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TMI Blog2020 (12) TMI 215X X X X Extracts X X X X X X X X Extracts X X X X ..... iew that creditors are old in respect of which the purchases were made in the earlier years. There is no much variation in facts for the year under consideration. Addition of excess process stock - HELD THAT:- On almost similar fact on similar ground of appeal in appeal for assessment year 2005- 06,this ground of appeal is covered by the decision of Tribunal in earlier years. Hence, we affirms the order of ld CIT(A). No contrary facts or law is brought to our notice to take the other view. Respectfully following the same, this ground of appeal raised by revenue is dismissed. Exclusion of expenses of Orisha unit on the basis of turnover of the whole company and TG-3 unit for which assessee claimed deduction under section 80IA - HELD THAT:- while allocating the expenses for power generation unit considered the overall cost of employee and other expenses , which consist of employee cost and other expenses of Orisha unit. CIT (A) after considering the submission of assessee that the Orisha unit has no connection with the generation of power by TG-3 unit, directed the assessing officer to reallocate the expenses by excluding the expenses of Orisha unit. No contrary fact or evidence is b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee. The assessing officer has not doubted that the expenses are not genuine. And without specifying any reason made disallowance @ 5% of the total expenses. The assessing officer simply concluded that the arguments of the assessee company are considered in but the same are not acceptable without specifying any reason - CIT(A) while granting relief to the assessee noted that assessing officer has not even try to deal with the expenses under different head and merely made ad-hock disallowance which is not sustainable. We have noted that like other ad-hock disallowances which were ultimately deleted by learned CIT(A), no contrary fact or evidence is brought to our notice to take other view. Disallowance of 5% of employee welfare expenses and other benefits - HELD THAT:- has not examined the details furnished by the assessee. AO has not find any defects in the books of account maintained by assessee. The assessing officer has not specified even a single discrepancy either in the documents or in the reply furnished by assessee. CIT(A) while granting relief to the assessee recorded that the assessing officer has not doubted that these expenses were not genuine. Even before us no contr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T ] deleted the entire disallowance. Club expenses allowed - as decided in Otis Elevator Co. Ltd. [ 1991 (4) TMI 53 - BOMBAY HIGH COURT ] TDS u/s 195 - disallowance under section 40 a (i) - seminar fees paid to London School of Economics -assessee submits that assessee paid fee for attending seminars and recipient has no business connection in India, thus no income accrues or arise to them in India within the meaning of section 9(1)(i) - The services for which the assessee made payment were rendered outside India. - HELD THAT:- In absence business connection in India, no income accrues or arise to them in India within the meaning of section 9(1)(i) of Income Tax Act. Therefore, on the services for which the assessee made payment were rendered outside India, the assessee was not required to deduct tax at source. However, the ld CIT(A) has categorically held that no that no details about the payment was made to London School of Economics was furnished the veracity of claim could not be verifiable. Hence, we direct the assessing officer to verify the details of the expenses and grant the relief to the assessee. In the result this ground of appeal is allowed for statistical purpose. - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee has not provided any documentary evidences regarding service provided by them. (7) Whether on the facts and circumstances of the case, learned CIT(A) is right in deleting the addition made on account of this allowance of expenses claimed as commission paid to agents on sales of ₹ 6,74,300/-, when the assessee has not provided any documentary evidences regarding services rendered by them. (8) Whether on the facts and circumstances of the case, learned CIT(A) is right in deleting the addition made on account of this allowance of 5% of various expenses amounting to ₹ 1,29,65,250/- especially when the assessee was unable to prove the expenses claimed was wholly and exclusively incurred for business purpose and was revenue in nature. (9) Whether on the facts and circumstances of the case, learned CIT(A) is right in deleting the addition made on account of this allowance of 5% of expenses claimed as employee welfare and other benefits of ₹ 62,31,600/- keeping in view that the assessee was unable to prove that expenditure was incurred wholly and exclusively for the purpose of business carried out by it. (10) Whether on the facts and circumstances of the case the lea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5,250/- 14 Disallowance on account of staff welfare expenses 62,31,600/- 3. On appeal before learned Commissioner (Appeals), the assessee was granted partial relief in respect of additions/disallowances made at serial No. 1 8, however, the additions were deleted in respect of serial number 4, 5, 7, 9 to 13 and other remaining additions mentioned at serial No. 2, 3, 6 and 14 were upheld. Aggrieved by the order of learned Commissioner (Appeals) the revenue has filed present appeal before us. 4. We have heard the submissions of learned CIT-DR and Sr DR (Department of representative) for the revenue and Sh. Saurabh Suparkar learned Senior Advocate/ authorized representative (ld. AR) for assessee and have gone through the orders of authorities below. At the outset of hearing the ld AR for the assessee submits that