2016 (5) TMI 869 - AT - Income Tax

Adjustment made by the TPO on account of AMP expenses deleted

Disallowance u/s 40(a)(i) - Held that:- The export commission was neither royalty nor fees for technical services and as such the assessee was not required to deduct tax at source on payment of export fee and thus, no disallowance under section 40(a)(i) could be sustained. Respectfully following the order of the Coordinate bench in assessee’s own case where no change in facts or circumstances has been pointed out, the additions made by applying section 40(a)(i) are directed to be deleted.

Disallowance of relocation expenses on transfer of factory of the assessee company from Rudrapur to Greater Noida - Held that:- Expenses on relocation and shifting are revenue in nature and would be allowed as business deduction and the disallowance made by the AO on this count is deleted.

Disallowance of provision for slow moving inventory - Held that:- Where the provision is made on a scientific and reasoned basis year after year and such provision would be reduced completely when the obsolete stock is written off in subsequent years, no disallowance can be made on the assessee company. provision for slow moving inventory would be allowed as revenue deduction and therefore, the disallowance made in the assessment order for A.Y. 2010- 11 on this account has to be deleted.