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2023 (6) TMI 393 - AT - Income TaxPenalty u/s 271(1)(c) - disallowance of non-compete fee claimed as revenue expenditure - HELD THAT:- It is a fact on record that the assessee has disclosed all material facts relating to payment of non-compete fee and the Assessing Officer was conscious of assessee’s claim. Assessee cannot be accused of furnishing inaccurate particulars of income. It is relevant to observe, penalty imposed u/s 271(1)(c) under identical facts and circumstances in assessee’s own case in assessment year 2002-03 was deleted by the first appellate authority and the Tribunal upheld the decision of the first appellate authority in deleting the penalty. No valid reason to interfere with the decision of FAA - Accordingly, we uphold the deletion of penalty imposed u/s 271(1)(c) of the Act in both the assessment years under dispute. Decided in favour of assessee. Nature of expenses - payment made towards non-compete fee - revenue or capital expenditure? - HELD THAT:- We find that this is a recurring dispute between the parties from assessment years 1999-2000 onwards and has been consistently decided against the assessee, even by the Tribunal. As per assessee’s appeal for assessment years 2004-05 to 2007- 08 [2023 (4) TMI 740 - ITAT DELHI] we uphold the decision of learned first appellate authority. Grounds raised are dismissed. Expenditure on unviable contracts - Disallowance towards provision made for reimbursement of sales tax and miscellaneous claims - HELD THAT:- In the assessment order, the AO has made specific allegation that the assessee has not furnished any evidence, either regarding the actual claim made by Salute Water House Pvt. Ltd., nor any evidence of the payment made. Similarly, in respect of payment alleged to have been made to Brindawan Beverages, Bareilly, the assessee has itself shown it as provision. Further, the Assessing Officer has made a categorical observation that no evidence has been furnished to demonstrate that the expenses were actually incurred by the assessee. The factual position remained unaltered before learned Commissioner (Appeals). Even, on perusal of written submission furnished before the Assessing Officer placed in the paper-book, we find, except quoting some facts and figures relating to certain expenses, some of which, have been classified as provision, no evidence has been furnished by the assessee to substantiate the fact that expenditure was actually incurred during the year. Ground dismissed. Payment made towards traffic rule violation - whether revenue expenditure u/s 37(1) - whether such payments made were for an offence or is prohibited by law? - HELD THAT:- The aforesaid issue has been decided in case of DCIT Vs. Bharat C Gandhi [2011 (3) TMI 278 - ITAT, MUMBAI] while dealing with identical issue of payment of compounding fee for violation of provision under the Motor Vehicles Act, 1988 and Rules thereunder has held that such expenditure is allowable as business expenditure under section 37(1) of the Act. Thus, following the decision of the Coordinate Bench (supra), we delete the disallowance. Ground no. 4 is allowed. Disallowance of expenditure incurred on Ice Boxes - HELD THAT:- We find that while considering identical nature of dispute in assessee’s own case in assessment years 2004-05 to 2007-08 [2023 (4) TMI 740 - ITAT DELHI] Tribunal, following its earlier decisions, has decided the issue against the assessee. Thus we uphold the disallowance. This ground is dismissed. Disallowance of processing charges - HELD THAT:- As relying on own case [2023 (4) TMI 740 - ITAT DELHI] in assessment years 2004-05 to 2007-08 we restore the issue to the Assessing Officer with a similar directions. Needless to mention, before deciding the issue, the assessee must be provided due and reasonable opportunity of being heard. TDS u/s 195 - Disallowance u/s 40(a)(ia) - payments made towards purchase of software without deducting tax at source (TDS) - Commissioner (Appeals) concluded that what the assessee has purchased is a copyrighted article and not the copyright, thus the payment made is not in the nature of royalty so as to require deduction of tax at source u/s 195 - HELD THAT:- The issue now stands squarely settled in favour of the assessee by the decision of the Hon’ble Supreme Court in case of Engineering Analysis Centre of Excellence Pvt. Ltd. [2021 (3) TMI 138 - SUPREME COURT] - we uphold the decision of learned Commissioner (Appeals) on the issue. Ground raised is dismissed.
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