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2022 (3) TMI 1331 - ITAT DELHIDeduction on account of interest payment based on the judgment of decree passed against the appellant by the Hon'ble Delhi High Court - grievance of the department is that though the same has been claimed in the computation of income, but the same has not been charged as an expense in the audited accounts/books - HELD THAT:- Since, the issue has travelled a series of judgments of the Tribunal, Special bench and the Hon'ble High Court and the matter has been settled with regard to the payment of interest, we decline to interfere with the order of the ld. CIT(A). Disallowance of Expenses u/s. 40(a)(ia) - HELD THAT:- The amount paid by the assessee is the cost of purchase and not in the nature of commission. The procuring organization i.e. the Village, District & State Level Co-operative Societies had to incur expenses on maintaining offices and administrative staff to carry out the work of procurement. They also had to earn some net profit from all their effort/work. Accordingly, the appellant allowed the Village, District &. State Level Co-operative Societies to raise their sales invoices on the appellant on a similar basis which the Govt. of India (GOI) has prescribed for the appellant i.e. cost plus a fixed gross margin. In fact even the market/mandi charges and other taxes etc. are also charged as a percentage. The State Level Cooperatives raise their sale bills on NAFED giving various components of the direct costs like "basic price, purchase tax, marketing fees, packing charges etc." as well as their margin of profit for meeting their own administrative costs etc. Pricing mechanism fixed by the Government of India, it is clear that the assessee has merely paid the purchase price as agreed. However, only to monitor the pricing, the cost components are separately shown so as to reimburse the assessee for any loss incurred by it in execution of PSS/MIS - Since the amount paid by the assessee to the Dist/State Level Cooperatives is only the purchase price and not in the nature of commission, no disallowance under section 40(a)(ia)is called for. Disallowance of Expenses u/s. 40(a)(ia) - HELD THAT:- Disallowance u/s. 40(a)(ia) was made by the AO for late deposit of TDS deducted u/s. 194C during December 2008 and February 2009 for payments made. TDS was deposited in the government treasury on 25.05.2009 which was before the due date of filing of return u/s. 139(1) of the Income Tax Act, 1961. No disallowance is called for u/s. 40(a)(ia) owing to the decision of the Income Tax Appellate Tribunal, Delhi 'H' Bench, in the case of Taru Leading Edge (P) Ltd., New [2012 (6) TMI 296 - ITAT DELHI] for Assessment year 2008-09. 50% of depreciation on the warehouse holding that it has been put to use for less than 180 days - HELD THAT:- Warehouse bills on sample basis were furnished vide letter dated 08.11.2011 to prove that the warehouse is in operation. The bills were issued by NAFED to FCI for giving warehouse storage facility by NAFED to FCI. These bills are therefore evidence to establish that the warehouse was in operation in the year under assessment. The invoices submitted on sample basis before the AO were not the purchase invoices for acquisition of the asset rather these invoices were in evidence to use of such assets. The document pertaining to handing over note of warehouse dated 31.03.2008 before the ld. CIT(A) which was remanded back to the office of AO. AO vide remand report dated 19.11.2013 rejected the claim of assessee without pointing out any reason as to why the aforesaid document does not prove the date of put to use. This contention of AO was not accepted by the ld. CIT(A) and relief was provided to assessee. Hence, we decline to interfere with the order of the ld. CIT(A) Disallowance u/s. 14A - HELD THAT:- During the year, the assessee received dividend income of ₹ 1,01,33,000/- from IFFCO and Cooperative Bank of India. The similar issue has been adjudicated by the Co-ordinate Bench of ITAT in the case of the assessee [2012 (4) TMI 803 - ITAT DELHI] wherein the disallowance made by the AO has been deleted. Since, the matter stands adjudicated, in the absence of any material change and the legal proposition, we decline to interfere with the order of the ld. CIT(A). Disallowance on account of Claims Rejected - HELD THAT:- Assessee claimed from railways and Government of India and an amount of ₹ 20,75,889/- for loss suffered in stock transfer from one branch to another and on account of purchase & sale of agriculture products on behalf of the Government of India. This is the rejection of expenses incurred by the assessee and not reimbursed by the GOI/Railways on account of Price Support Scheme and Market Intervention Scheme. These expenses are not penal in nature and hence claimed u/s. 37 - Since, the expenses are incurred in connection with the business of the assessee, no disallowance is called for. Disallowance u/s. 37 - assessee has claimed in the P&L Account an amount towards "Reimbursement of Deficit/Surplus from/to business associates" on account of reimbursement as per the terms of Memorandum of Understanding dated 11th April 2008 between the said entity and the assessee - HELD THAT:- Recorded sales and purchases/costs (though made/incurred by the business associate) in the books of the assessee, as the result an amount of ₹ 10,03,22,868/- is shown as the difference between the sale and the purchase in the books of the assessee which was payable to the business associate after deducting the service charges of ₹ 53,33,813/- being income of the assessee. Thus, the balance amount of ₹ 9,49,89,055/- payable to the business associate namely M/s. R. Piyarelal Global Impex Ltd. was recorded as an expense in the books and the account of the business associates was credited. Export sales made by the business associates, the sales have been credited by the assessee in its books of accounts as normal sales, being pursuant to the tie-up business model adopted for recording of sales and purchase transactions, to that extent the revenue is recognized in the books of the assessee. Correspondingly the purchase cost/expenses incurred by the business associates were also debited by the assessee in its books of accounts and to that extent the cost is recorded.Thus, the difference is sitting in the books of the assessee after reducing the service charges being the true income of the assessee, was nullified by debiting the profit & Loss account under the head "Reimbursement of Deficit/Surplus from/to business associates". Disallowance of prior period adjustments - AO made the aforesaid disallowance by holding that the liability of these expenses were crystallized in previous years - HELD THAT:- Since, the expenses were found to have been crytalized during the year, no disallowance is called for. Disallowance of interest u/s. 36/37 - HELD THAT:- Mere non-accrual of any income does not ipso facto make the tie-up advances as not for business purposes and very importantly when the same were given as held driven out of commercial expediency and the income has been earned in the past and duly included in the taxable income and assessed under section 143(3) of the Income Tax Act for those years and for subsequent assessment years. NAFED is persistently pursuing the recoveries against these tie-up advances. A Year Wise breakup of recoveries made against Tie-Up Advances and total recoveries aggregated to ₹ 158.24 crores. To expedite the remaining recovery, all the efforts are being made by the NAFED including legal proceedings which have been initiated against the defaulting parties at various levels i.e., CBI, Enforcement of Economics Offences Wing, High Court, etc. Since, the tie-ups could be said to be a part of the business operation, no disallowance of interest on this account is called for and hence we decline to interfere with the order of the ld. CIT(A). Appeal of revenue dismissed.
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