2013 (8) TMI 57 - AT - Income Tax

Assessment pursuant to DRP order - 43 issues.

Issues decided in favor of assessee:- Addition of freight inward/ import clearing expenses to cost of closing inventory - Addition on account of cost of rejection of semi finished goods and obsolete items - Addition of provision for increase in price of material to the value of closing inventory - Disallowance of cost of scrap material - Adjustment on account of provision for increase in price of material as prior period expenditure or preponement of revenue - Disallowance of alleged excessive purchases price paid to related parties as per AS-18 - Disallowance of purchase under section 40(a)(ia) for alleged failure to deduct TDS u/s 194C - Disallowance of advisory services availed from Hero Corporate Services Ltd. (HCSL) - Payment received on behalf of Hero Honda Fin lease Ltd. (HHFL) deemed as dividend u/s 2(22)(e) - Addition on account of difference in amount of excise duty in inter unit transfer price of goods - Addition to value of closing stock on the basis of value reported in cost audit report - Disallowance u/s 14A as per Rule 8D - Disallowance of Rs. 4.26 crores on account of payment to LIC to cover leave encashment on the ground that same is allowable on actual payment of leave encashment under section 43B(f) of the Act; - Disallowance of Rs. 2.08 crores being the actual amount of leave encashment to employees during the year, on account of no evidence establishing such payment. - Disallowance of expenditure incurred in connection with expansion of business at Hardwar - payment of passenger tax to Government on behalf of transporters - Reimbursement of free service coupons to dealer for repair of vehicle - Payment to dealers on account of reimbursement of advertisement expenses - Reimbursement of repair and maintenance cost of Omax Auto Ltd. - TDS on reimbursement of out of pocket/ traveling expenses to consultant/ vendors - TDS on rental of leased lines from MTNL/BSNL - TDS on rent paid towards property taken on lease (matter remanded back) - TDS on management fee under a portfolio management scheme - TDS on payments exceeding exemption limit specified under 197 certificate - TDS at lower rate or wrong provision - TDS on incentive/ discount to dealers - TDS on clearing charges paid towards import consignments (matter remanded back) - TDS on reimbursement of cost of gifts distributed to customers by FX Enterprise Solutions Pvt. Ltd. - Addition on account of non-recognition of royalty income during the relevant previous year - Addition on account of non-recognition of membership under the passport scheme - Disallowance of reimbursement of foreign traveling expenses to directors/ employees, on the ground of no evidence/ proof of actual expense incurred by employees. - Disallowance of advertisement expenses on the ground of being capital in nature - payment for advertisement and publicity of the brand name of the assessee and for promotion of its product during the Cricketing events of ICC versus royalty / fee for technical services - Disallowance of provisions for advertisement expenses under section 40(a)(ia) - Disallowance of provision for warranty - Disallowance of royalty/ technical guidance fee on the following grounds: a. capital expenditure; (b) applying section 40(a)(ia) for failure to deduct tax at source at rate applicable to business profits - Disallowance of export commission for alleged failure to deduct tax at source - Transfer pricing adjustments - Disallowance of alleged prior period expenses amounting to Rs. 489.07 lacs - Disallowance of excess provision for discounts/ incentives payable to dealers at the end of the relevant year, which was recovered in next year on receipt of actual bills from the dealers - Disallowance of payment made towards use of aircraft for alleged failure to deduct tax at source under section 194-I - Addition on account of outstanding liability DRP Directions - Gains from sale of investments income treated as business income - Disallowance of provision towards medical reimbursement/ leave travel allowance: (DRP Directions)

Issues decided against the assessee:- Disallowance of provision for price increase reversed in the next year - Disallowance of deduction u/s 80-IA in relation to generation of power - Disallowance of additional depreciation of computers installed at supervisory office - Disallowance of deduction u/s 35(1)(iv) in respect of R&D assets - Disallowance of first car insurance premium on the ground of capital in nature relating to acquisition of car - Disallowance of repair/ maintenance expenses of existing assets as capital expenditure - TDS on motorbikes gifted to various winners of contestants at TV shows - TDS on use of catering services provided by hotels and room rent to hotels - TDS on hire charges of generator used at the corporate office - TDS on purchase of flowers - TDS on stitching charges of uniform for employees - TDS on provisions of various miscellaneous expenses made at the end of relevant year - Disallowance of incorrect deduction on account of additional depreciation reversed in succeeding year.