TMI Blog2019 (5) TMI 1254X X X X Extracts X X X X X X X X Extracts X X X X ..... in tune with tribunal s first round remand directions in these peculiar facts and circumstances - Decided in favour of assessee. - ITA No.1378/Kol/2017 - - - Dated:- 24-4-2019 - Shri J.Sudhakar Reddy, Accountant Member And Shri S.S.Godara, Judicial Member For the Appellant : Shri C.J.Singh, JCIT-SR-DR For the Respondent : Shri A. Sinha, ACA ORDER PER S.S.GODARA, JUDICIAL MEMBER:- This Revenue s appeal for assessment year 2002-03 arises against the Commissioner of Income Tax (Appeals)-22, Kolkata s order dated 27.03.2017 passed in case No.123/CIT(A)-22/02-0310-11/Kol, involving proceedings u/s 143(3) r.w.s. 251 r.w.s. 254 of the Income Tax Act, 1961; in short the Act . 2. The Revenue pleads the following substantive grounds in its instant appeal:- 1. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) is justified in deleting ₹ 3.85 crores routed through P L A/c under the head dealers incentive disregarding the fact that the Assessing Officer's addition has been based on discrepancies, crystal clear as it looks, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of trade incentive/turnover discount payable to dealers and distributors of the company. However, on actual calculation the actual incentive credited to the dealers and distributors of the company was ₹ 5,89,21,638/- for the financial year 2001-02. The differential amount of ₹ 2,04,21,638/- (₹ 5,89,21,638/-) was charged to the profit and Loss account for the financial year 2002-03, which actually related to the financial year 2001-02. 4. However, the Assessing Officer was of the view that the assessee has not furnished the details to show that the actual amount of ₹ 5,59,21,638/- pertains to the assessment year 2002-03. But he allowed the amount provided in the accounts amounting to ₹ 3,85,00,000/- and the additional claim of ₹ 2,04,21,638/- as per revised return was disallowed. 5. Aggrieved by this order of the Assessing Officer the assessee went in appeal before the first appellate authority who enhanced the income of the assessee by disallowing the amount of ₹ 3,85,00,000/-, relying on the decision of Hon ble Supreme Court in the case of Indian Molasses Vs- CIT reported in 37 ITR 66 which has been a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... instant case too the amount of dealer s incentive had been provided in the books during the F.Y. 2001-02 and had been paid out in the immediately next year. In the case of Indian Molasses Vs- CIT (supra) the issue was of contingent liability but in the instant case the liability had crystalised as soon as the sales had been affected by the dealers but could not be correctly quantifies due to lack of actual data. Therefore, the reliance placed by the Ld. CIT(A) on this case is misplaced. The second and third grounds on which the Ld. CIT(A) has made this disallowance are that the assessee did not credit the individual accounts of the dealers and did not issue credit notes. In this connection, the Ld. Counsel s submissions were that since quantification of the actual incentives payable to each dealer was not possible as on 31st March, 2002 the individual accounts of the dealers could not be credited. However, all the individual accounts of the dealers were credited with the actual incentives payable to them for the sales affected by them during the F.Y. 2001-02 in the immediately next F.Y. 2002- 03 and the entire list of incentives amounting to ₹ 5.89 crores have been furnish ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unts. 9. The Ld. Departmental Representative, on the other hand, supported the orders of the lower authorities and while placing reliance on Ld. CIT(A) s order submitted that since the assessee has failed to file copy of incentive scheme either before the Assessing Officer or before the Ld. CIT(A) the claim of the assessee is without any basis and deserves to be rejected. To verify the fact whether assessee has filed copy of the incentive scheme, the records of Ld. CIT(A) were called for and found that assessee did submit the copy of credit policy, incentive scheme and deferred discount policy for the F.Y. 2001-02 and the same was available with him. Copies of which are also available at pages 369 to 391 of the paper book filed by the assessee before us. At this stage, the argument of Ld. Departmental Representative was that since this incentive scheme was not before the Assessing Officer the matter should be restored back to the file of the Assessing Officer to ascertain whether the incentive claimed by the assessee is as per the scheme or not. In reply, the Ld. Counsel for the assessee submitted that he has no objection if the matter is restored back only for ver ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al assessment order makes it clear that all the said parties confirmed assessee s credit notes barring a few small amounts of matching issues. The Assessing Officer thereafter invoked the impugned disallowance after quoting hon'ble apex court s decision in Indian Molasses vs. CIT 37 ITR 66 (SC). He held that the impugned liability had neither accrued nor crystallized during the relevant previous year. 6. The CIT(A) has delete the impugned dealers incentive disallowance vide its following discussion:- 06. DECISION: 1. I have carefully gone through the submissions filed by the appellant and the observation of the Ld. AO in the order. I find that in terms of the direction of the Hon'ble ITAT A AO was required to verify the quantification of the incentive payable to dealers with the incentive scheme. 2. The Hon'ble ITAT has decided the issue on merits by holding that Simply because the assessee could not estimate the amount correctly and had provided a lower figure in its P L account and differential figure was ascertained at a later stage and provided in the subsequent year the allowable deduction cannot be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erred in law and on facts in deleting the impugned dealers incentive disallowance / addition despite the fact that the same was found to have neither accrued nor crystallized during the relevant previous year. He quotes hon'ble apex court s decision (supra) in support of the Assessing Officer s action during the course of hearing. Learned Departmental Representative further seeks to buttress the Assessing Officer s point that the amount in question had not gone out of assessee s hands irretrievably. We find no merit in any of Revenue s instant arguments. We wish to re-emphasize here first of all that this is second round of litigation. This tribunal s co-ordinate bench s remand directions extracted hereinabove made it clear that the impugned dealers incentive had much accrued during the relevant previous year. It further concluded that same should have been allowed by the Assessing Officer (supra). The Revenue s fails to dispute the clinching fact that our earlier remand directions had restored back the issue to the Assessing Officer only to verify whether the assessee s impugned claim confirms to the relevant terms and conditions incorporated in the dealers incentive scheme o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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