9911796707
TMI Blog2022 (10) TMI 1204X X X X Extracts X X X X X X X X Extracts X X X X ..... - Rs. 8,47,948. (iii) Disallowance u/s. 14A r.w. Rule 8D - Rs. 6,26,81,738. (iv) Disallowance u/s. 40(a)(ia) (a) In respect of year end provisions - Rs. 21,72,88,675. (b) Business promotion expenses - Rs. 1,44,00,000. (v) Disallowance u/s. 43B - Rs. 4,84,865 (vi) Excess claim of depreciation - Rs. 14,03,28,945. (vii) Disallowance of bad advances written off u/s 36(1)(vii) - Rs. 1,08,36,000. 3. Aggrieved, the assessee filed an appeal before the CIT(Appeals), who gave partial relief to the assessee in terms disallowance made u/s. 14A. The assessee is in appeals before the Tribunal against the order of the CIT(Appeals). Ground no.1 and 2 are general and Ground no.10 is consequential. Hence these grounds do not warrant a separate adjudication. Depreciation on goodwill 4. Ground No.3 raised by the assessee is as follows:- "3. Depreciation on Goodwill; 3.1 The learned CIT(Appeals) erred in confirming the action of the AO in disallowing Depreciation of Rs. 6,57,08,884 on Goodwill arising on acquisition of Karnataka Breweries and Distilleries Limited and other subsidiaries; 3.2 The learned CIT(Appeals) erred in confirming the action of the AO in disallowing Depreci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deducted by foreign enterprises, disregarding the submission made on the nuances of Section 5 and Section 198 of the Act 4.3 The learned CIT(Appeals) erred in confirming the action of the AO disregarding the judicial decisions cited on the principle applicable to the issue; 4.4 The learned CIT(Appeals) erred in not adjudicating on the alternate ground raised that if the stand of the A.0 is upheld, then the appellant should be allowed credit for the tax withheld, as per the provisions of the applicable DTAA;" 9. During the year, the assessee received royalty from M/s. Independent Distilleries (Aust) Pvt. Ltd., Australia and Independent Distilleries (NZ) Ltd., New Zealand amounting to Rs. 35,81,869 and Rs. 58,39,779 respectively towards sale of Kingfisher Beer. The AO during the course of hearing noticed that the assessee has disclosed only 90% of the royalty amount. The assessee submitted before the AO that the balance 10% was withheld by the payer towards withholding of tax towards which no TDS certificate has been issued nor the actual consideration was paid by the payers. The AO added this 10% to the income of the assessee by stating that it is the gross value of considerati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore, we remit the issue back to the AO with a direction to allow credit for the tax paid in foreign countries on the doubly taxed income in accordance with provisions of section 90 /91 r.w. Rule 128 based on the documents / evidences submitted by the assessee in this regard. The assessee is directed to submit the relevant documents and cooperate with the proceedings before the AO. This ground is allowed for statistical purposes. Disallowance u/s. 40(a)(ia) 14. Ground No.5 reads as under:- "5. Disallowance of expenditure u/s 40(a)(ia) 5.1 The learned CIT(Appeals) has erred in confirming the action of the AO in making disallowance under section 40(a)(ia) amounting to Rs. 21,72,88,675 on the ground that TDS was not made on the year end provisions; 5.2 The learned CIT(Appeals) has erred in confirming the action of the AO in making the disallowance without appreciating that there was no requirement of making TDS on year end provisions when no credit was given to the identified party; 5.3 The learned CIT(Appeals) has erred in confirming the action of the AO in making disallowance under section 40(a)(ia) without appreciating the rationale of the provisions of the Act and with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e return of income at pages 528 to 537 of the assessee's PB. In view of the above discussion and respectfully following the decision of the coordinate Bench of this Tribunal supra, we remand this issue back to the AO to verify the details of payments and tax deducted and allow the expenditure where the TDS is remitted to the Government account on or before the due date for filing the return of income. The assessee may be given a reasonable opportunity of being heard." 18. The ld. AR further submitted that in the above order, the Hon'ble ITAT has in principle held that if the assessee has deducted and remitted the tax into the Government account on or before the due date for filing the return of income the expenditure should be allowed and the issue was remitted for the limited purpose of verification of whether the tax is deducted and remitted into Government account on or before the due date for filing the return of income. The ld AR also submitted that for the year under consideration, the AO had initiated proceedings u/s. 201(1) and 201(1A) in connection with the same year end provisions and after verification of tax deducted subsequently the AO did not raise any demand u/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owance and therefore this ground is not pressed for AY 2010-11. In view of the above submissions, we dismiss this ground as not pressed. Disallowance of depreciation 23. Ground No.7 raised by the assessee reads as follows:- "7. Disallowance of depreciation 7.1 The learned CIT(Appeals) has erred in confirming the action of the AO in making disallowance of depreciation to the extent of Rs 14,03,28,945, by holding it as excess claim made by mistake, without appreciating that the appellant has claimed additional depreciation on Plant & Machinery and Energy saving devices as allowed under law; 7.2 The learned CIT(Appeals) has erred in confirming the action of the AO in making disallowance of depreciation without considering the additional depreciation claim made in the electronic return filed by the appellant;" 24. The AO during the course of assessment held that assessee has made excess claim of depreciation on plant & machinery, affluent treatment plant and energy saving devices, amounting to Rs. 14,03,28,944 and disallowed the same. 25. Before the CIT(Appeals), the assessee submitted that the excess amount as disallowed by the AO is additional depreciation