TMI Blog2018 (12) TMI 1490X X X X Extracts X X X X X X X X Extracts X X X X ..... sue and confirm his action and dismiss the ground of appeal of the revenue. Addition under the head ‘royalty expenses’- Held that:- We note that in this year the basis of royalty computation has been changed with retrospective effect from 01.04.2003 arising out of a policy decision and the additional expenditure on account of royalty has been actually determined during the year under consideration before us. CIT(A) has clearly made a finding of fact that this liability was determined this year and this liability crystallized during the current year. This finding of fact has not been challenged by the revenue before us. Therefore, when the liability has crystallized in this year, it cannot be called as prior period expenditure and since the additional expenditure on account of royalty has been determined and has crystallized during the year under consideration, it is an allowable business expenditure and so we find no infirmity in the order of the CIT(A) and we confirm the same. This ground of appeal of revenue is dismissed. Addition of provision for bad debts to assessee’s book profit ignoring the provisions of item (c) of Explanation 1 below section 115JB - Held that:- At th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contention of the assessee and was pleased to add the amount of ₹ 82,13,618/-. Aggrieved, the assessee preferred an appeal before the Ld. CIT(A), who was pleased to allow the same. Aggrieved, revenue is in appeal before us. 4. We have heard rival submissions and gone through the facts and circumstances of the case. We note that the assessee company is engaged in the business of transportation and car rentals. It was brought to our notice by the Ld. AR that the assessee supplies chauffer driven cars on rent to customers for a period of time as per the customers requirement. Elaborating on the business, the Ld. AR submitted that the time period for which vehicles may be given to customers varied for few hours on a day to a full day or for a number of days depending upon the requirement of the customers. According to Ld. AR, the assessee company operates through its branch offices situated in almost all the major cities and places of tourist interests in India. It was brought to our notice that as per the ITS details generated by the Department through its software and the reports thrown by it is based on the inputs filed by the payee who deducts TDS on payments made to asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income at ₹ 12,77,335/-. So far as commission income is concerned, it was brought to our notice that it comprises of service charges of ₹ 11,03,134/-, sundry income of ₹ 53,26,778/- referral commission of ₹ 7,46,495/- and miscellaneous income of ₹ 23,85,648/-. According to Ld. AR, the income offered for taxation by the assessee far exceeded the amount appearing in the ITS details. It was brought to our notice that during the assessment proceedings it was brought to the notice of the AO that the income as per the ITS details have been duly accounted for though in some cases the accounting heads may not be matching and as stated earlier that mistake is attributable to the ignorance on behalf of the payees while deducting the tax and/or fill-up the TDS return. After considering the facts and circumstances of the issue before us, we note that the assessee had shown total turnover of ₹ 54,91,34,241/- whereas the total income as per ITS details was only to the tune of ₹ 23,43,57,693/- and thus we note that assessee has declared income far exceeding the income shown in ITS details. The Ld. CIT(A) has correctly appreciated the facts that the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y was determined this year and this liability crystallized during the current year. This finding of fact has not been challenged by the revenue before us. Therefore, when the liability has crystallized in this year, it cannot be called as prior period expenditure and since the additional expenditure on account of royalty has been determined and has crystallized during the year under consideration, it is an allowable business expenditure and so we find no infirmity in the order of the Ld. CIT(A) and we confirm the same. This ground of appeal of revenue is dismissed. 7. Ground no. 3 is against the action of the Ld. CIT(A) in deleting the addition of provision for bad debts of ₹ 46,63,357/- to assessee s book profit ignoring the provisions of item (c) of Explanation 1 below section 115JB of the Act. 8. Brief facts of the case are that the AO had added back an amount of ₹ 46,63,357/- representing the provision for doubtful debts to book profit for the purpose of computation of deemed total income and tax liability u/s. 115JB(1) of the Act. The AO has added back an amount of ₹ 46,63,357/- representing doubtful debts for computation of total income. Aggrieved, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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