9911796707
TMI Blog2012 (11) TMI 935X X X X Extracts X X X X X X X X Extracts X X X X ..... diture has not crystallized and hence provisions for performance guaranty amounts to contingent liability. 2. Without prejudice to Ground No. 1 above, learned CIT(A) erred in not adjudicating the alternative ground of the appellant to exclude from the total income assessed for the year, the reversal of warranty provision of earlier years, amounting to Rs. 26,94,333/- which was disallowed in the assessment year 2002-03, and remained unutilized and credited to the profit and loss account for the year under appeal. 3. The learned CIT(A) erred in confirming the addition of Rs. 14,45,265/- to the total income, in terms of section 28 of the I.T. Act, 1961, as item not credited to the profit and loss account, on the ground that 'the balan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... without any basis, by treating such expenditure to be in the nature of deferred revenue expenditure, as per details tabulated below :- Description Total expenses Rs. Amount allowed (1/3rd) Amount disallowed (2/3rd) Business development expenditure 1,78,934 59,645 1,19,289 (b) Without prejudice to ground No. 6(a) above, learned CIT(A) further erred in disallowing 15% of Rs. 42,497/- (Rs. 1,19,289/- less earlier year's deferment of Rs. 76,792/-), out of the expenditure incurred on business development on account of 'personal element of the expenses', arbitrarily and without any basis without understanding the actual ground of appeal and without giving the appellant an opportunity to be heard in the matter. 7. The learned CIT(A) erred in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd No. 1 is on the disallowance of warranty provision of Rs. 2,18,950/-. The disallowance was made on the ground that the expenditure has not crystallized and hence provisions for performance guaranty amounted contingent liability. This issue came up before "H" Bench of the Tribunal in assessee's own case for earlier assessment year 2002-03 in ITA No. 188/Mum/2006 dated 3.11.2008, and the Tribunal following its own orders for A.Ys. 1996-97 to 2000-01 allowed the claim of the assessee. Respectfully following the same, we allow ground No. 1 of the assessee. 4. Ground No. 2 is on the reversal of warranty provision made in earlier years. This ground is consequential to ground No. 1. As in the earlier year, this ground is decided against the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acts as to the nature of arrangement/agreement between the assessee and client and relevant facts regarding payment of Rs. 8 lakhs in this regard. Therefore, we are considered opinion that the Assessing Officer has to bring out relevant basic facts relating to the nature of the receipt of Rs. 8 lakhs, terms of contract, income recognition methods followed by the assessee etc. and decide the issue afresh after giving reasonable opportunity of being heard to the assessee. Accordingly, ground 3 of the assessee is set aside." 6. Consistent with the view taken therein, we set aside the issue to the file of the Assessing Officer from fresh adjudication in accordance with law. 7. Ground No. 4 is consequential to ground No. 3 and hence co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e undisputed fact is that the foreign exchange loss is on the revenue items. Learned CIT(A) confirmed the addition by observing as follows :- "I have carefully considered both the arguments. It is seen that the sale particulars guaranteed in the P&L A/c. includes expenditure to be incurred on performance guaranty quantification of which may take place at a later date, has been taken into account in computing the profits liable to tax by the assessee. From the above, it is clear that the said expenditure was not crystallized and hence provisions of performance guaranty amounts to contingent liability. In the light of the above, the Assessing Officer has correctly disallowed an amount of Rs. 2,18,950/- towards W.P. for this year also ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
