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TMI Blog2020 (4) TMI 394X X X X Extracts X X X X X X X X Extracts X X X X ..... ) TMI 290 - ITAT BOMBAY-G] where principle of consistency were followed. Thus, we find no justification in disallowing such expenses - Decided in favour of assessee. Disallowance u/s 40(a)(ia) - TDS u/s 172 or 194C or 195 - payment of freight expenses to non resident shipping agencies agent - HELD THAT:- Payment made to the non-resident shipping company in foreign currency by such agents is reimbursement of actual expenses and thus no tax is required to be deducted at source on the same as it appears from the records which has been duly taken care of by the Learned CIT-A. As per CBDT circular No. 723 dated 19.09.1995 since agents acts on behalf of the non-resident ship-owner he therefore steps into the shoes of the principal. Accordingly provision of Sec.172 shall apply and provisions of Sec.194C and Sec.195 would not apply. Having regard to the this particular aspect of the matter the Learned CIT(A) has deleted such disallowance made under section 40(a)(ia) of the Act. Alternatively in the event the C F agents have declared terminal handling charges, documentation charges etc. as income and pay tax thereon disallowance under section 40(a)(ia) is not called for. In this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as undoubtedly revenue in nature, the impugned disallowance has been rightly deleted by the Learned CIT(A) relying upon the ratio laid down by the judgement as aforesaid. Hence, we find no merit in the ground of appeal preferred by the Revenue. The same is, thus, dismissed. Disallowance for market survey and production of TV commercial - HELD THAT:- expenditure in question has not resulted into any enduring benefit to the assessee. Further that such expenses have been incurred wholly and exclusively in connection with the business of the assessee as it appears from the records being revenue in nature, and relying upon the judgement passed by the jurisdictional High Court in the matter of PCIT vs. Zydus Wellness Ltd. [ 2017 (4) TMI 920 - GUJARAT HIGH COURT] we find no ambiguity in the order passed by the Learned CIT(A). Hence, we reject the ground of appeal preferred by the Revenue. Disallowance of expenses paid to Triton Communication for making advertisement film - HELD THAT:- These expenses have been incurred wholly and exclusively in connection with the business of the assessee - underlying expenses are undoubtedly revenue in nature and hence, the disallowance has righ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i O.P. Sharma CIT DR L.P. Jain, SR DR ORDER PER Ms. MADHUMITA ROY- JM : The cross appeals by the Revenue and Assessee are directed against the order dated 18.05.2015 passed by the CIT(A)-1, Ahmedabad arising out of the order dated 28.03.2013 passed by the ITO Wd-1(2), Ahmedabad u/s. 143(3) of the Income Tax Act, 1961 (hereinafter referred to as the Act ) for Assessment Years 2010-11. ITA No. 2277/Ahd/2015(Assessee s Appeal):- 2. This appeal relates to disallowance of ₹ 46,52,291/- by the Revenue treating the same as prior period expenses. The said expenses found to be crystallized in the F.Y. 2009-10 and hence disallowed by the Ld. AO, which was, in turn confirmed by the Ld. CIT(A). Hence, the appeal before us. 3. The assessee company engaged in manufacturing of cosmetic products for domestic as well as exports filed it return on 08.04.2011 declaring income at Rs. (-) 4,57,78,741/- and book profit u/s. 115JB of the Act at ₹ 50,82,397/-. Notice under section 143(2) dated 22.09.2011 was issued and served upon the assessee flowed by and further notice dated 18.05.2012 and a detail questionnaire under section 142(1) of the Act dated 23.08.201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. Nagri Mills Co. 33 ITR 681 (Bom.). 6. On the other hand, the Ld. DR relied upon the order passed by the authorities below. 7. We have heard the respective parties and we have also perused the relevant materials available on record. It is the settled principle that merely because the expense relates to earlier years the same cannot be said to be payable always in the same year unless and until it is crystallized. It appears from the record of the assessee is in the practice of claiming the prior period expenses as and when it is crystallized. Since in this particular case we have verified from the documents that the said expense of ₹ 46,52,291/- made to the parties during A.Y. 2010-11 upon resolving the dispute between those parties, the same actually been crystallized in A.Y. 2010-11 and such expenses are allowable in nature. In this aspect we relied upon the judgment passed by the jurisdictional High Court in the matter of Deepak Fertilizers and Petrochemicals Corp. Ltd. vs. DCIT 116 ITD 372(Mum.) where principle of consistency were followed. Thus, we find no justification in disallowing such expenses as aforesaid by the authorities below. Hence, we delete the same. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 77; 34,14,124/- u/s. 40(a)(ia) of the Act. The A.O. in the impugned order considered payment of ₹ 34,14,124/- to eight parties in respect of freight and forwarding expenses (already discussed para 4A above) and rejected appellant s explanation that due TDS was deducted as per the provision s as evidenced by photo copies of invoices raised by these parties (submitted by appellant and verified by A.O.) on the amounts attributable to servicing and handling charges and not reimbursement. The A.O. also rejected appellant s contention about non application of TDS for the freight expenses to non resident shipping agencies agent. The appellant in appeal reiterated its contention with copies of such invoices and emphasizing the fact that circular no. 723 dt. 19/09/1995 is applicable for such non resident shipping agencies and its agent since taxable u/s. 172 of the Act and no provision of section 195/194C of the Act is applicable. The appellant further relied on Hon ble Gujarat High Court order dt. 25/06/2013 in the case of CIT-III Vs. Gujarat Narmada Valley Fertilizers company Ltd.