web based interface which provides a common platform to all its dealers (including the assessee) to record business transactions. In connection to the above, Accenture LLP (Accenture) and Caterpillar have entered into a Service Agreement dated 1stJune, 2009, vide which Accenture has been granted an exclusive right to license Caterpillar's DBS / DBSi integrated software package (Software) to Caterpillar's dealers on globa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for using the application efficiently. That being so, we decline to interfere in the order passed by the Ld. CIT(A), his order, on this issue is hereby upheld and the grounds of appeal raised by the Revenue is dismissed. 14. Ground No. 2 raised by the Revenue relates to disallowance of commission expenses of Rs. 1,10,58,743/-. 15. Brief facts qua the issue are that the assessee is a dealer of Caterpillar Inc. USA. During the year, the assessee has made commission payment amounting to Rs. 1,10,58,743/- to TRS Enterprises, SAS Enterprises and Chhundu Enterprises. During the year under consideration, the assessee company paid an amount of Rs. 1,10,58,743/- on account of commission on sales to following parties: Sl. No. Name of party Amount (INR) 1. TRS Enterprises 61,82,528 2. SAS Enterprises 43,13,072 3. Chhundu Enterprises 5,62,463 Total 1,10,58,743/- The assessee company being a dealer of Caterpillar and desirous of increasing its sales had entered into separate agreements with the aforesaid parties to engage them to find and/or secure new buyers/customers for it. The aforesaid parties acting as an independent consultant agreed to undertake reaso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on record. We note that ld Assessing Officer has failed to appreciate the facts of the case that the payment made to three parties represents commission for securing sales order for the company. This payment is made as per clause 1 and 2 of the agreement entered into with SAS Enterprises, which states as under:- "i. That TIPL and SAS hereby agree that SAS, acting as an independent consultant, shall use reasonable endeavor to find and/or secure buyers/customers for the Equipment for TIPL ii. SAS shall use reasonable endeavors for keeping TIPL fully informed about buyers'/customers' requirements, forwarding enquiries for Equipment. " Further Clause 7(a) and (b) of the agreement deals with consideration payable to the SAS and the same provides as under: "7. a) That a brokerage/commission will be paid to SAS by TIPL and it would be paid on the case to case basis and determined on the value of the order received by TIPL from buyers/customers for the sale of the Equipment. b) That the said commission shall be paid to SAS against receipt of an invoice by TIPL from SAS payable on a pro rata basis of the Equipment by TIPL from the buyer/customer, wherein the said invoice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to interfere in the order passed by the Ld. CIT(A), his order on this issue, is hereby upheld and the ground no. 2 raised by the revenue is dismissed. 18. Ground No. 3 raised by the Revenue relates to addition of warranty expenses of Rs. 82,02,019/- . 19. Brief facts qua the issue are that the assessee company debited in profit and loss account a sum of Rs. 82,02,019/- as warranty expenses. It claims reimbursement of warranty expenses from Caterpillar for goods supplied on warranty to its customers. During the year under consideration, the assessee incurred total warranty cost of Rs. 15,99,76,159/- claimed as reimbursement from Caterpillar. However, Caterpillar accepted warranty claim of Rs. 15,17,74,140/-. The assessee debited the unrecovered warranty cost of Rs. 82,02,019/- (Rs. 15,99,76,159-Rs. 15,17,74,140) to the Profit and Loss account as business expense. The AO disallowed the expenses on the contention that the assessee has not credited any or at least equal amount of expenditure which is reimbursable by Caterpillar and thereby the assessee had violated the principle of accounting. Hence, AO disallowed the amount of Rs. 82,02,019/-. 20. Aggrieved by the stand so take ..... X X X X Extracts X X X X X X X X Extracts X X X X
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