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TMI Blog2020 (3) TMI 219X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee which are co-related with the above ground raised by the Revenue are as under:- 2. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred on facts and in law in not deciding the disallowance of expenditure incurred by the appellant towards payment on account of running royalty. 2.1 That on the facts and in the circumstances of the case, the Ld. CIT(A) erred on facts and in law in not considering the submissions made and the judicial precedents cited by the Appellant to show why the preceding years order ought not to be followed as a good precedent. 4. The facts of the case, in brief, are that the assessee company is engaged in the business of manufacturing of various body parts for small vehicles, including the side bumper frame works, rear frame work, cener pillar, etc for Maruti Suzuki India Ltd. It filed its return of income on 28/11/2012 declaring loss of Rs. 52,48,917/-. The Assessing Officer during the course of assessment proceedings noted that the assessee has debited an amount of Rs. 3,73,97,245/- on account of royalty on sales to the Profit & Loss Account. He asked the assessee to explain as to why royalty paid during the year sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nical knowledge of the foreign company. Thus, respectfully following the decision of Hon'ble Delhi High Court and of the coordinate bench of Tribunal, we are of the considered opinion that the royalty paid by the assessee in the peculiar facts and circumstances of the present case, was in the nature of revenue expenditure incurred by the assessee. Therefore, we set aside the orders of the authorities below on this issue and decide it in favour of the assessee. Accordingly, ground No. 3 of assessee is allowed and ground No. 1 of the Revenue is dismissed." 8. Since, the Ld. CIT(A) has allowed only 75% of the royalty payment as revenue in nature, therefore, respectfully following the decision of the Tribunal in assessee's own case in the immediately preceding assessment year, we hold the entire royalty payment as revenue in nature. Accordingly the ground raised by the assessee is allowed and the ground raised by the Revenue is dismissed. 9. In the result, ground raised by the Revenue is dismissed and the grounds raised by the assessee are allowed. ITA No.5946/Del/2016(By the assessee) 10. The grounds of appeal no.1 and 1.1 by the assessee read as under:- "1. That on the facts an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellant submitted a different fact that the debit notes amounting to Rs. 1,17,38,409/- although related to F.Y 2010-11 were actually raised by M/s Maruti Suzuki Ltd during the year under reference. This contention was never raised before the A.O, thereafter, in the written submissions dated 20.07.016, the appellant once again changed the contention and submitted as under:- "2.5 It was in these circumstances, that when the issue of balance outstanding for considerably a long period was broached with Maruti, it said that according to it there was no outstanding with reference to those balances as it had already made full payment against invoices after taking into account the price variation that had taken place from time to time. Therefore when it became clear that Maruti would not be making any more payments against the outstanding balances shown in the books of accounts of the Appellant, the Appellant had no other go than to write off the outstanding balances against which Maruti stated that they would not be making, any further payments against those balances. 2.6 Immediately upon coming to know this, the Appellant wrote off the receivable outstanding against Maruti and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing India (P.) Ltd. vs ACIT [2019] 110 taxmann.com 172(Del. Trib.), he submitted that the duty of the first appellate authorities to pass a speaking order after proper appreciation of facts. Referring to the decision of the Hon'ble Supreme Court in the case of Indian Tube Co. (P) Ltd. vs CIT [1992] 60 Taxman 399 (SC), he submitted that the Hon'ble Supreme Court has held that true nature and character of the disputed claim must be determined with reference to the substance of the matter and not by the mere entry or nomenclature which the assessee had chosen to give. Relying on various other decisions placed in the paper book, he submitted that the amount should be allowed as bad debt and cannot be disallowed as prior period expenditure. He further submitted that the tax rates for the current year as well as preceding year are the same and the assessee is not going to derive any benefit, therefore, the amount of Rs. 1,17,38,409/- should be allowed as deduction to the assessee. 15. The Ld. DR on the other hand heavily relied on the order of the Assessing Officer and Ld. CIT(A). He submitted that the assessee is changing its stand time and again. Before the Assessing Officer, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hold and direct accordingly. The grounds raised by the assessee are allowed for statistical purposes only. 17. The ground raised by the assessee read as under:- 3. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred on facts and in law in confirming the disallowance of the expenditure incurred by the appellant, on staff welfare to the extent of Rs. 8,55,000/- on the ground that the expenditure to this extent did not appear to be in accordance with the attendance policy of the appellant. 18. The facts of the case, in brief, are that the Assessing Officer during the assessment proceedings noted that the assessee has claimed staff welfare expenditure of Rs. 1,89,54,834/-. From the details furnished by the assessee, he noted that the amount of Rs. 25,74,500/- has been withdrawn in its account on various dates without any description/merits and nature of expenses. Since the assessee could not substantiate evidence to his satisfaction regarding the withdrawal of such huge amount towards staff welfare expenses, the AO made addition of Rs. 25,74,500/- treating the same as expenditure otherwise than wholly and exclusively incurred for business purposes. 19. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee company. Referring to page 101 of the paper book drew attention of the Bench to the monthly attendance reward of the assessee company which is debited under the staff welfare expenses. Referring to page 103 to 239 of the paper book, he drew attention of the Bench to the date wise and month wise attendance reward which is as per policy of the assessee company. He submitted that the expenditure being wholly and exclusively incurred for the purpose of business should not have been disallowed. 22. The Ld. DR on the other hand heavily relied on the order of the Ld. CIT(A). 23. We have considered the rival arguments made by both the sides, perused the orders of the authorities below and the paper book filed on behalf of the assessee. We find the AO in the instant case made addition of Rs. 25,74,500/- out of the staff welfare expenses of Rs. 1.89,564,834/- which was restricted by the Ld. CIT(A) to Rs. 8,55,000/-. The reasons of such relief granted by the Ld. CIT(A) has already been reproduced in preceding paragraphs and the Revenue is not in appeal against the same. So far as the disallowance of Rs. 8,55,000/- is concerned, the Ld. counsel for the assessee brought to our notice th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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