(tax appeal no. 315 of 2013) and Hon ble ITAT Ahmedabad order in the case of M/s. Om Satya Exim Pvt. Ltd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is, therefore, considering the facts and judicial preposition, the A.O. is directed to allow such expenses and delete the addition so made of ₹ 3414124/-. The appellant gets relief accordingly. This ground is allowed. Heard the parties, perused the relevant materials available on record. 10. It is the case of the assessee that while exporting its goods, it books the container of various foreign shipping companies through their offices in India/clearing and forwarding agents (C F) who deal with the office of such shipping companies. In fact upon receipt of bills for freight and other related charges of shipping companies the assessee pays to clearing and forwarding agents, who in turn, make such payment to the concerned shipping companies. As it appears from the records that such bills comprise of freight in foreign currency, terminal handling charges, consolidation and documentation charges, detention charges etc. It is further the case of the assessee that the assessee has duly deducted tax at source on terminal handling charges, documentation charges etc paid to these agents. However, the payment made to the non-resident shipping company in foreign currency ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... company has passed a resolution for registration of the said car in the name of the director but the company has domination over the said car and the same is used wholly and exclusively for the business of the company. However, this plea of the assessee has found to be confronted by the ld.DR but he failed to bring any decision in his favour. 14. Heard the parties and perused the records. It is the settled principle of law that though cars are brought by a company the name of its director, the company is eligible for claiming depreciation on the same. In this regard, the assessee relied upon the judgement passed in the matter of CIT vs. Aravalli Finlease reported in 341 ITR 282(Guj) which we have carefully perused. 16. As we find that the Learned CIT(A) deleted additions made in respect of Interest ₹ 82,121/- and Insurance ₹ 23,370/- ; However, addition in respect of Depreciation ₹ 1,36,000/- and car expense ₹ 28,995/- has been partly deleted to extent of 75% i.e. 25% which according to us is unambiguous taking into consideration of the assesses books of accounts maintained in regard to the said asset as it appears from the records and thus we u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xpenses has undoubtedly revenue in nature, the impugned disallowance has been rightly deleted by the Learned CIT(A) relying upon the ratio laid down by the judgement as aforesaid. Hence, we find no merit in the ground of appeal preferred by the Revenue. The same is, thus, dismissed. Ground No.6: 21. This ground relates to deletion of disallowance of ₹ 8,71,278/- for market survey and production of TV commercial has been challenged before us by the Revenue. Such expenses in question have been incurred for carrying out market survey prior to launch of assesse s products in foreign markets and this expenses in question are part of sales and marketing expenses since it is essential for the company to carry out some such market survey prior to launching its product in the market as the case made out by the assessee. 22. Heard the parties, perused the relevant materials available on records. It appears from the above discussion that the expenditure in question has not resulted into any enduring benefit to the assessee. Further that such expenses have been incurred wholly and exclusively in connection with the business of the assessee as it appears from the records bein ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t card of those concerned expenses which appear at Page 254 to 255 of the Paper Book on record before us. Assessee s turnover is ₹ 16,64,10,392/- for the year under consideration which appears at Page 54 of the Paper Book. Accordingly, the impugned expense is only 0.07% of the total turnover. Thus, ultimately, the impugned expenses have been found to be incurred wholly and exclusively for the business of the assessee by the ld.CIT(A), which finding according to us is without any ambiguity and needs no interference. The same have been deleted by the Ld. CIT(A). Hence, we reject this ground preferred by Revenue. Ground no.9 29. This ground relates to the addition of ₹ 13,44,47,290/- made on account of under-invoicing of sales made to sister concern. 30. Heard the parties and perused the relevant materials on record. 31. It appears that AO made the ad-hoc addition of ₹ 13,44,47,290/- on account of alleged under-invoicing of sales made to sister concerns. The assessee has made exports of ₹ 2,42,67,490/- to its sister concern viz. Bajaj Herbal FZE LLP. The AO further found that the assessee had exported same products to various other parties as we ..... X X X X Extracts X X X X X X X X Extracts X X X X
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