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2022 (4) TMI 1073 - AT - Income TaxService charges for quality audit of the bottlers - allowable business expenditure u/s 37(1) - test of `wholly’ for the purpose of the assessee’s business - word of `exclusively’ as a sine qua non for allowing deduction - HELD THAT:- This very issue has been examined by the Tribunal in its order for A.Y. 1997-98 [2019 (9) TMI 300 - ITAT PUNE] and a decision has been rendered that such expenses are allowable in terms of section 37(1) of the Act. Albeit there is a massive force in the contentions of the ld. DR, but we do not wish to accord our imprimatur to the same by disturbing the consistency of the Tribunal’s conclusion on the issue because the matter is already sub judice before the Hon’ble High Court. Respectfully following the Tribunal order for the immediately preceding year, we hold that the disallowance of service charges paid by the assessee to CCI Inc. at 25% is unwarranted. The same is, ergo, directed to be deleted. The only issue raised in the cross appeals for the assessment year 1999-2000 is about the extent of deductibility of service charges paid by the assessee to CCI Inc. For this year also, the assessee claimed deduction of service charges after adjustment of certain debit notes with the gross amount - AO, following the parity of reasoning given for the earlier years, disallowed the full amount of service charges. The ld. CIT(A), however, restricted the disallowance to 30%. Both the assessee as well as the Revenue have come up in cross appeals on their respective stands. The rival parties fairly conceded that the facts and circumstances of the appeals for the instant year are mutatis mutandis similar to those of the preceding year, which was argued by them at length. In fact, the parties simply adopted their arguments made for the assessment year 1998-99[2019 (9) TMI 300 - ITAT PUNE]. The only distinguishing feature brought to our notice was that the assessee did not carry out any bottling activity in the instant year. Having regard to the fact that there is no distinction in the facts and circumstances of the case qua the Service charges paid by the assessee to CCI Inc., following the view taken by the Tribunal for the preceding years, we direct to allow the deduction for service charges in full. At the cost of repetition, it is once again made clear that the deduction is being allowed so as to maintain consistency in the view of the Tribunal as the matter is sub judice before the Hon’ble High Court notwithstanding the fact that the Department has a good arguable case. Appeal of assessee allowed.
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