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2023 (8) TMI 1179 - AT - Income TaxTP adjustment related to export commission - HELD THAT:- We find that this issue is squarely covered in favour of the assessee by the decisions of ITAT in its own case for AYs. 2015-16 [2021 (5) TMI 949 - ITAT DELHI] & 2016-17 [2021 (11) TMI 570 - ITAT DELHI] assessee has successfully demonstrated not only the benefits but has also shown that the profitability is higher (as per the charts exhibited elsewhere). Considering all no hesitation in directing the AO/TPO to delete the impugned addition on account of export commission. TP adjustment relating to model fee paid for strips and color change - TPO/DRP have made disallowance by holding that model fee paid by the assessee to its AE is nothing but in the nature of royalty which is already paid separately to the AE - HELD THAT:- Upon careful consideration, we find that the payment is according to an agreement. The disallowance has been made by the TPO not on the basis of any method prescribed under the rules or benchmarking the transactions. The Revenue authorities cannot sit into the shoes of businessman to decide which agreement should be made or which should not be. Hence, in effect, authorities below have opined that payment has no commercial expediency. This, in our considered opinion, is not as per the provisions of the Act. Hence, we accept the submissions of assessee and direct that the expenditure should be duly allowed. Disallowance of signage expenses as capital in nature - nature of expenses - HELD THAT:- As decided in assessee own case 2016-17 [2021 (11) TMI 570 - ITAT DELHI] signage expenditure is revenue in nature. Disallowance of sales tools expenses - These sales tools/fixtures are placed at dealer's outlets and are manufactured by third party in accordance with the specifications provided by the assessee - HELD THAT:- As In assessee’s own case for assessment year 2015 – 16 [2021 (5) TMI 949 - ITAT DELHI] we hold that sales tool expenditure are revenue expenditure in nature and therefore the disallowance made AO is directed to be deleted. Capitalization of royalty expenses paid to HMJ - HELD THAT:- As decided in assessee’s own case for AY 2016-17 [2021 (11) TMI 570 - ITAT DELHI] assessee was already engaged in the manufacturing of motorcycle and Scooter and payment of royalty expenses was not with respect to setting up of manufacturing facility. Therefore appeal of the assessee allowed and direct the learned AO to delete the addition on account of capitalisation of royalty expenses holding it to be revenue in nature. Disallowance u/s 80G - assessee made certain donation to approved institutions or funds and claimed 50% of the total donation made as deduction u/s 80G - This amount also formed part of the CSR initiative of the assessee company - AO has disallowed the claim on the ground that anything donation over and above the CSR u/s 80G will be only allowed as the CSR expense is not an allowable expense u/s 37 - HELD THAT:- We find that in the case of Goldman Sachs Services (P.) Ltd. [2020 (11) TMI 464 - ITAT BANGALORE] has held that the other contributions made under section 135 (5) of the Companies Act are also eligible for deduction/s 80G of the Act subject to satisfying the requisite conditions prescribed for deduction u/s 80G - issue is remanded to the file of AO to examine the same whether the payments satisfy the claim of donation u/s 80G of the Act. We find that the case law is fully applicable to the facts of the case. There is no restriction in the Act that expenditure when disallowed for CSR cannot be considered u/s 80G of the Act. Hence, we remit the issue to the file of AO to verify whether these payments were qualified as donations u/s 80G of the Act or not, if they qualify as donation u/s 80G of the Act then the requisite amount deserves to be allowed. Disallowance u/s 80JJAA - employees/ workmen employed by the assessee during the year - HELD THAT:- As we agree that AO has erred in applying amended provisions of section 80JJAA of the Act. Hence, we remit the issue to the file of AO to examine the factual aspects in terms of the unamended provisions of section 80JJAA. The issue of liberal interpretation raised by the ld. Counsel for the assessee is not tenable. The AO will act as per the sanguine provisions of the Act. Additional claim of deduction of expenses - Deduction of expenses in respect of technical know-how - Assessee contented that in light of Circular No. 14(XL- 35) dated 11.04.1955, it has been made clarified by the CBDT that the officers of the Department shall genuinely provide reliefs/remedies available to assessee in cases wherein the assessee has missed to claim any relief available to during the assessment and therefore the claim of deduction shall be allowed by the AO - HELD THAT:- As decided in own case 2016-17 [2021 (11) TMI 570 - ITAT DELHI] stand of the Revenue that where the assessee itself had not claimed as deductible in its hands, then the same cannot be allowed by the additional ground of appeal is not acceptable as there is no estoppel in law; especially where the issue has been decided by the Jurisdictional High Court on similar facts - we direct the Assessing Officer to allow assessee’s claim of deduction in respect of technical know-how payment. Payment of gratuity - assessee submitted that the said disallowance is made without providing any opportunity to assessee and the draft assessment order passed by the NFAC is non- speaking on this ground - HELD THAT:- We find that the issue should be remitted to the AO in the interest of justice. AO shall factually verify the averments of the assessee and decide as per law, by giving the assessee proper opportunity of being heard. Levy of education cess - HELD THAT:- We find that the issue is squarely covered by the decision of Chambal Fertilizers & Chemicals Ltd. [2022 (12) TMI 1098 - SC ORDER] expounded that term ‘tax’ under section 40a(ii) of the Income Tax Act should include cess. Ld. Counsel of the assessee in his elaborate submission tried to distinguish this case law. But we are not convinced. Hence, we decide this issue in favour of Revenue.
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