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2015 (6) TMI 518 - ITAT MUMBAI

2015 (6) TMI 518 - ITAT MUMBAI - TMI - Disallowance of provision for trade guarantee - Held that:- Identically, the Tribunal has placed reliance upon the decision of the Tribunal for the assessment year 2004-05, wherein a detailed deliberation has been made on identical facts / issue. In the absence of any contrary material or any case law cited by the Revenue against the assessee, on the reasoning contained in the aforesaid order / earlier order of the Tribunal, we allow this ground of the asse .....

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lf has observed that the amount was paid to the consultant in connection with feasibility report on power generation, as is evident from the assessment order. Power generation is not the new business of the assessee. It is evident that the assessee disclosed income to the tune of ₹ 270,38,23,066=24, from sales, services and operation, etc. The assessee rendered services to the extent of ₹ 95,02,33,220, the nature of business shown by the assessee is manufacturing / trading in diesel .....

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law. The assessee be given opportunity of being heard with further liberty to furnish evidence, if any, in support of its claim. - Decided in favour of assessee for statistical purposes. - ITA NO.2695/Mum/2012 - Dated:- 5-6-2015 - Shri Joginder Singh and Shri N.K. Billaiya,JJ. For the Petitioner:Shri N.V. Nadkarni For the Respondent:Shri J.D. Mistry ORDER Per Joginder Singh (Judicial Member) The assessee has challenged the impugned order dated 31st January 2012, passed by the learned Commission .....

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ed by the Mrs. N.V. Nadkarni, learned D.R. 2.1 We have considered the rival submissions and perused the material available on record. In view of the above factual matrix, we are reproducing hereunder the relevant portion from the aforesaid order of the Tribunal dated 27th April 2011 for ready reference:- 2 In grounds of appeal no.1, the assessee has challenged the order of the CIT(A) in confirming the action of the Assessing Officer in disallowing the provision for trade guarantees of ₹ 1, .....

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there was no scientific method to arrive at such values of provision for trade guarantee. Therefore, according to the Assessing Officer, it appears that prima facie, the assessee has claimed contingent liabilities. He, therefore, asked the assessee to explain as to why the provision for such trade guarantee should not be disallowed. 2.2 Rejecting the various explanations given by the assessee, he came to the conclusion that provision created by the assessee is purely irrational and adhoc basis .....

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sessee are also not applicable to the facts of the present case. Relying on a couple of decisions, the Assessing Officer disallowed the amount of ₹ 1,41,92,093/- being in the nature of contingent liability. After deducting actual expenditure of ₹ 64,33,230/- incurred by the assessee he disallowed an amount of ₹ 77,58,863/-. 3 In appeal, the CIT(A) following the order of his predecessor for Assessment Year 1991-92 upheld the action of the Assessing Officer and held that provisio .....

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n case in ITA No.7114/Mum/2008 order dated 26.2.2010 for the Assessment Year 2004-05, submitted that the issue stands covered in favour of the assessee by the decision of the Tribunal in assesse s own case. Referring to para 5 of the order, he drew the attention of the Bench to the dispute relating to disallowance of provision for trade guarantee of ₹ 1,03,04,465/- for the Assessment Year 2004-05. 5.1 Referring to para 10 of the order, he submitted that the issue was stated to be covered i .....

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m of the assessee. Therefore, this being a covered matter, the ground raised by the assessee should be allowed. 5.3 The ld DR, on the other hand, fairly conceded that the ground in principle is covered against the revenue and in favour of the assessee. However, he submitted that quantification is required to be examined at the level of the Assessing Officer since the period of warranty is not known. He, accordingly submitted that the matter may be set aside to the file of the Assessing Officer f .....

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ns of the Tribunal in assessee s own case for Assessment Year 2004-05 where the Tribunal after considering the decision in the case of the assessee for earlier years has allowed the claim and in absence of any contrary material brought to our notice by the ld DR, this ground by the assessee is allowed. 2.2 If the observation made in the assessment order, leading to addition made to the total income, conclusion drawn in the impugned order, material available on record, assertions made by the ld. .....

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Tribunal, we allow this ground of the assessee. 3. The next ground pertains to disallowance of provision for trade guarantee written-back of ₹ 64,85,216. The crux of argument advanced on behalf of the assessee is that the learned Commissioner of Income Tax (Appeals) has not dealt with this issue though raided by the assessee, however, pointed out that if ground no.1, is decided in favour of the assessee, then automatically this ground will be disposed off. The learned D.R. fairly agreed w .....

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aim was made by the assessee, therefore, there is no question of fulfilling the conditions required under the section. The learned D.R. consented that no claim was made by the assessee. 4.1 In view of the assertion of the learned Counsel for the assessee that no claim was made by the assessee u/s 80IA of the Act and admission by the learned D.R. that no such claim was made, there is no question of making any addition / disallowance. 5. The next ground pertains to disallowance of professional fee .....

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e in Para-10.1 of the assessment order wherein it has been mentioned that vide letter dated 18th October 2010, the assessee filed the details of legal and professional consultancy charges in excess of ₹ 2 lakhs for the parties. The Assessing Officer disallowed the amount of ₹ 30,36,122, which was fees for study conducted and feed-back given on power generation to a feed-back business consultant. In a query to the order sheet dated 18th October 2010, the assessee vide letter dated 25t .....

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ion of power. Broadly, the power is generated either through water (electricity) or generator set and also through wind (wind energy / electricity). The assessee is manufacturing generators through which the power is generated and such generators are used by the customers. Thus, we are not in agreement with the observation of the Assessing Officer that power generation is not the regular business of the assessee because the assessee is manufacturing generators which are used for power generation .....

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. Power generation is not the new business of the assessee. It is evident from Page-63 of the paper book that the assessee disclosed income to the tune of ₹ 270,38,23,066=24, from sales, services and operation, etc. The assessee rendered services to the extent of ₹ 95,02,33,220, as is evident from page-68 of the paper book and Form no.3CD [col. 8(a)], the nature of business shown by the assessee is manufacturing / trading in diesel engine, trading in engineering goods and other engin .....

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