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2015 (12) TMI 1742 - AT - Income TaxDisallowing reimbursement of expenses to ABSC - Held that:- The assessee drew our attention to the break-up of expenditure. However, he pointed out that it could not furnish the details before the authorities below as the same had been lost in floods. Even before us, the assessee failed to furnish any document or information though pressed that whether the payment was to the foreign affiliate or it was reimbursement was a factual issue. We find no merit in the stand of the assessee in this regard in the absence of basic details to substantiate its claim, the amount in question is to be added in the hands of the assessee. Upholding the order of CIT(A), we uphold the addition - Decided against assessee. Disallowance of Excise duty on closing stock of obsolete inventory - Held that:- We find similar issue of advance payment of Excise duty in an accounting year, which is to be adjusted as and when goods were lifted by the assessee from its factory, was held as allowable as deduction under section 43B of the Act, since the said section recognized the deduction for payment of tax, duty, etc. as allowable on payment basis. See DCIT Vs. Glaxo Smithkline Consumer Healthcare Ltd. (2007 (7) TMI 334 - ITAT CHANDIGARH). Following the same parity of reasoning, we hold that the assessee is entitled to the claim of deduction of ₹ 10,06,000/- under section 43B of the Act as the aforesaid amount admittedly, was paid before the due date of filing the return of income for the instant assessment year, as certified by the Auditor in the audit report in Annexure 7 attached to the Form No.3CD, wherein it has been certified that the amount of Excise duty paid up to date of filing the return of income, exceeded sum of ₹ 1.86 crores. Disallowance of sales commission paid to sales agents - onus to prove - Held that:- the onus is upon the assessee to establish that the said expenditure has been incurred for the purpose of carrying on its business activities. Merely because the expenditure has been incurred by the assessee, does not entitle the assessee to the said claim without discharging his onus. In the facts of the case, the Assessing Officer made enquiries from the respective parties through Revenue Department at Mumbai and Kolkata respectively. However, no evidence whatso ever was furnished by either of the two parties in support of services provided by them to the assessee and the expenditure incurred by them vis-à-vis the said income earned by them. The assessee also did not furnish complete details in this regard and in the absence of any evidence and the onus not having been discharged by the assessee, we find no merit in the claim of the assessee. Addition made on account of software expenses - Held that:- The assessee for the year under consideration had also claimed to have incurred the expenditure on application software. However, the claim of the assessee was rejected being of enduring nature. We find no merit in the aforesaid disallowance made by the Assessing Officer in the case of assessee in view of the nature of expenditure incurred and also in view of ratio laid down in assessee’s own case in earlier years. We uphold the order of CIT(A) in allowing expenditure incurred by the assessee on application software - Decided against revenue Addition made to the closing stock being provision for obsolete inventory - Held that:- The assessee was consistently following the method of accounting of its obsolete inventory which has been consistently followed from year to year. Where there is recognition of the value of obsolete stock on a scientific basis, then provision made on that basis cannot be objected to by the Assessing Officer as the Department has been accepting the consistent method followed by the assessee both in the earlier and subsequent years. In view of the principle of consistency and in the absence of any evidence brought on record to dis-believe the method followed by the assessee, we find no merit in the order of Assessing Officer in this regard. Further, even the Hon’ble Supreme Court in Rotork Controls India (P) Ltd. Vs. CIT (2009 (5) TMI 16 - SUPREME COURT OF INDIA) had upheld the provision for warranty made by the said assessee in its books of account and its admissibility being on scientific basis - Decided against revenue. Allowing the losses suffered by newly set up EOU against its other business income - entitled to claim deduction under section 10B - Held that:- In the present case, the assessee has claimed the said deduction from assessment year 2005-06. Where the option is available with the assessee to claim the deduction under section 10B of the Act from assessment year in which it commences the business and not when the plant and machinery is first put in use, we find no merit in the ground of appeal No.3b raised by the Revenue in this regard. The assessee is entitled to set off of losses of EOU unit against the other business income, if any, assessed in the hands of assessee for the captioned assessment year. Balance loss, if any, would be carried forwar d to the succeeding years to be adjusted as per the provisions of the Act. Accordingly, the ground of appeal No.3 raised by the Revenue is also dismissed. Computation of deduction under section 80HHC - write back of the creditors to be included as business income eligible for deduction under section 80HHCHeld that:- The issue is squarely covered in favour of the assessee, where the credit balance written back, in turn relating to purchases made by the assessee. The Hon’ble Madras High Court in CIT Vs. Abdul Rahman Inustries (2006 (12) TMI 114 - MADRAS High Court) had held that the said write back of the creditors is to be included as business income eligible for deduction under section 80HHC of the Act. The learned Departmental Representative for the Revenue before us had made an alternate plea that once the same is included in the business profits, it should also be included in the total turnover of the unit. The assessee on the other hand, submits that the Assessing Officer had restricted himself in including the same in the business profit only. We find merit in the plea of the assessee in this regard and the said item relates to purchases and is not to be included in the total turnover of the eligible unit, while computing deduction under section 80HHC of the Act
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