he had already filed a chart showing that the ground No. 1,2,3 11 of appeal raised by the revenue are covered by the decisions of Tribunal in assessee s own case for earlier years and on other grounds the ld CIT(A) granted relief by passing well reasoned order. The ld. DR for the revenue submits that this appeal is filed by the revenue and he may be allowed to begin his submis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of sapling, research and development activities, technical assistance to farmers, entails expenditure in the hand of assessee. The assessee is not engaged in the agricultural activities. The assessee incurred expenses wholly and exclusively for the purpose of its business for ensuring regular supply of raw material. The learned AR for the assessee submits that on similar set of fact in earlier years the assessing officer made additions, which were affirmed by learned CIT(A). However, on further appeal before Tribunal the contention of assessee was accepted and the assessee was allowed relief vide consolidated order dated 4th September 2009 for assessment year 2002-03 to 2004-05. The same order was followed by Tribunal in appeal for assessment year 2009-10. The learned CIT (A) while following the order of Tribunal in earlier years granted relief to the assessee in the year under consideration. The learned AR of the assessee accordingly submits that the copies of the orders of Tribunal in earlier years are placed on record. In this back ground the ground of appeal raised by revenue is fully covered. 7. We have considered the rival contention about the parties and have gone through ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... saplings not relatable to agricultural operations at ₹ 1.42 lacs. Therefore, agricultural loss would be only ₹ 15.15 - 5.72 = 9.43 lacs. The sale of saplings at ₹ 1.42 lacs would be non-agricultural receipts and therefore cannot be allowed to be adjusted against agricultural expenses. So far as the depreciation of ₹ 4.32 lacs is concerned the same has been claimed on mist chambers other assets used in growing saplings through clonal routes which has been treated as non-agricultural operation in our discussion made in assessment year 2002-03 while disposing of similar ground. Thus, the disallowance is restricted to ₹ 9.43 lacs and accordingly assessee gets relief of ₹ 78.13 - 9.43) = ₹ 68.70 lacs. 2.1 In the light of the above discussion, we are of the considered opinion that this issue now stood covered by several decisions of the Tribunal pronounced in the past and learned CIT(A) has simply followed one of the said decision, hence, there was no fallacy in the judgment of learned CIT(A), thus required to be affirmed. Resultantly, we find no force in this ground of the assessee. Hence dismissed. 8. Considering the consistent decision of Tri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10.2 At the outset, we have been informed that on identical facts, the Tribunal in A.Y.2008-09 (supra) had held that there was no change in the facts of the case already considered in the past for A.Y. 2006-07 and 2007-08 by the Tribunal. On the same lines for A.Y. 2008-09, the ITA No.511 634/Ahd/2013 J.K. Paper Ltd. Vs ITO A.Y. 2009-10 Tribunal has decided the issues in favour of the assessee, relevant portion is reproduced below: 2.4 Ground No.4 is as under: (4) On the facts and circumstances of the case and in law, the Ld. CIT(A)-I, Surat has erred in deleting the addition of ₹ 4,95,000/- made on account of unexplained creditors without appreciating the fact the assessee failed to discharge the onus cast upon it to prove the genuineness of the creditors. 2.4.1 Regarding this issue, it was agreed by both the side that similar issue was raised by the revenue in earlier two years i.e. assessment year 2006-07 and 2007-08 as per ground l(d) and l(c) respectively and therefore, in the present year also, this issue may be decided on similar line. In those two years, this issue was decided by the tribunal in favour of assessee as per para 15.2 of the tribunal order of earlier two ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve. Accordingly, this ground of the revenue is also rejected. 12. Considering the consistent decision of Tribunal on similar set of fact, we are in agreement with the submission of learned AR of the assessee that this ground of appeal is covered by the decision of Tribunal in earlier years. Hence, we affirms the order of ld CIT(A). No contrary facts or law is brought to our notice to take the other view. Respectfully following the same, the ground of appeal raised by revenue is dismissed. 13. Ground No.3 relates to deleting the addition of excess process stock. The ld. DR for the revenue supported additions made by assessing officer. The ld. DR for the revenue further submits that during the assessment preceding the assessee was asked to produce the stock statements along with the bank and stock available as per books of accounts as on 31 March 2010. The assessee produced the statement which show a difference of ₹ 11,90,980 /- and stated that for bank statement, process stock valuation is based on immediately preceding months, whereas valuation in the books as on 31st March 2010 was done on actual cost which was worked out after submission of a statement to the banks. The rep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -7 and any other statement which is in the possession of AO pointing out the difference in a stock in terms of quantity. If there is no such statement depicting difference in terms of quantities, no addition is called for but where there is any document in possession of AO showing stock in quantity on a particular date and on comparison with the books it result in unfavorable difference against the assessee, the same will be shown to the assessee and after confronting him the difference in quantities will be worked out. Stock in terms of quantity