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2023 (7) TMI 1150 - AT - Income TaxDeduction on account of non-compete fee amortized in the computation of income - Assessee explained that the payment of non-compete fees has been done to the shareholders/contractors of the bottling companies to facilitate the conduct of the assessee’s business more efficiently and more profitably, leaving the fees untouched - HELD THAT:- As in assessee’s appeal for A.Y 2008–09 [2023 (6) TMI 393 - ITAT DELHI] has considered a similar disallowance 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.- Decided against assessee. Reversal of provision towards bad debts - assessee explained that as per the accounting policy and receivables past due for more than 90 days needs to be provided and this amount is offered for tax while computing tax-free income after making provisions for doubtful receivable - HELD THAT:- We have carefully perused the orders of the authorities below. Provision was created in the earlier year and it was written back in that year is not in dispute. CIT(A) has admitted that the issue in hand is a case of reversal of provision of which income has already been offered in the earlier year. Therefore, we fail to understand why the addition has been sustained by the ld. CIT(A). In A.Ys 2008–09 and 2009–10 [2023 (6) TMI 393 - ITAT DELHI] also, similar issue arose but no disallowance was made in this regard as the ld. CIT(A) has deleted the disallowance and no appeal has been filed by the revenue against the decision of the ld. CIT(A).No merit in the addition. We, therefore, direct the Assessing Officer to delete the disallowance - This ground is allowed. Disallowance of traffic challans - HELD THAT:- We find force in the contention of assessee. Similar disallowance was considered by this Tribunal in A.Y 2008–09 as held 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) - Decided in favour of assessee. Addition on account of deposits from customers - assessee is accepting deposit from customers like distributers/retailers etc as a security deposit - CIT(A) accepted that section 41(1) of the Act does not apply, but applied provisions of section 41(2) and 43(6) - HELD THAT:- Facts on record show that the assessee has not claimed any trading liability. Containers and bottles are shown under the head “Current Assets” and deposits are shown as “Liabilities”. There is no evidence brought on record to show that liability has ceased to exist. In our considered view, the cessation of liability can only occur either by operation of law or debtors unequivocally declaring his intention to not honour his liability when payment is demanded by the creditor. As considering from all possible angles, neither provisions of section 41(1) of the Act apply [Assessing Officer fails] nor provisions of section 41(2) and 43(6) of the Act [CITA fails]. This ground by the assessee is allowed and similar grievance in revenue’s appeal is dismissed. Delayed payment to PF/ESI - HELD THAT:-This quarrel is now settled by the decision of Checkmate Services [2022 (10) TMI 617 - SUPREME COURT]. Addition on account of inventory loss and leakages - CIT(A) was convinced that the inventory loss is actually write off and not based on estimation and deleted the addition - HELD THAT:- The undisputed fact is that since the assessee is engaged in the business of manufacturing and distribution of non-alcoholic beverages which are perishable in nature, these beverages are supplied in glass and plastic bottles which are susceptible to breakage. Such breakage and expiry of the products leads to inventory losses in the year under consideration. Write off of inventory is based on actual loss and not on estimation. Therefore, CIT(A) was correct in allowing the same as business expenditure. Such action of the ld. CIT(A) cannot be faulted with. This ground is dismissed. Addition on account of repair and maintenance - steep increase of 53% in these expenses from immediate previous year whereas the turnover of the assessee company has increased by 35% only - HELD THAT:- It is not acceptable the comparison of the increase in sales with increase in repairs and maintenance expenses etc. - difference of 18% between 53% and 38% has no logic without pointing out any error or defect in the books of account which are audited and no adverse inference has been pointed out by the auditors. Decided against revenue.
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