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TMI Blog2023 (6) TMI 393X X X X Extracts X X X X X X X X Extracts X X X X ..... LD THAT:- We find that this is a recurring dispute between the parties from assessment years 1999-2000 onwards and has been consistently decided against the assessee, even by the Tribunal. As per assessee s appeal for assessment years 2004-05 to 2007- 08 [ 2023 (4) TMI 740 - ITAT DELHI] we uphold the decision of learned first appellate authority. Grounds raised are dismissed. Expenditure on unviable contracts - Disallowance towards provision made for reimbursement of sales tax and miscellaneous claims - HELD THAT:- In the assessment order, the AO has made specific allegation that the assessee has not furnished any evidence, either regarding the actual claim made by Salute Water House Pvt. Ltd., nor any evidence of the payment made. Similarly, in respect of payment alleged to have been made to Brindawan Beverages, Bareilly, the assessee has itself shown it as provision. Further, the Assessing Officer has made a categorical observation that no evidence has been furnished to demonstrate that the expenses were actually incurred by the assessee. The factual position remained unaltered before learned Commissioner (Appeals). Even, on perusal of written submission furnished before th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with C.O. No. 79/Del/2019 [In ITA No.1124/Del/2018], C.O. No. 80/Del/2019 [In ITA No.1125/Del/2018] with ITA Nos. 3448 And 3449/Del/2015 with ITA Nos.4588 And 4589/Del/2015 - - - Dated:- 7-6-2023 - Shri Saktijit Dey, Judicial Member And Shri M. Balaganesh, Accountant Member For the Assessee : Sh. Neeraj Jain, Advocate, Sh. Aditya Vohra, Advocate And Mr. Arpit Goyal, CA For the Respondent : Mohd. Gayasuddin Ansari, CIT (DR) ORDER PER SAKTIJIT DEY, JM: Captioned appeals and cross objections by the assessee and Revenue relate to the same assessee and against various orders of learned Commissioner of Income Tax (Appeals), pertaining to assessment years 2004-05, 2005-06, 2008-09 and 2009-10. ITA No. 1124/Del/2018 for AY: 2004-05 (Revenue s Appeal) C.O. No. 79/Del/2019 ITA No. 1125/Del/2018 for AY: 2005-06 (Revenue s Appeal) C.O. No. 80/Del/2019 2. These appeals by the Revenue and cross objections by the assessee arise out of two separate orders of learned Commissioner of Income Tax (Appeals) deleting the penalty imposed under section 271(1)(c) of the Income-tax Act, 1961 (in short the Act ) 3. Briefly the facts, more or less comm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e considered rival submissions and perused the materials on record. Undisputedly, after decision of the Tribunal in the quantum appeals filed by the assessee for the impugned assessment year, the only additions which survive in both the assessment years are the additions made on account of disallowance of non-compete fee claimed as revenue expenditure. It is a fact on record that this is a recurring issue between the assessee and the Revenue from past assessment years. The assessee has been consistent in its position that the non-compete fee paid is allowable as revenue expenditure. However, according to the department, such payment has to be capitalized. In our view, whether non-compete fee is a revenue or capital expenditure is a highly debatable issue and the assessee over the years is maintaining its position on the issue. Though, the Tribunal has not accepted assessee s claim of revenue expenditure qua payment of non-compete fee, however, it is a fact on record that against the decision of the Tribunal in past assessment years, the assessee has preferred appeals before the Hon ble High Court and substantial question of law on the issue of allowability of deduction in respect o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idual shareholders/directors of the bottling companies merely facilitates the conduct of business more efficiently and more profitably leaving the fixed capital untouched. It was submitted by the assessee that the payment made did not create any asset or addition of enduring nature at the hands of the assessee as the scope of the agreement is limited to a particular territory and the term of the agreement was for a short duration between 5 to 10 years. The Assessing Officer, however, was not convinced with the submission of the assessee. He observed that in the preceding assessment years, viz., 1999-2000 onwards identical claim made by the assessee has been disallowed. Following the decision taken in the earlier assessment years, he disallowed the non-compete fee paid to the individual shareholders/directors of the bottling companies. For identical reasons, he also disallowed the noncompete fee paid to Maestro Industries Pvt. Ltd. for surrender of Kinley water rights. The disallowances so made, were also upheld by learned Commissioner (Appeals). 14. Before us, learned counsel for the assessee fairly submitted that this issue has been consistently decided against the assessee by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quently, the grounds in that regard raised in the respective A.Y. stand dismissed. 17. Thus, facts being identical, respectfully following the consistent view expressed by the Tribunal on identical issue arising in assessee s own case, we uphold the decision of learned first appellate authority. Grounds raised are dismissed. 18. In ground no. 3, the assessee has challenged disallowance of Rs. 1,52,73,245/- claimed towards provision made for reimbursement of sales tax and miscellaneous claims. 19. Briefly the facts are, in course of assessment proceeding, the Assessing Officer noticed that the assessee has claimed deduction of Rs. 14,09,27,038/- towards expenditure on unviable contracts. After calling for necessary details and examining them, he found that the payments of various amounts have been made to nine parties. After examining the nature and details of each individual payments made to these parties, the Assessing Officer noticed that an amount of Rs. 1,02,73,245/- was claimed as reimbursement of sales tax expenses to Salute Beverages, Guntur, on account of old transactions. The Assessing Officer observed, though, the assessee has furnished letter dated 06.03.2007 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ture of mere provision. Further, he strongly relied upon the observations of the departmental authorities. 