TMI Blog2014 (12) TMI 795X X X X Extracts X X X X X X X X Extracts X X X X ..... recorded in the order is not a shortcoming as far as the assessee is concerned and the issue may require an internal administrative redressal if so warranted at the end of the FAA - the order under challenge was passed on 29.11.2010 - the assessee has canvassed that part of the expenses were reimbursed which fact has been found to be acceptable on considering the material available on record by the FAA in quantum proceedings - bright line as a concept was introduced for the first time as far as the assessee is concerned in the year under consideration and even otherwise as would be demonstrated from the arguments advanced before the Special Bench – assessee rightly contended that there was a reasonable cause on account of which the specific transaction was not disclosed as an international transaction in its Form 3CEB – the belief od the assessee was bonafide that the documentation placed on record is correct and as per the requirement of the law at the relevant point of time, thus, penalty u/s 271AA was not attracted – Decided in favour of assessee. - I.T.A. Nos. 3571/Del/2010 & 507/Del/2011, I.T.A. No. 3549/Del/2010 - - - Dated:- 12-12-2014 - Smt. Diva Singh And Sh. B. C. Me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions made by way of resorting to bright line holding AMP as an international transaction. The contention had been put forth praying for exclusion of expenditure consisting of advertisement and sale promotions amounting to ₹ 25.87 crores on the ground that it was for its own benefit as the expenditure incurred for the benefit of the AE was reimbursed to the extent of ₹ 19.01 crores. The remaining expenses amounting to ₹ 6.79 crores incurred was explained as an expense which is necessarily required to be incurred as a distributor of products in India on account of expenses pertaining to cost of finance scheme to the customer, free gift on product sales, salary of sales staff, dealers meet expenses, expenses on sales activities, printed demonstration material, stickers, sales of product etc whose benefit could not be attributed to the AE or could be recovered by way of adjustment as it was incurred for attracting business. It was also canvassed that rebate and discount do not form part of AMP expenses. Selection of comparables for bench-marking the AMP expenses were also assailed. It was contended that the advertisement expenses incurred by the assessee did not resu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amounting to ₹ 26,39,636 holding the same to be contingent expenditure. 9. The record shows that the assessee s claim for treating the provision for warranty as ascertained liability was not accepted by the AO. This action on being challenged in appeal by the assessee was upheld by the CIT(A) who concurred that it was in the nature of contingent liability. The Ld. AR has placed reliance upon the order of the Hon ble Supreme Court in the case of Rotork Controls India Pvt. Ltd. vs CIT, Chennai 314 ITR 62 (SC) and the decision of the Delhi High Court in the case of CIT vs Whirlpool of India Ltd. (ITA No.-1154 of 2009) so as to contend that the assessee on sale of its products undertakes to provide warranty services for a period of one year. The provision was made on account of warranty which was estimated to devolve in respect of sales made in the relevant previous year. The estimate of the provision for warranty it was submitted was made on a rationale basis considering the past failure ratio in respect of sales of products. The same accordingly it was submitted deserves to be allowed. 10. The Ld. CIT DR had no objection if the issue is restored to the AO for verificatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and this order of the Tribunal has been upheld by the Hon ble High Court in ITA No.-956/10, copies of the order it is found are available on record. Addressing the position in the subsequent assessment years the Ld. AR referring to the orders for 2006-07 2007-08 assessment years (cited supra), invited attention to para 11 12 of the same. On the basis of these paras it was submitted that identical treatment was given by the Revenue to similar expenditure and repeatedly this issue has been decided in assessee s favour as would be evident from the orders available on record. The ld. CIT DR on considering the orders of the Tribunal did not dispute the stand of the Ld. AR. 15. We have heard the rival submissions and perused the material available on record. In the light of the submissions advanced and considering the judicial precedent cited in assessee s own case we set aside the orders on record and hold that Ground No.-3 raised by the assessee has to be is allowed. 16. In the result the appeal of the Revenue is allowed for statistical purposes and the appeal of the assessee is partly allowed for statistical purposes. I.T.A .No.- 507/Del/2011 17. The relevant facts rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anted by the CIT(A) and as a result of the decision of the Special Bench in the quantum proceedings the issue has been restored to the TPO to consider them afresh in the light of the decisions of the Special Bench and assessee s own case in subsequent years. In these aforementioned peculiar facts and circumstances it was his submission that there existed a reasonable cause in terms of section 273B of Income Tax Act, 1961 on account of which the assessee had not disclosed the said transaction as an international transaction as such the penalty imposed was not attracted. 20. The Ld. CIT DR submitted that these explanations do not seem to be addressed in the impugned order as the CIT(A) has not discussed what arguments were advanced on behalf of the assessee and in the circumstances it was his stand that what arguments were advanced before the CIT(A) should be verified. 21. We have heard the rival submissions and perused the material available on record. We are of the view that the fact that these above mentioned arguments are not found recorded in the impugned order is not a shortcoming as far as the assessee is concerned and the issue may require an internal administrative red ..... X X X X Extracts X X X X X X X X Extracts X X X X
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