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2015 (12) TMI 1276 - AT - Income TaxAddition on account of development expenses - CIT(A) deleted the addition - Held that:- this issue is covered by the order of the ITAT for AY 2002- 03 and also by the orders passed by his predecessors for other assessment years. He observed that the AO had not pointed out any change in facts in the year under appeal as compared to the preceding assessment years and accordingly, ordered deletion of the disallowance made by the AO correctly as the impugned expenditure has been incurred by the assessee with the object of studying and identifying new areas of activities which would result in increased profits from business of manufacturing. The expenditure on feasibility study does not mean that it is incurred towards any new business- Decided in favour of assessee. Addition made on account of sale of land - Addition u/s 68 - CIT(A) deleted the addition - Held that:- during the year under consideration i.e. AY 2007-08, there was no physical receipt of money in the books of the assessee and all that had happened was that a sum of ₹ 2.50 crores was transferred by the assessee to the account of Escorts Limited (Parent Company) by a book entry. We also take note that the Permanent Account Number (PAN) of Mr. Satish Lamba was furnished before the CIT (A) and complete details including address of Mr. Lamba was furnished to the Assessing Officer. Therefore, we find that the said sum of ₹ 2 crores has been advanced against the agreement to sale of land from Mr. Satish Lamba ; and since sale has not taken place due to procedural delay and clearance from Haryana Urban Development Authority, the sale has not been executed and the assessee has rightly shown the said amount of ₹ 2 crores as advance. Therefore, we do not find any infirmity in the order of CIT (A) deleting the said addition made by the AO and uphold the order of the CIT (A) on this issue - Decided in favour of assessee. Addition on account of royalty expenditure - CIT (A) deleted the disallowance - Held that:- This issue has already been decided in favour of the assessee by the Tribunal for assessment year 2004-05 and the same was followed by the CIT (A) in this relevant assessment year to conclude the expenditure is of a revenue nature - Decided in favour of assessee. Disallowance u/s 35AB - Held that:- A perusal of the agreement reveals that there is nothing in it to suggest that the arrangement between the assessee and M/s Escorts Limited (100% holding company) is for providing a technical know-how and thus, we agree with the CIT (A) that there is no justification on the part of the AO to treat the expenditure as covered by Explanation to Sec 35AB of the Act. We further find that the genuineness of the expenditure is not in doubt since the AO himself has allowed 1/6th of the expenditure and the balance to be allowed in subsequent assessment years. The assumption of the AO that assessee had incurred expenditure for acquiring technical know-how is at best can be termed as guess-work and is not on the basis of any evidence to contradict the claim of the assessee or borne out of the agreement. We, therefore, hold that as the genuineness of the arrangement with the holding company is not in doubt and since no know-how has been acquired by the assessee, section 35AB is not attracted. - Decided in favour of assessee. Disallowance of interest paid for the late deposit of TDS deducted - Held that:- The payment was made on account of interest on delayed payment of tax. In other words, the AO disallowed the interest paid for the late deposit of TDS deducted, on account of interest on FBT and interest on Service Tax, We take note of the fact that the payment was actually made by the assessee on account of late deposit of service tax etc. and this factual position has not been controverted by the assessee before the CIT (A) and before us. Therefore, we find that the AO has rightly made the disallowance - Decided against assessee. Disallowance as unclaimed liability u/s 41 - Held that:- We find that the assessee has not furnished any documentary evidence to prove the identity/creditworthiness and genuineness of the sundry creditors before the AO or before the CIT (A). Therefore, we concede to the request of the Ld DR and remand this issue back to the file of the AO for adjudicating this issue de-nova and the assessee may produce necessary evidences before the AO to prove the identity/creditworthiness and genuine of the sundry creditors - Decided in favour of assessee for statistical purposes. Disallowance of unpaid sales Tax due in the previous years - Held that:- This amount represents unpaid sales tax liability and the same was disclosed itself by the assessee as a contingent liability. We find that there is no impact in the Profit & Loss account since the assessee had not claimed any deduction on that score. Therefore, we find that AO could not have made any disallowance on this issue - Decided in favour of assessee.
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