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TMI Blog2024 (2) TMI 540X X X X Extracts X X X X X X X X Extracts X X X X ..... m of the assessee is not legally bonafide as alleged by the Ld. AO. The impugned disallowance is not justified at all. CIT(A) has deleted the disallowance after having allowed opportunity to the Ld. AO. We decline to interfere and reject this ground. Disallowance u/s 43B - deduction claimed was on account of leave encashment and furnished list of employees to whom leave encashment was paid during the year - CIT(A) deleted addition - grievance of the Revenue that the Ld. CIT(A) did not appreciate that payments pertained to earlier years and the assessee did not establish that these payments were disallowed in earlier assessment years - HELD THAT:- AO referred to the Departmental records of earlier years, the facts could have easily been verified. This was not done. Before the Ld. CIT(A) details have been furnished. Nothing averse has been pointed out. The finding of the Ld. CIT(A) is in consonance with the decision of the Hon ble Supreme Court in UOI vs. Exide Industries Ltd. [ 2020 (4) TMI 792 - SUPREME COURT] as observed that with the application of clause (f) of section 43B, the eligibility for deduction arises in the previous year in which the payment is actually made a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated 18.02.2019 of the Ld. Commissioner of Income Tax (Appeals) -9, New Delhi ( CIT(A) ) pertaining to Assessment year ( AY ) 2011-12. These were heard together and are being disposed of by this common order. 2. The Revenue has taken the following grounds:- i. On the facts and in the circumstances of the case and law, the Ld CIT(A) has erred in deleting the disallowance of expenses related to trial sales of Rs 2.90,04,000/-without appreciating the details finding of the AO and without appreciating that the assessee failed to furnish all bills/vouchers pertaining to above expenditure before the AO ii. On the facts and circumstances of the case the Ld. CIT(A) erred in deleting the addition u/s 43B of Rs. 5.56.022 by holding that the assessee made these payments before filing of ITR without appreciating that the disallowance u/s 43B was made as these payments pertained to earlier assessment years and the assessee failed to establish that these payments were disallowed in the earlier assessment years making the order perverse. iii. On the facts and circumstances of the case the Ld. CIT(A) erred in deleting disallowance u/s 14A amounting to Rs. 58.84,990/- on the groun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 143(1) of the Income Tax Act, 1961 (the Act ), the case was taken up in scrutiny. Statutory notices along with questionnaire were served upon the assessee. In response, necessary details were filed. The Ld. Assessing Officer ( AO ) completed the assessment on 26.03.2014 under section 143(3) of the Act on total income of Rs. 7,46,971/- as against the returned loss including therein disallowance of expenditure incurred related to Trial Sales (Rs. 2,90,04,000/-); disallowance under section 43B (Rs. 5,56,022/-); disallowance of depreciation on Plants Machinery (Rs. 88,26,090/-) disallowance under section 14A (Rs. 58,84,990/-) and disallowance out of advertisement expenses (Rs. 53,01,600/-). 5. Aggrieved, the assessee carried the matter in appeal. The Ld. CIT(A) deleted the above disallowances made by the Ld. AO except sustaining disallowance of depreciation of Rs. 55,21,000/- on Plant Machinery giving relief of Rs. 33,05,090/- to the assessee. The Revenue is dissatisfied and is before the Tribunal against deletion of expenses related to Trial Sales; disallowance under section 43B, disallowance under section 14A and disallowance out of advertisement expenses. All the grounds N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed most of the purchase bills amounting to Rs.1.72 Crores but the expenses relating to manpower, travelling etc. have been apportioned on proportionate basis as they form part of common expenses account relating to the expenses incurred during the development period, and sale of product for which commercial production has been commenced for the first time in the year. 5.6 Based on the above facts and circumstances of the case and the submission of the appellant and finding in the remand report, it emerges that there was no reason for the Assessing Officer to doubt the claim of expenses in relation to trial sales for which the details were submitted and make a blanket disallowance of the expenditure relating to trial sale and on the other hand consider the revenue from trial sale only in the computation of taxable income. 5.7 The expenditure relating to material purchased for which invoices amounting to Rs. 1.72 Crores were given during the assessment proceedings, the AO has also not given credit for. If the Assessing Officer had any doubt regarding the expenses incurred of project of Ivory Coast he could have issued a show cause notice for the same or could have called fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reject this ground. 8. Ground No. (ii) Disallowance of Rs. 5,56,022/- under section 43B The Ld. AO discussed this issue in para 2 at page 4 of the assessment order. The Ld. AO found that in the return the assessee deducted a sum of Rs. 5,56,022/- as amount disallowed in earlier year and allowed in current year under section 43B. The Ld. AO required the assessee to justify its claim and issued show cause notice why its claim be not disallowed under section 43B. The assessee replied that the deduction claimed by it was on account of leave encashment and furnished list of employees to whom leave encashment was paid during the year. 8.1 The Ld. AO did not accept the explanation and made the impugned disallowance for want of supporting documentary evidence. 8.2 Before the Ld. CIT(A) the assessee submitted that the fact that the amount has been disallowed is already on the record of Department in the ITR of the previous years as well as disclosed in the tax audit report of current year. Details thereof were submitted. Page 23 of Ld. CIT(A) s order refers. It was claimed that the assessee paid the leave encashment during the year and upto the date of filing the return. Reliance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the Ld. AO overlooked the reply filed on 14.03.2014 stating therein that the assessee had made investments in shares of its foreign subsidiary companies, the dividend income from which is not exempt. Decision of ITAT Ahmedabad in Suzlon Energy Limited vs. DCIT (2013) 32 taxmann.com 349 was relied upon before Ld. CIT(A) in this regard. 9.2 The Ld. CIT(A) recorded his findings in para 8.2 to 8.6 at pages 29-32 of the order. He found that during the year the assessee has not claimed any exempt income. He observed that dividend income arising from shares of foreign subsidiary companies is taxable under section 115BBD of the Act. The Ld. CIT(A) extensively quoted from the decision of Hon ble Delhi High Court in the case of Cheminvest Ltd. vs. CIT (2015) 378 ITR 33 (Del) and CIT vs. Holcim India (P) Ltd.(2015) 57 taxmann.com 28 (Delhi) wherein it is held that section 14A will not apply if no exempt income is received or receivable during the relevant previous year. Relying on decisions (supra) the Ld. CIT(A) deleted the disallowance under section 14A r.w. Rule 8D. 9.3 In our considered opinion, reliance of Revenue on CBDT Circular No. 5/2014 and decision of ITAT Amritsar in L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssion of the appellant and documents so filed in this regard. It is noted from the submission of the appellant and accompanying documents provided before the Assessing Officer that out of the total expenditure on account exhibition of 60.50 lakhs, the major amount relates to a single party i.e. M/S Insta Exhibitions Pvt. Ltd for Rs. 54.22 Lakhs which was paid subject to TDS of 10% and related to the stall charges of participation of company in 3GSM exhibition at Barcelona, Spain which is held every year. Out of the balance amount 4.02 Lakhs was paid to Rural Cellular Association as participation fees in the 19th Annual Convection Innovation Expo organized in USA and amount of Rs 1.66 Lakhs relate towards hotel accommodation and travel etc. and amount of Rs.60,000 relates to payment to Digital Empowerment Foundation which for advertisement. None of the expenses above would provide any enduring benefit to the appellant as the payments for the exhibition charges are in recurring nature and done every year for participation and other payments relating to hotel accommodation are in respect of the participation of the fest while the amount paid as advertisement is to an exempt organizati ..... X X X X Extracts X X X X X X X X Extracts X X X X
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