22. We have considered rival submissions and perused the materials on record. Though, before us, learned counsel for the assessee submitted that the disputed expenses were incurred out of contractual obligation. However, as it appears on record, apart from making the claim, the assessee has not furnished any cogent evidence to establish the authenticity of such claim. Furnishing of termination agreement by itself does not prove incurring of the expenses, unless, strong supporting evidence is placed on record. In the assessment order, the Assessing Officer has made specific allegation that the assessee has not furnished any evidence, either regarding the actual claim made by Salute Water House Pvt. Ltd., nor any evidence of the payment made. Similarly, in respect of payment alleged to have been made to Brindawan Beverages, Bareilly, the assessee has itself shown it as provision. Further, the Assessing Officer has made a categorical observation that no evidence has been furnished to demonstrate that the expenses were actually incurred by the assessee. The factual position rem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee has included expenses of signages and iceboxes under the head marketing expenses . When called upon to justify the claim, the assessee submitted that the life of these products is short and no advantage of enduring nature was acquired on them. The Assessing Officer, however, did not find merit in the submissions of the assessee. Ultimately, he treated such expenses as capital in nature and allowed depreciation thereon. The aforesaid decision of the Assessing Officer was sustained by learned First Appellate Authority. 27. Before us, learned counsel for the assessee fairly submitted that identical issue has been decided against the assessee by the Tribunal in earlier assessment years. 28. Learned Departmental Representative agreed with the aforesaid submission of the assessee. 29. Having considered rival submissions, we find that while considering identical nature of dispute in assessee s own case in assessment years 2004-05 to 2007-08 (supra), the Tribunal, following its earlier decisions, has decided the issue against the assessee. For better appreciation, the relevant observations of the Tribunal is reproduced hereunder: 9. Issue no. 6. Lastly coming to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12 of the assessee is partly allowed in regard to claim of the assessee for Electric Spectaculars, Neon Signs, Artwork, Glow Signs and Neon Signs but these grounds arc partly dismissed on the issue of Ice Chests/Ice Boxes and Dealer Sign board as indicated above as per our foregoing discussions. 9.3 This bench is of considered opinion that the nature of expenditure on the articles once examined by Co-ordinate Bench, cannot be interfered without there being substantial basis to disagree, that not being there accordingly following the Co-ordinate Bench decision in assessee's own case for A.Y. 2002-03, the ground is decided against the assessee. 30. Thus, respectfully following the consistent view of the Tribunal on identical issue, we uphold the disallowance. This ground is dismissed. 31. In the result, appeal is partly allowed. ITA No.4588/Del/2015 (Revenue s Appeal) AY: 2008-09 32. The only issue arising in the appeal relates to deletion of disallowance of processing charges. 33. Briefly the facts are, the assessee had outsourced packing and processing work to third parties on payment of processing charges. While completing the assessment, the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... viding processing vices and assessment on the basis of a guesswork cannot be sustained. 7.2 The bench accordingly is inclined to restore the issue to the files of Ld. AO with direction to examine the issue of processing charges on the basis of evidence made available by the assessee showing genuineness of the payments made to the suppliers. The non-availability of the suppliers or their failure to appear on the behest of assessee is not required to be considered to discredit the expenditure otherwise established from books and mode of payment. Accordingly, the ground arising out of this issue in appeal of assessee for the assessment year 2004-05 and 2005-06 are allowed for statistical purposes. While of Revenue for A.Y. 2006-07 and 2007-08, against the Revenue 37. Consistent with the view expressed by the Tribunal in the preceding assessment years, we restore the issue to the Assessing Officer with a similar directions. Needless to mention, before deciding the issue, the assessee must be provided due and reasonable opportunity of being heard. 38. In the result, the appeal is allowed for statistical purposes. ITA No. 3449/Del/2015 (Assessee s Appeal) AY: 2009-10 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l finding of learned first appellate authority remains uncontroverted before us. 47. In any case of the matter, the issue now stands squarely settled in favour of the assessee by the decision of the Hon ble Supreme Court in case of Engineering Analysis Centre of Excellence Pvt. Ltd. Vs. CIT (432 ITR 471) . 48. In view of the aforesaid, we uphold the decision of learned Commissioner (Appeals) on the issue. Ground raised is dismissed. 49. In the result, appeal is partly allowed for statistical purposes. 50. To sum up, the appeals are decided as under: 1. ITA No.1124/Del/2018 Revenue s appeal Dismissed 2. ITA No.1125/Del/2018 Revenue s appeal Dismissed 3. C.O. No.79/Del/2019 Assessee s cross objection Dismissed 4. C.O. No.80/Del/2019 Assessee s cross objection Dismissed 5. ITA No.3448/Del/2015 Assessee s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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