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2020 (3) TMI 219 - AT - Income TaxDisallowance of expenditure incurred by the appellant towards payment on account of running royalty - HELD THAT:- We find the AO in the instant case, following the order of his predecessor treated the entire royalty expenses as capital in nature and after allowing depreciation made addition to the total income of the assessee. We find in appeal, the CIT(A), following the order of his predecessor in assessee’s own case for assessment year 2011-12, treated 25% of such royalty payment as capital in nature and held the balance amount to be revenue in nature. We find identical issue had come up before the Tribunal in assessee’s own case in the immediate preceding assessment year. CIT(A) has allowed only 75% of the royalty payment as revenue in nature, therefore, respectfully following the decision of the Tribunal in assessee’s own case in the immediately preceding assessment year, we hold the entire royalty payment as revenue in nature. Accordingly the ground raised by the assessee is allowed and the ground raised by the Revenue is dismissed. Bad debt u/s 36(1)(vii) - CIT(A) sustained the addition made by the Assessing Officer, the reasons of which have already been reproduced in the preceding paragraphs - HELD THAT:- We find the assessee is changing its stand from time to time. He has made one statement before the Assessing Officer whereas before the CIT(A) he has come out with another theory. In any case the assessee has not substantiated the reasons for changing its stand before the two lower authorities. It is not coming out from the record as to when and how Maruti Suzuki Ltd. Company has stated or written to the assessee that they are not going to make any more payments against the outstanding balance. Since, nothing is coming out from the record, therefore, considering the totality of the facts of the case and in the interest of justice, we deem it appropriate to restore this issue to the file of the AO with a direction to give one more opportunity of hearing to the assessee to substantiate the claim of deduction. AO shall decide the issue as per fact and law after giving due opportunity of being heard to the assessee. We hold and direct accordingly. The grounds raised by the assessee are allowed for statistical purposes only. Disallowance of the expenditure incurred by the appellant - staff welfare - expenditure to this extent did not appear to be in accordance with the attendance policy of the appellant - HELD THAT:- The reasons of such relief granted by the CIT(A) has already been reproduced in preceding paragraphs and the Revenue is not in appeal against the same. So far as the disallowance of ₹ 8,55,000/- is concerned, assessee brought to our notice the attendance reward policy of the assessee company giving date wise, name wise and department wise, the payment made for the entire year. It is the industry policy that when the staff works for some extra time, different companies give incentives to their employees which the assessee in the instant case has followed. Under such circumstances, we are of the considered opinion that the entire amount should have been allowed as deduction and the Ld. CIT(A) is not justified in sustaining ₹ 8,55,000/-. We, therefore, set-aside the order of the CIT(A) and direct the AO to delete the disallowance. The ground raised by the assessee is accordingly allowed.
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