will be compared as on the same date. Thereafter, the difference if any will be valued at cost or market price whichever is low as per accounting policy followed by the assessee for valuation of stock. With these remarks we set aside this ground to the file of AO. 16. We have further noted that the assessing officer, while giving effect to the order of learned CIT(A), in his order dated 11th April 2014, deleted the entire addition. Considering the consistent decisions of Tribunal on similar set of fact in earlier years, we are in agreement with the submission of learned AR of the assessee that this ground of appeal is covered by the decisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 29 Crore, the common cost for the purpose of allocation would be ₹ 54.98 Crore as against ₹ 137.27 Crore considered by the assessing officer. The learned AR further submitted by applying the formula the assessee calculated the common cost to be allocated to TG-3 at ₹ 1.58 Crore plus depreciation of ₹ 0.15 Crore i.e. total of ₹ 1.73 Crore. The learned CIT(A) appreciated the facts and accepted the contention of assessee and directed to reallocate the expenses by excluding the expenses of Orisha unit and to compute the disallowance @ 2.87%. 19. We have considered the submissions of both the parties and have gone through the orders of the lower authorities. We have noted that the assessing officer while allocating the expenses for power generation unit considered the overall cost of employee and other expenses , which consist of employee cost and other expenses of Orisha unit. The learned CIT (A) after considering the submission of assessee that the Orisha unit has no connection with the generation of power by TG-3 unit, directed the assessing officer to reallocate the expenses by excluding the expenses of Orisha unit. No contrary fact or evidence is broug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as compared to its turnover in the year under consideration. The ad-hock disallowance is not at all sustainable in the eyes of law. 22. We have considered the rival submission of the parties and have gone through the orders of authorities below. We have noted that the assessing officer made ad-hock disallowances on the doubt of genuineness of the commission expenses. The assessing officer not accepted the contention of the assessee. The learned CIT(A) granted relief to the assessee by taking view that expenses were incurred in accordance with the provisions of Companies Act. The commission expenses were paid by passing the Board s resolution. And in earlier years such commission expenses were claimed and allow to the assessee. The assessing officer made disallowance on ad- dock basis which is not sustainable. Before us, no contrary fact or law is brought to our notice, therefore, we do not find any justification to interfere with the order of learned CIT(A), which we affirm. In the result this ground of appeal is also dismissed. 23. Ground No. 7 relates to deleting the addition made on account of disallowance of commission paid to the agents. The learned DR for the revenue submitt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o take other view. Therefore, we do not find any reason to interfere with the order of learned CIT(A), which we affirm. In the result this ground of appeal is dismissed. 26. Ground No. 8 relates to deleting the disallowance of 5% of various expenses of ₹ 1.29 Crore. The learned DR for the revenue submits that the assessee debited ₹ 2593.05 lakhs under the heads Bank charges, transport, Clearing and Forwarding charges, travelling and other miscellaneous expenses. The assessee was asked to provide ledger accounts of these expenses and vouchers relating to travelling and other miscellaneous expenses. The assessee claimed that expenses are revenue in nature and pertain to the business operation of the assessee. The assessee could not prove the entire expenses being wholly and exclusively incurred for the purpose of business. The assessing officer reasonably disallowed only 5% of the total expenses treating same as non-business expenditure and added to the total income of the assessee. Accordingly, the learned DR prayed that disallowance was made on reasonable basis and are required to be upheld by reversing the order of learned CIT(A) and by restoring the order of assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unting to ₹ 62,31,600/- out of total expenses of ₹ 1246.32 lakhs. The assessee failed to discharge its onus relating to the expenses that the same was incurred wholly and exclusively for the purpose of business. The learned CIT (A) deleted the disallowance by taking view that assessing officer failed to bring on record and adverse evidence and specified reason while the disallowances was made. The assessee failed to discharge his onus, moreover the disallowance was made only reasonable basis. 30. On the other hand the learned AR of the assessee supported the order of learned CIT(A). The learned AR submits that all the expenses are exclusively incurred for the purpose of business. The assessing officer has not find any the fault in the details maintained by the assessee. The assessing officer made disallowance without any basis. There is no justification in making disallowance on ad-hock basis to the expenses incurred on employee welfare and other benefits. 31. We have considered the rival submission of both the parties and perused the record carefully. We have noted that the assessing officer has not examined the details furnished by the assessee. The assessing officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment before Gujarat High Court and the final outcome is pending. Therefore, we do not find any good reason to interfere with the order of ld CIT(A), which we affirms. In the result this ground of appeal is also dismissed. 