TMI Blog2017 (11) TMI 860X X X X Extracts X X X X X X X X Extracts X X X X ..... he price that they proposes. ITAT held that the debit and credit of provision in the price support account is not a provision in the real sense, but an actual expenditure or its adjustment. The amount of provision of ₹ 15 created at the end of each month is credited to the respective bottler’s account ant the payment made does not enter into the price support account to the extent of the provision already debited. The AO has misunderstood the provision debited and credited to the price support account as a mere provision and not as an actual expense. When this provision is a part and parcel of the total price support expense, such part of provision, which actually represents the expenditure incurred, cannot be disallowed. Having ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on record provided to whole all the purchasers the average expenditure that could be reasonably claimed was 11.79%. In this, the A.O. concededly adopted a method of averaging out the entire expenditure after taking into account the total sum. 4. The Assessee attempted to have this determination rectified before the DRP against the TPO s determination but was unsuccessful and the amount was added back in assessment. It, therefore, approached the ITAT, which after considering the submissions of the parties, directed that the sum should be reversed. 5. The Revenue s counsel urges that the Tribunal fell into error in interfering with the Assessing Officer s reasoned determination. He relied upon the observations in the Assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... actors, such as, the location of the party, its terms of payment, the competitiveness in that particular area, etc., etc. It is apparent from the calculation of percentage of price support to sales that out of 21 parties, the assessee did not pay any price support to 8 parties varied from 3.72% to 32.90%. We fail to appreciate the view point of the AO in picking up only those 12 parties to whom price support was allowed and, then, averaging the percentage of price support to total sales as a benchmark for the purposes of disallowance. This course of action has no legal sanctity and is unfounded. If the AO was not satisfied with the explanation given by the assesses for allowing of discount at varying rates, it was open to him to specificall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o a bottler is ₹ 100/-, on which discount allowable is ₹ 15/- and debit this amount to the price support account with a parallel credit to the account of the concerned party. Subsequently, when the actual amount is paid, respective account of the party is credited without routing it through the price support account. Sometimes, the actual amount of price support is enhanced or reduced from the amount of provision made at the end of the respective month, depending upon the negotiations between the parties and the market conditions. If in the above illustration, the assessee actually pays price support of ₹ 14/-, it will reverse the provision of price support with Re.1 by crediting this account. If on the other hand, volume ..... X X X X Extracts X X X X X X X X Extracts X X X X
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