TMI Blog2017 (12) TMI 1163X X X X Extracts X X X X X X X X Extracts X X X X ..... not find any infirmity in the order of the first appellate authority in deleting the addition. Disallowance of provision for warranty expenses - Held that:- The assessee has demonstrated before us that out of the provisions created in the financial year relevant to the assessment year under dispute the assessee has utilized an amount of ₹ 2,14,73,380/-. It is also a fact on record that in assessee‟s own case for the preceding Assessment Year the CIT(A) has held that the provision on account of warranty and maintenance have been created on scientific basis cannot be treated as unascertained liability. We have also noted in case of other group companies similar disallowance made by the AO was deleted by the CIT(A) and while dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wance u/s. 14A can be made in view of the decision of Hon‟ble Delhi High Court in the case of Cheminvest Ltd. vs. CIT [2015 (9) TMI 238 - DELHI HIGH COURT] - ITA No.2338/Mum/2016 - - - Dated:- 18-12-2017 - Shri Saktijit Dey, JM And Shri G Manjunatha, AM For The Appellant : Shri Rajat Mittal For The Respondent : Shri Bhupendra Kharkanis ORDER Per Saktijit Dey, Judicial Member This is an appeal by the department against order dated 19.01.2016 of learned CIT(A)-8, Mumbai for A.Y. 2011-12. 2. In Ground no.1, department has challenged deletion of addition made of ₹ 6,03,255/- on account of interest paid on delayed payment of TDS/TCS. 3. Briefly, the facts are the assessee a company is engaged in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d DR relied upon the observations of the AO, the learned AR strongly supported the finding of the first appellate authority. 6. We have considered the rival submissions and perused material on record. As far as the nature of payment is concerned, there cannot be any doubt that the interest on delayed payment of TDS/TCS is not penal in character but it is compensatory in nature. This view has been expressed by Hon‟ble Karnataka High Court in the case of CIT vs. Oriental Insurance Co. Ltd. 2009 183 Taxman 186. Further in our considered view the interest on delayed payment of TDS/TCS cannot be considered to be a payment towards any rate or tax levied on the profit or gains of any business or profession as provided u/s. 40 (a) (ii) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tails the provision created by the assessee cannot be considered as an ascertained liability. Accordingly, he disallowed the claim of the assessee. Before the first appellate authority the assessee reiterated the stand taken before the AO. Further the assessee submitted that as per the provisions of section 115JB of the Act the AO cannot go beyond the profits shown in the Profit and loss account. In this context assessee relied upon number of decisions including the decision of Hon‟ble Supreme Court in the case of Appollo Tyres vs. CIT 255 ITR 273. The learned CIT(A) after considering the submissions of the assessee found that his predecessor following the decision of Hon‟ble Supreme Court in the case of Rotork Controls India (P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n created on scientific basis cannot be treated as unascertained liability. We have also noted in case of other group companies similar disallowance made by the AO was deleted by the CIT(A) and while deciding the appeal of the department the Tribunal following the decision of Hon‟ble Supreme Court in the case of Rotork Controls India (P) Ltd has upheld the decision of the CIT(A). Even in the facts of the present case also the AO has agreed in principle that provision for warranty and maintenance is allowable as per the methodology laid down by the Hon‟ble Supreme Court in the case of Rotork Controls India (P) Ltd (supra). In view of the aforesaid, we uphold the order of the CIT(A) by dismissing the ground raised. 10. In groun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estments no disallowance u/s. 14A can be made. Finally, the learned AR submitted in the relevant previous year the assessee has not earned any exempt income therefore the provisions of section 14A are not applicable. 12. We have heard rival submissions and perused material on record. The factual finding of the first appellate authority that the assessee has sufficient interest free funds available with it has not been controverted by the department therefore, no disallowance of interest expenditure under Rule 8D(2)(ii) can be made. Further the claim of the assessee that all investments are in group companies hence, are in the nature of strategic investment therefore should be excluded from the average value of investment for computing di ..... X X X X Extracts X X X X X X X X Extracts X X X X
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