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2016 (7) TMI 833

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..... an amount of ₹ 4,21,087/- is actually incurred as expenses on account of FOC and complimentary bottles given in the market as samples all over India. Ld. CIT (A), after noticing the factual mistake committed by the AO in treating the amount of ₹ 4,21,087/- as unascertained liability, has rightly deleted the same. So, finding no illegality or perversity in the order passed by the ld. CIT (A), we hereby decide ground against the revenue. Addition on commission - Held that:- CIT(A) deleted the addition of ₹ 70,000/- made by the AO on the ground that the assessee has paid the commission to M/s. Paras Commercial Corporation, Cuttack, a consignment agent on 02.09.2008 on a monthly commission of ₹ 10,000/- per month and the assessee company has raised the bill and paid it after deducting TDS. From the perusal of agreement and Form 16A it is apparently clear that since the agent has not raised any bill since March 2009, the assessee on the basis of agreement provided an amount of ₹ 70,000/- from September, 2008 to March, 2009 after deducting the tax at source i.e during the relevant financial year. So, the mistake committed by the AO has been rectified by .....

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..... is justified in making disallowance of claim of expenses to the extent of ₹ 11,49,335/- on estimate basis and not as per Rule 8D r.w.s. 14A was made by the AO? 2. Whether on the facts and circumstances of the case in law, the Ld. CIT(A) is justified in allowing claim of ₹ 4,21,087/- provision for supplying free goods? 3. Whether on the facts and circumstances of the case in law, the Ld. CIT(A) is justified in allowing claim of ₹ 70,000/- as provisional commission expense? 4. Whether on the facts and circumstances of the case in law, the Ld. CIT(A) is justified in allowing claim of ₹ 3,07,88,306/- as bad debt under the head rebate and discounts? 5. Whether on the facts and circumstances of the case in law, the Ld. CIT(A) is justified in allowing claim of ₹ 19,01,217/- as bad debt in absence of supporting documents? 3. The Objector, by filing the present cross objection, sought to set aside the impugned order dated 30.09.2013 passed by the Commissioner of Income-tax (Appeals)-VIII, New Delhi qua the assessment year 2009-10 on the ground that :- That, on the facts and in circumstances of the case, the learned Commissioner of In .....

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..... 31.03.2009. Assessee has reversed all other provisions but ₹ 70,000/- provided for commission was neither reversed nor added back by the assessee and disallowed the same as unascertained liability and thereby made an addition of ₹ 70,000/-. 7. As per Annexure 6 of Form 3CD, the assessee shown the amounts of profit chargeable to tax u/s 41 of the Act at ₹ 14,49,165/- as on 31.03.2004 on account of sundry balance written back and ₹ 3,07,88,306/- as on 31.03.2004 on account of provision for discount and rebate written back and out of the said amount, the assessee has declared ₹ 14,49,165/- being sundry balances written back as its income under other income but not shown the provisions for discount and rebate written back as its income for the year under consideration. Finding the explanation furnished by the assessee not tenable, the AO came to the conclusion that assessee company had recovered ₹ 5,00,00,000/- in FY 2007-08 relevant to AY 2008-09 from promoters against disputable claims by debtors for discount and rebate and thus ₹ 5,00,00,000/- were kept by the assessee for provision in its books of account for discount and rebate and has .....

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..... p Investments Limited (supra) passed by the Hon ble jurisdictional High Court is that under section 14A(2,) it is a condition precedent for Assessing Officer to determine amount of expenditure incurred in relation to exempt income; that he must record his dissatisfaction with correctness of claim of expenditure made by the assessee or with correctness of the claim made by the assessee that no expenditure has been incurred and that determination of amount of expenditure in relation to exempt income under Rule 8D only come into play when AO rejects claim of assessee in this regard. 13. Undisputedly, assessee company earned dividend income to the tune of ₹ 4,31,81,095/- and claimed the same as exempt income u/s 10(35) of the Act and suo motu disallowed the amount of ₹ 2,60,564/- u/s 14A being the expenses incurred for earning exempt dividend income. 12. Before invoking provisions contained under Rule 8D(2)(iii), the AO has not recorded his dis-satisfaction of the correctness of the claim of expenditure made by the assessee nor AO came to the conclusions that, the claim of the assessee that no expenditure has been incurred is incorrect. Assessee has come up .....

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..... nditure for marketing of the mineral water bottles. Hence, this expenditure of ₹ 4,21,087 is allowed in full. The additions of ₹ 4,21,0071- is deleted. In the result this ground of appeal is allowed. 16. From the copy of ledger account available at page 104 of the paper book, it is apparently clear that the amount of ₹ 4,21,087/- treated as unascertained liability by the AO includes an amount of ₹ 3,64,453/- on account of expenses actually incurred in respect of cost of raw material, packing material, electricity, power fuel, wages, repair and maintenance expenses and amount transferred from general expense ledger to specific ledger for FOC and complimentary and as such, an amount of ₹ 4,21,087/- is actually incurred as expenses on account of FOC and complimentary bottles given in the market as samples all over India. Ld. CIT (A), after noticing the factual mistake committed by the AO in treating the amount of ₹ 4,21,087/- as unascertained liability, has rightly deleted the same. So, finding no illegality or perversity in the order passed by the ld. CIT (A), we hereby decide ground no.2 against the revenue. GROUND NO.3 OF ITA No.6536 .....

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..... an write off any bad debts in its account in any year including the first year of business without proving the fact that the debt has actually become bad. Assessee has rightly claimed provision for discount and rebate written back of ₹ 3,07,88,306/- duly disclosed in Schedule 18 of the tax audit report of the composite amount of ₹ 5,24,10,339/-. When the write back of ₹ 5,05,09,122/-, which includes the amount of ₹ 3,07,88,306/-, was duly credited in profit loss account in the form of adjustment of bad debt expenses in Schedule 18, question does not arise to invoke the provisions of section 41 of the Act. So, finding no illegality or perversity in the findings returned by the CIT (A), we hereby determine ground no.4 against the revenue. GROUND NO.5 OF ITA No.6536/DEL./2013 20. AO by disallowing the bad debt written off to the tune of ₹ 19,01,217/- made an addition thereof to the income of the assessee which has been deleted by the CIT (A) by making following observations :- Ground no. 5 is part of ground no 4 the case of debts return off ₹ 19,01,217/- was shown in the schedule 18 of Tax Audit Report. This is again minimum of the .....

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