claimed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irming the action of the AO in making the disallowance, without appreciating the fact that the non - deduction certificate was issued to the payee for the sums to be received for the full financial year, which is evident from the certificate; 8.3 The learned CIT(Appeals) erred in confirming the action of the AO in making the disallowance by holding that no deduction certificate is not applicable retrospectively, without appreciating that the certificate was issued for the payment to be received for the full year and hence there was no infirmity in the claim of no deduction on the impugned payments; 8.4 Notwithstanding the above, the learned CIT(Appeals) erred in not appreciating that the proviso to Section 201 are applicable to this case and the disallowance made amounts to double taxation;" 31. During the course of assessment proceedings, the AO noticed that assessee has made payment to GMR Sports P Ltd. being the franchisee for Delhi Daredevils and no TDS was deducted on the payment aggregating to Rs. 2,94,52,608. The assessee submitted before the AO that the payee has obtained NIL deduction certificate from their AO and therefore no TDS was deducted on the strength of the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in section 197(1) is 'satisfied'. As per Shorter Oxford English Dictionary, the term 'satisfaction' means 'sufficient information, proof or removal of doubt, conviction, provide with sufficient proof or information, free from doubt or uncertainty, convince'. The usage of the word 'shall' obligates or mandates an Assessing Officer to issue the certificate on being satisfied. The issue of a certificate under section 197(1) presupposes that the Assessing Officer is satisfied that the payments in question justify lower or nil deduction of tax at source. .......... 17. The aspect of "credit" of a sum to the account of the payee or any other account inviting or mandating the deduction of tax at source is not to be regarded as having an all pervasive effect. For example, an application is made to the Authority for Advance Ruling for a determination whether the payment under a transaction warrants deduction of tax at source. The Authority has a time of six months to dispose the said application. If the application is made close to the financial year end, it is possible that the Authority may give its ruling after the expiry of the financial year. In the meanwhile the company may pass a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... regarded as binding and, hence, liable to be ignored." 37. In assessee's case, we notice that assessee has made three payments to the same payee on 14.4.2009 and 22.4.2009. We also notice that the AO has considered the certificate issued u/s. 197(1) for the payment made on 22.4.2009 since the certificate is dated 20.4.2009. However the AO did not consider the certificate for payment made on 14.4.2009. On perusal of the certificate, we notice that the same is issued for payments expected to be received during the FY 2009-10. The extract of certificate is given below:- 38. From the above, it is clear that certificate is issued for payments pertaining to FY 2009-10 and the impugned payment is made on 14.4.2009 falls within the period for which the certificate is issued. Considering these facts and relying on the decision of coordinate Bench, (supra) we hold that no disallowance u/s. 40(a)(ia) is warranted towards payments made to GMR Sports towards business promotion expenses. Disallowance of bad advances written off u/s 36(1)(vii) 39. Ground No.9 is as follows:- "9. Disallowance of Bad advances 9.1 The learned CIT(Appeals) has erred in confirming the action of the AO in dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... material on record. We notice that the assessee has submitted the break-up of the bad advances while filing Form 35 itself as per details given below:- "Disallowance of Bad Advance: The details are given below: Amount Narration 87,05,700.00 Amount paid to Al Tajir Glass as advance for making the blow moulds of bottles for new products like Buzz etc. vide BP/BDV/APR08 /0782, BP/BDV/FEB09/0767 AND BP/BDV/FEB09/0768 - WRITTEN OFF 9,358.00 BALANCE in Loan to Staff/Workmen as at 31.3.10 WRITTEN OFF 19,436.00 OTHER STAFF ADVANCES NOT RECOVERABLE WRITTEN OFF AS AT 31.03.10 82,054.00 VEHILCE LOAN BALANCES OF LEFT CASES AS AT 31.03.10 WRITTEN OFF 3,015.00 FURNITURE LOAN BALANCES OF LEFT CASES AS AT 31.03.10 WRITTEN OFF 20,03,117.70 Staff Advances - Others not recoverable as at 31.03.10 written off. 1,08,22,680.70 45. We also notice that the CIT(Appeals) while confirming the disallowance has not called for any details with regard to the break-up submitted. We further notice that he AO has also not called for any details from the assessee with regard to the bad advances written off. We therefore remit the issue back to the AO to verify the details of bad adv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee's own case (supra) where the decision in the case of Biocon Ltd. v. DCIT in ITA No.1248/Bang/2014 is followed and order of AO passed u/s. 201(1) was considered while holding as above. For the year under consideration also, the ld AR submitted that the AO has passed order u/s. 201(1) where no tax was levied u/s. 201(1) on the basis of verification of details pertaining to subsequent tax deduction and payment into Government account. Therefore the ld AR prayed that the disallowance be deleted for AY 2011-12 also. We have in earlier part of the order have considered the order of AO u/s. 201 and held that the year-end provisions are allowable respectfully following the decision of the coordinate bench of the Tribunal in assessee's own case. We notice that for AY 2011-12 also, the AO has passed an order u/s. 201 and based on examination of facts had not levied any tax u/s. 201(1), but charged only interest u/s. 201(1A) for delayed remittance. Following our decision of AY 2010-11, we hold that the expenditure claimed by way of year end provisions be allowed as a deduction and the disallowance made in this regard is deleted. 52. Vide Ground No.6 the plea of the assessee is that R ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