35. Ground No. 10 relates to deleting the disallowance of ₹ 4,87,257/- and ₹ 3,98,053/- being expenses incurred for the purpose of exempt income while computing book profit. The ld. DR for the revenue supported the order of assessing officer. 36. On the other hand the ld. AR further submits that this ground of appeal is also covered by the decision of CIT(A) in assessee s own case for AY 2009-10. The revenue ahs not challenged the order for AY 2009-10 before Tribunal and accepted the same. 37. We have considered the rival submissions of the parties and perused the order of the lower authorities. The assessing officer made adjustment by taking view that there is no provision for any adjustment in respect of MAT credit to the profit and loss accounts and the same is required to be reduced from the net profit for computing book profit and accordingly added to the book profit. The ld CIT(A) granted relief to the assessee by following the order of his prede ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allowance on account of bad debts. The learned DR for the revenue submits that assessee failed to prove whether bad-debts written off were offered as income in the preceding years or not. The ld CIT(A) ignored the facts that no details relating to bed-debts were furnished. 45. On the other hand the learned AR for the assessee submits that learned CIT(A) granted relief to the assessee by following the decision of Hon ble Supreme Court in case of CIT versus TRF Ltd (323 ITR 397 SC)and the fact that similar issue was decided in favour of assessee by his predecessor in earlier assessment years. 46. We have considered the rival contention of the parties and perused the order of lower authorities. The assessing officer made addition by taking that assessee failed to punish any evidence which established that the debts have become irrevocable. The learned CIT(A) granted relief to the assessee by following the decision of honourable Supreme Court in CIT versus TRF Ltd (supra )wherein it has been held that assessee is not required to establish that debts s has become irrevocable in that particular year and it is enough if the bad debts written off as irrevocable in the accounts of the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rned CIT(A)following the decision of honorable Supreme Court in CIT versus Toshoku Limited (supra) deleted the entire disallowance. No contrary fact or law is brought to notice to take any other view, thus we affirm the order of learned CIT(A). In the result this ground of appeal is dismissed. 50. Ground No. 7 raised by revenue and ground No. 1 raised by assessee relates to disallowance of club expenses. The learned DR for the revenue supported the order of assessing officer. The learned DR further submits that during the assessment the assessing officer already reasonably allowed 25% of the club expenses in favour of the assessee which is quite justified. The learned CIT(A) granted further relief to the assessee despite the fact that assessee has not proved that expenses were incurred wholly and exclusively for the purpose of business. The learned DR prayed for restoring the order of assessing officer and to reverse the order of CIT(A). 51. On the other hand the learned AR for the assessee submits that the assessee is entitled for allowance of all expenses incurred towards the payments made to various clubs at Delhi Golf club, DLF Golf Resort in Friends etc. The club expenses repr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsidering the submission of learned AR of the assessee ground No. 2 raised by assessee is dismissed. 55. Ground No 3 relates to upholding the disallowance under section 40 a (i) of ₹ 12 lakhs being seminar fees paid to London School of Economics. The ld AR for the assessee submits that assessee paid fee of ₹ 12 lakhs to London School of Economics for attending seminars. The recipient has no business connection in India, thus no income accrues or arise to them in India within the meaning of section 9(1)(i) of Income Tax Act. The services for which the assessee made payment were rendered outside India. In support of his submissions the ld AR for the assessee relied on the decision of Tribunal in ITO Vs Veeda Clinical Research (P) Ltd [2013] 35 taxmann.com 557 / 156 TTJ115 (Ahmedabad-Trib) and DDIT Vs Tetra Pack India Ltd[2019]111taxmann.com 205 (Pune-Trib). 56. On the contrary the ld DR supported the order of the ld CIT(A). The ld DR further submits that the assessee was liable to make TDS on the payments made to London School of Economics. 57. We have considered the rival submissions of the parties and have gone through the orders of the lower authorities carefully. Duri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ia has tax treaty and in such tax treaties, there is clause of FTS, with condition to make available of any technology and in absence of technology made available to the assessee, payment made to recipient is not exigible to tax deduction at source. 59. Considering the aforesaid decisions of coordinate benches of Tribunal, we are in agreement with the submissions of the ld AR for the assessee that in absence business connection in India, no income accrues or arise to them in India within the meaning of section 9(1)(i) of Income Tax Act. Therefore, on the services for which the assessee made payment were rendered outside India, the assessee was not required to deduct tax at source. However, the ld CIT(A) has categorically held that no that no details about the payment was made to London School of Economics was furnished the veracity of claim could not be verifiable. Hence, we direct the assessing officer to verify the details of the expenses and grant the relief to the assessee. In the result this ground of appeal is allowed for statistical purpose. 60. In the result the appeal of the revenue is dismissed and the appeal of assessee is partly allowed. Order pronounced on 4th November ..... 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