9911796707
TMI Blog2020 (10) TMI 79X X X X Extracts X X X X X X X X Extracts X X X X ..... . CIT(A) that assessee has not adopted consistent accounting principle on year to year basis and it is not open to the assessee to claim the expense on provision basis in one year and on accrual basis in the other year. As the assessee is not adopting consistent accounting principle on year to year basis. No infirmity in the order of the Ld. CIT(A) confirming the disallowance made by the AO - Decided against assessee. - ITA No. 3541/Del/2016 - - - Dated:- 29-9-2020 - Shri R.K. Panda, Accountant Member And Shri Sudhanshu Srivastava, Judicial Member For the Assessee : Shri Tarandeep Singh, Adv. For the Department : Ms. Maimun Alam, Sr. DR ORDER PER R.K. PANDA, AM This appeal filed by the assessee is directed against the order dated 31st March 2016 of the Ld. CIT(A)-1, Gurgaon relating to assessment year 2010-11. 2. The grounds raised by the assessee are as under :- 1. That on the facts and circumstances of the case and in law, the Learned Commissioner of Income -tax (Appeals) -1, Gurgaon [ Ld. CIT(A) ], has grossly erred in upholding the order of the Deputy Commissioner of Income-tax Circle-l(l), Gurgaon ( the Ld. AO ) in disallowing the provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under :- 7.2 I have given careful consideration to the arguments of the appellant and find that the allowability of any provision is dependent upon the fact that whether such liability has been fully ascertained and the appellant has been adopting consistent accounting principle on year to year basis. It is not open to the appellant to claim the expense on provision basis in one year and in the other year on actual basis. In the present case it is indicated from the table below that uniform policy has not been followed:- 2008-09 2009-10 2010-11 2011-12 2012-13 Invoice amount 1,22,00,177 2,40,36,196 3,79,88,001 7,48,74,834 10,39,26,337 Provision made 130,50,000 94,97,000 1,87,18,709 2,59,81,584 Provision reversed in A.Y 2009-10 (30,50,000) Provision revers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vice tax, if any. 3. Parties also agree that detailed documentation of Support Services provided will be maintained and will be invoiced annually as seen after the close of the financial year as administratively feasible, but no later than sixty (60) a days after the year end. 4. Payment shall be made within thirty (30) days of issuance of the invoice for the Support provided. Amounts can be settled vis a so-called intercompany Account. 6. He submitted that the service stipulated in Annexure A of agreement has been rendered by the AE and the assesseee has derived benefit therefrom during the year under consideration. He submitted that the TPO has not doubted the benefit test vis-a-vis these services which can be verified from the order of the TPO. He submitted that the assessee receives invoice from its overseas group companies for professional services at the end of the calendar year i.e in the month of December of every year. On account of the same the assessee recognised a provision for expenses for the month of January to March on an estimate basis. He submitted that the provision recorded in books of accounts is calculated on a prorata basis based on the invoice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the provision . Therefore the Ld. CIT(A) was fully justified in rejecting the claim of the assessee and thereby upholding the addition / disallowance made by the AO. 8. We have heard the rival arguments made by both the sides, perused the order of the AO and Ld. CIT(A) and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find the AO in the instant case disallowed the provision of professional cost amounting to ₹ 94,97,000/- debited to the profit and loss account on the ground that the assessee could not substantiate the basis for making the said provision. There was no invoice raised by Bain US as on 31.3.2011 and thus the assesee failed to establish that provision for professional support cost was an ascertained liability. We find the Ld. CIT(A) upheld the action of the AO, the reasons of which have already been reproduced in the preceding paragraphs. It is the submission of the Ld. Counsel for the assessee that as per the agreement the AE has rendered services to the assessee and assessee has derived benefit from there and TPO has not doubted the benefit test vis-a-vis these services. Further the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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