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TMI Blog2024 (1) TMI 1131X X X X Extracts X X X X X X X X Extracts X X X X ..... computation form of the assessment order. For the year under consideration from the evidences submitted by the assessee it is clear that the assessee had paid the Dividend Distribution Tax and that the Revenue has denied the credit based on the misunderstood fact that the assessee is claiming credit for the Dividend Distribution Tax against regular tax payable. This in our considered view is factually incorrect, since the assessee is seeking to adjust the Dividend Distribution Tax paid against the Dividend Distribution Tax payable computed by the AO. Thus we direct the AO to given credit to the extent of the Dividend Distribution Tax actually paid by the assessee as per the documentary evidences submitted by the assessee after giving a reasonable opportunity of being heard to the assessee. Levy of interest u/s 115P on the amount of Dividend Distribution Tax payable - AO has levied the interest u/s 115P on the Dividend Distribution Tax payable without giving credit for the Dividend Distribution Tax actually paid by the assessee - HELD THAT:- As we have already directed the AO to give credit for the Dividend Distribution Tax actually paid by the assessee while adjudicating Ground No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g medical equipments and provides standard warranty to its customers that is in the nature of basic warranty or extended warranty that may vary from 12 to 15 months. The assessee has been consistently following the practice of making provision towards the warranty and the same is claimed as a deduction. It is also noticed that at the ends of the warranty period the unutilized portion of the provision of warranty is reversed and credit to the P L A/c thereby offering the same to tax. The reason for the disallowance by the revenue is that the basis of estimation for making the provision is not reliable since the utilization is only 38.5% for the year under consideration. As decided in own case [ 2016 (8) TMI 1593 - ITAT MUMBAI] assessee has a present obligation as a result of past event and a reliable estimate has been made towards the amount of obligation and accordingly held that the deduction under section 37 should be allowed. On the perusal of the fact we noticed that the assessee have been claiming the warranty provision as expenditure and has been reversing the excess provision periodically and offering the same to tax. It is also noticed that there are years in which the amou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity." 2) "On the facts and circumstances of the case, the Ld.CIT(A) erred in deleting the addition made for provision of warranty on the basis of order of ITAT in assessee's own case without considering the facts that the revenue has not accepted the decision and appeal is pending before the Hon'ble Bombay High Court." 3) The appellant prays that the order of the CIT(Appeals) on the above grounds be set aside and that of the Assessing Officer be restored." 3. The assessee-company is engaged in the business of marketing, selling and servicing medical equipments. The assessee filed the return of income for AY 2012-13 on 29.11.2012 declaring total income of Rs. 13,97,15,020/-. The assessee filed a revised return in order to revise the claim of TDS on 26.03.2014. The case was selected for scrutiny and the statutory notices were duly served on the assessee. The AO completed the assessment by making additions as listed below: (i) Cessation of liability under section 41(1) - Rs. 7,52,952/- (ii) Unreconciled receipts as per Form 26AS vis-à-vis books of accounts. - Rs. 5,13,731/- (iii) Provision for warranty - Rs. 3,34,46,445/- 4. Aggrieved the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax paid is incorrect and accordingly, this ground of appeal is dismissed." 6. The ld. AR also submitted that a similar issue has been considered by the Co-ordinate Bench of the Tribunal in assessee's own case for AY 2011-12 (MA No. 550/Mum/2017 dated 01.06.2020 arising out of ITA No. 6523/Mum/2017) wherein the Tribunal has directed the AO to allow credit for the Dividend Distribution Tax paid. 7. The ld. DR on the other hand relied on the order of the lower authorities. 8. We have heard the parties and perused the material on record. We noticed that in the income tax computation form which is annexed to the assessment order, the AO has computed the Dividend Distribution Tax payable by the assessee at Rs. 32,44,500/-, however, the said amount is shown as payable which would mean that the Dividend Distribution Tax paid by the assessee has not been adjusted/given credit. From the perusal of the order of the CIT(A) it is noticed that the CIT(A) has upheld the order of the AO for the reason that as per section 115O(4) of the Act, the tax on distributed profits shall be treated as the final payment of tax against the dividend declared and distributed and no further credit in resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y way of an appeal the quantification of tax and interest liability raised by the revenue against it u/s. 115-O and 115-P of the Act. In the backdrop of our aforesaid observations, we are of the considered view that the declining on the part of the Tribunal to address the grievance of the assessee as regards the raising of the demand u/s. 115-O (tax) and 115-P (interest) by observing that the issue as regards quantification of DDT did not arise from the order passed by the CIT(A), is not found to be in conformity with the settled position of law laid down by the Hon'ble Apex court in the afore mentioned judgments. As such, in the backdrop of the judgment of the Hon'ble Apex Court in the case of ACIT Vs. Saurashtra Kuth Stock Exchange Ltd. (2008) 305 ITR 227 (SC), wherein it was observed that a non-consideration by the Tribunal of a judgment of the jurisdictional High Court or the Hon'ble Supreme Court, though not brought to the notice of the Tribunal at the time of hearing of the appeal would constitute a "mistake apparent from record" which could be rectified under Sec. 254(2) of the Act. Accordingly, on the basis of our aforesaid observations, the order passed by the Tribunal whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the return of income. The AO during the course of assessment noticed that there are some discrepancies between the receipts appearing in Form 26AS with the books of accounts and called on the assessee to furnish reconciliation of the same. The assessee submitted a detailed reconciliation before the AO (page-8 to 26 of PB). After perusing the detailed submitted by the assessee, the AO noted that there are receipts from ten (10) party the receipts from whom have not been reflected in the books of account of the assessee totalling to Rs. 5,13,731/-. The assessee submitted before the AO that receipts do not pertain to the assessee and therefore, the same is not accounted as income. The assessee also submitted that no credit is claimed against the TDS deducted on the said amount which is wrongly shown as the receipts of the assessee. The AO did not accept the submissions of the assessee stating that there seems to no reason to suspect that 10 parties altogether will wrongly credit any amount to the assessee. On further appeal, the CIT(A) upheld the addition. 13. The ld. AR before us submitted that the assessee has submitted a very detailed reconciliation between Form 26As and book ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xcept these 10 lines which the assessee is denying that they do not belong to the assessee and TDS credit is not claimed by the assessee which is an undisputed fact. Since, the assessee has denied the transactions, onus was on the Revenue to show that TDS reflected in Form 26AS is in respect of the amounts that have been received by the assessee during the relevant period. During the course of hearing nothing is brought on record by the revenue to this effect. The Hon'ble Bombay High Court in the case of RBNJ Naidu v. CIT 29 ITR 194 (Nag) has held that when an assessee denies that he is in receipt of income from a particular source, it is for the ITO to prove that the assessee received income and that the assessee cannot prove the negative. In view of this discussion we see merit in the contentions of the ld AR that the assessee cannot prove a negative. Since the Revenue did not bring anything to lead positive evidence with regard to the impugned amounts, the addition of Rs. 5,13,731/- is hereby deleted. 16. The assessee raised additional grounds with regard to refund of excess Dividend Distribution Tax paid in respect of non-resident shareholders and also deduction in respect of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see. The CIT(A) allowed the issue in favour of the assessee by placing reliance on the decision of the Hon'ble Supreme Court in the case of M/s Rotork Control India Pvt. Ltd. Vs. CIT [314 ITR 62 (SC) ] and also the decision of the Co-ordinate Bench in assessee's own case for the AY 2006-07 vide ITA No. 5145/Mum/2011. 21. The ld. DR submitted a details written submission the extract of which given below: "Reasons why provisions should not be allowed as deduction: a. The two conditions for allowability of the claim for provision of the warranty which requires to be satisfied are as under:- (i) There should be a present obligation as a result of past events resulting in outflow of resources (ii) Reliability estimate of the amount of obligation should be met b. In the present case, it is not disputed that the warranty was an integral part of sales made. However, the provision to that effect can be allowed only if reliable estimates of the amount of the obligation is made. As per the information given and as discussed in the paragraph No.6.7 of the assessment order, it was noted that over the years the Assessee has made warranty provisions aggregating to Rs. 78,35 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arranty made, which a provision made for liabilities other than ascertained liabilities, was added back while computing the book profit u/s. 115JB of the Act." 22. The ld. AR on the other hand argued that the provision is made based on the scientific method for each of the medical equipments sold by the assessee and drew our attention to the basis as mentioned in the assessment order: "If we refer to assessee's submission dated 09.02.2016, point no. (vi), where it bring out that policy by which provision for warrant is recognized: Particulars Ventilator (CC) Basic Warranty Rs. 8250 p.a. per machine Extended Warranty Rs. 24,500 p.a. per machine (CMC) Extended Warranty Rs. 4,500 p.a. per machine (AMC) Intra Iaortic Ballon Pump (IABP) CAIIW Extended Warranty USD 1500 p.a. per machine (CMC) Heart Lung Machine (CP) Extended warranty on case to case basis with type of contracts and Equipment OT lights/Tables( SWP): Extended Warranty @0.25% of Sale Value Spare Parts Warranty: Actual Replacement within 6 months 23. The ld. AR also drew our attention to the provision made for warranty and the amount utilized towards warranty for AY 2005-06 to 2014-15 as tabulated below to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the valve actuators manufactured by the assessee, were sophisticated goods and statistical data indicated that every year some of these were found defective; that valve actuators being a sophisticated items, no customer was prepared to buy a valve actuator without a warranty. Therefore the warranty became an integral part of the sale price; in words the warranty was attached to the sale price of the product. In this case the warranty provision had to be recognized because the assessee had a present obligation as a result of past event resulting in outflow of resources and reliable estimate could be made of the amount of obligation. Therefore the assessee had incurred a liability during the assessment year which was entitled to deduction u/s 37 of the IT Act. Facts being similar, so, following same reasoning, CIT(A) was justified in granting relief to assessee. This reasoned factual finding of CIT(A) needs no interference from our side. We uphold the same." 27. The Co-ordinate Bench in the above case has held that the assessee has a present obligation as a result of past event and a reliable estimate has been made towards the amount of obligation and accordingly held that the ded ..... X X X X Extracts X X X X X X X X Extracts X X X X
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