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2015 (7) TMI 838 - AT - Income TaxDisallowance of Club membership fee, which included entrance fees and subscriptions paid for acquiring membership in clubs - A.O. disallowed the above amount on the ground that the admission fee gives benefit of enduring nature and hence the same is capital expense in nature - Held that:- Identical issue was considered by the Co-ordinate bench in the case of Skol Breweries Ltd. vs. ACIT (claimed to be present assessee’s old name) [2013 (1) TMI 623 - ITAT MUMBAI] wherein held that similar disallowance made by the Assessing Officer for the AYs 2004-05 to 2006-07 has been deleted by the Commissioner of Income tax (Appeals) and the revenue has accepted the order of the Commissioner Of Income Tax (Appeals. The assessing Officer has not brought out on record that there is a change in the facts and circumstances with respect to the claim of the assessee for the Assessment Year under consideration to that of earlier years 2004-05 to 2006-07. Though, principle of res-judicata is not applicable in the matter of income tax, however, rule of consistency has to be followed as the facts are identical. Since there is no difference in the facts and circumstances with respect to the claim of the assessee for the Assessment Year under consideration vis-a-vis to the Assessment Years 2004-05 to 2006-07 and when the order of the Commissioner of Income Tax (Appeals) has been accepted by the revenue for the AYs 2004-05 to 2006-07, then the claim of the assessee cannot be disallowed for the Assessment Year under consideration. Also see CIT Vs. Samtel Color Ltd (2009 (1) TMI 26 - DELHI HIGH COURT) has held that the admission fee paid to the Clubs is also revenue in nature. - Decided in favour of assessee. Disallowance made u/s 40(a)(ia) - discount given to distributors by way of credit notes for non-deduction of tax at source - Held that:- The relationship between the parties, as per the agreement, in relation to sale and purchase of the product is on principal to principal basis and to that extent the decision of Hon’ble Delhi High Court rendered in the case of Mother Diary (2012 (2) TMI 80 - DELHI HIGH COURT) is applicable. However, the Tribunal took the view that the scheme under which the impugned benefit/incentive is given needs to be examined in order to give a finding as to whether the impugned payment is commission or not. Hence, the matter was set aside to the file of the AO with a direction to verify and examine relevant record and decide the same as per law. Consistent with the view taken in earlier year, we set aside the order passed by AO on this issue and restore the same to his file with the direction to examine the same afresh after affording necessary opportunity of being heard to the assessee and take appropriate decision in accordance with the law. At the time of hearing, the ld A.R placed reliance on the decision rendered by Hon’ble Bombay High Court in the case of CIT Vs. Intervet India Pvt Ltd (2014 (4) TMI 353 - BOMBAY HIGH COURT), wherein it was held that the sale promotion benefit availed by the dealers is not payment of Commission. In the set aside proceedings, the AO should decide the issue by considering the applicability of the above said decision of Hon’ble jurisdictional High Court. - Decided in favour of assessee for statistical purposes. Disallowance u/s 40(a)(ia) r.w.s. 195 and 200 of the Act in respect of depreciation on payment to Foster’s Australia - Held that:- The above said issue is squarely covered in favour of the assessee by the decision of the Tribunal rendered in the case of Skol Breweries Ltd. (supra) to held that the deduction u/s 32 is not in respect of the amount paid or payable which is subjected to TDS; but is a statutory deduction on an asset which is otherwise eligible for deduction of deprecation. Depreciation is not an outgoing expenditure and therefore, the provisions of sec. 40(a) (i) of the Act are not attracted on such deduction.- Decided in favour of assessee . Disallowance made u/s 40(a)(i) of the Act of software charges - Non-deduction of tax at source - Held that:- When it was pointed out that the Explanation 4 is only a clarificatory amendment inserted by Finance Act, 2012 w.r.e.f. 1.6.1976 and hence Explanation 2 may encompass the same under its fold, the Ld A.R submitted that the assessee could not have visualized the amendment that is going to be brought in by Finance Act, 2012, when the impugned payment was made in Financial year 2007-08 and hence the provisions of sec. 40(a)(i) should not be applied on the payments that were hit by prospective amendment. We agree with this contention of the assessee and accordingly direct the AO to delete this disallowance. Decided in favour of assessee . Disallowance of interest on advances given to group entities u/s 36(1)(iii) - Held that:- an identical issue was considered by the Co-ordinate bench in the case of Skol Breweries Ltd. (supra) and restored the matter to the file of the AO to verify the contentions of the assessee that the advances were given out of own funds and not borrowed funds. Consistent with the view taken in the earlier year, we restore this issue to the file of A.O. for fresh examination by duly considering the contentions of the assessee.- Decided in favour of assessee for statistical purposes. Transfer pricing adjustment in respect of royalty payment to Associated Enterprises (AE) - A.R submitted that the assessee has undertaken fresh Transfer pricing study by taking fresh set of comparables, by following the directions given by the Tribunal in AY 2007-08 with regard to the approach to be followed for benchmarking royalty transaction. He further submitted that the TPO has recently passed the order for AY 2007-08 in the set aside proceedings and has accepted the fresh set of comparables furnished by the assessee. Accordingly, he prayed that the assessee may be given one more opportunity in this matter to represent its case in the current year also. Thus restore the same to his file with the direction to examine this issue afresh by making reference to the TPO and decide the same in accordance with the law. - Decided in favour of assessee for statistical purposes.
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