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2018 (8) TMI 53 - AT - Income TaxCIT-A enhanced the income of the assessee by discovering a new source of income - TDS u/s 194C - CIT(A) enhancing the income of the assessee u/s 251(1)(a) - disallowing the expenditure incurred on account of procurement of materials from third party vendors u/s 40(a)(ia) - assessee has entered into transactions with domestic third parties, LGEK and its related parties for purchase of finished goods without deducting tax at source - Held that:- There is no discussion of any such disallowance either in the return of income or in the assessment proceedings, therefore, the disallowance made by the ld. CIT(A) by discovering a new source of income is not sustainable in law. We, therefore, hold that the disallowance made by the ld. CIT(A) u/s 40(a)(ia) is void ab-initio. Since we are allowing the grounds raised by the assessee on the issue of enhancement of assessment by the ld. CIT(A) by discovering a new source of income, the other alternate arguments made by the ld. counsel for the assessee become academic in nature and therefore are not being adjudicated. Treatment to sales-tax subsidy - taxable revenue receipt OR capital receipt - Held that:- As following the order of the Tribunal in assessee’s own case for assessment year 2002-03 has decided the issue against the assessee by observing that the facts concerning this ground are that the assessee treated sales tax subsidy as capital receipt, which was held by the AO to be chargeable to tax in the nature of revenue receipt. It is noticed that this issue came up for consideration before the Tribunal in earlier years. For the first time, the tribunal decided it against the assessee for the assessment year 2002-03 and such view has been followed for the subsequent years. In view of the consistent view taken by the Tribunal in deciding sales tax subsidy as revenue receipt, we do not find any reason to interfere with the impugned order on this issue. Disallowing the provision for service warranty - Held that:- We find the Tribunal following the order of the Tribunal in assessee’s own case for assessment years 2002-03, 2003-04 and 2004-05 has decided the issue in favour of the assessee Disallowing royalty paid to LG Electronics Inc. Korea holding the same to be capital expenditure - Held that:- Respectfully following the decision of the Tribunal in assessee’s own case for assessment year 2007-08 [2014 (12) TMI 437 - ITAT DELHI], we hold that the total royalty payment as reduced by the transfer pricing adjustment on this score be treated as revenue expenditure. The ground raised by the assessee on this issue is accordingly allowed. Disallowing the claim of bad debts - Held that:- We find the ld. CIT(A) rejected the claim of the assessee on the ground that the assessee has not made out any case except making a bald claim that it has fulfilled the requirement of section 36(1)(vii) or 36(2) of the I.T. Act. Since the assessee is required to fulfill the twin conditions, therefore, considering the totality of the facts of the case and in the interest of justice, we deem it proper to restore the issue to the file of the Assessing Officer with a direction to give one more opportunity to the assessee to substantiate the claim of allowability of bad debts. The ground raised by the assessee on this issue is accordingly allowed for statistical purposes. Disallowing the claim of deduction u/s 80JJAA - Held that:- This issue is decided against the assessee by the Tribunal in assessee’s own case in earlier years and in assessment year 2007-08 [2014 (12) TMI 437 - ITAT DELHI] Addition of sales promotion and advertisement expenditure - as submitted that sales promotion and advertisement expenditure is incurred by the appellant wholly and exclusively in connection with its own business in India and is not at all guided by the alleged motive of promoting the business interest of its overseas group company - Held that:- Respectfully following the order of the Tribunal in assessee’s own case for assessment year 2007-08 [2014 (12) TMI 437 - ITAT DELHI] which has been decided earlier i.e. prior to assessment years 2005-06 and 2006-07, we deem it proper to restore the issue to the file of the Assessing Officer/TPO for fresh adjudication of the issue in the light of the decision of the Tribunal for assessment year 2007-08. The grounds raised by the assessee are accordingly allowed for statistical purposes.
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