TMI Blog2019 (6) TMI 428X X X X Extracts X X X X X X X X Extracts X X X X ..... suggests that the same were availed on annual basis and was not a one-time payment. Hence, we do not find any possible reason to treat the expense as capital expenditure since the payment is made only for maintenance and support services, necessary for using the application efficiently. - Decided against revenue Disallowance of commission expenses - allowable business expenses or not? - HELD THAT:- A.O. has made various allegations and the assessee has submitted rebuttal to each such allegation during the appellate proceedings. It is observed that the A.O. has not brought any corroborative evidence in support of his allegation except making only such allegation. On perusal of statement by third parties no adverse inference could be drawn. In absence of any evidence of payments being not genuine, we do not find any justification in the action of the A.O. in treating the impugned commission payments as not being expended wholly and exclusively for the purpose of business. In view of the facts narrated above, we note that the addition made on account of commission payments rightly deleted by ld CIT(A) - Decided against revenue. Addition of warranty expenses - unrecovered warrant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issue involved in these two appeals are common and identical, therefore, these appeals have been heard together and a consolidated order is being passed for the sake of convenience and brevity. The assessee s appeal in I.T.A. No. 1344/Kol/2015, for assessment year 2011-12, is taken as a lead case. 3. At the outset itself, Ld Counsel for the assessee submitted before us that the issue involved in these two appeals relate to disallowance on account of provision of leave encashment of ₹ 70,06,297/- for assessment year 2011-12 and ₹ 1,73,21,918/- for assessment year 2012-13. The issue under consideration, i.e. provision for leave encashment, which is pending before the Hon ble Supreme Court for adjudication and there is no finality on this issue. The ld Counsel submitted that the main grievance of the assessee is that the Ld. CIT(A) was erred in not appreciating that Clause (f) of section 43B of the Act, providing for allowance of leave encashment on payment basis is arbitrary and de horse the Supreme Court decision in the case of Bharat Earth Movers, as held by the Hon ble jurisdictional High Court in the case of Exide Industries Ltd. 292 ITR 470 (Cal). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e case of M/s. Exide Industries Ltd. (supra). It was pointed out by the ld. DR that the Hon ble Apex Court in SLP (Civil) 22889 of 2008 has stayed the operation of the decision of the Hon ble jurisdictional High Court. In view of the above, we set aside the orders of the authorities below on this point and restore the matter back to the file of the AO with the direction that he will readjudicate this issue as per decision of the Hon ble Apex Court in the case of M/s. Exide Industries Ltd. (supra) . Respectfully following the same we set aside the orders of authorities below on this point and restore the matter back to the file of Assessing Officer for adjudication as per the decision of the Hon ble Apex Court in the case of M/s. Exide Industries Ltd.(supra). In view of the above and respectfully following the same, we set aside the orders of the authorities below and restore the matter back to the file of Assessing Officer for adjudication as per the decision of Hon ble Apex Court in the case of M/s. Exide Industries Ltd. (Supra). This Common ground of appeal of assessee (for both assessment years 2011-12 and 2012-13), is allowed for statistica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f ₹ 1,11,56,494/- was added back to the computation of total income of the assessee. Out of the total sum, depreciation @ 25% was allowed to the assessee, therefore, net disallowance made by AO was to the tune of ₹ 83,67,730 (₹ 1,11,56,494 25% of ₹ 1,11,56,494). 10. Aggrieved by the stand so taken by the Assessing Officer, the assessee carried the matter in appeal before the Ld. CIT(A) who has deleted the addition made by the Assessing Officer. Aggrieved by the order of the Ld. CIT(A) the Revenue is in appeal before us. 11. The ld. DR for the Revenue has primarily reiterated the stands taken by the Assessing Officer which we have already noted in our earlier para and the same is not being repeated for the sake of brevity and on the other hand, the ld. Counsel for the assessee has defended the order of theld CIT(A). 12.We have heard both the parties and perused the material available on record. We note that the assessee is a dealer of Caterpillar Inc., USA (Caterpillar). Caterpillar Inc. maintains a common web based interface which provides a common platform to all its dealers (including th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... during benefit and are only for annual maintenance and support services. The same services has been availed by the assessee in future years also which suggests that the same were availed on annual basis and was not a one-time payment. Hence, we do not find any possible reason to treat the expense as capital expenditure since the payment is made only for maintenance and support services, necessary for using the application efficiently. That being so, we decline to interfere in the order passed by the Ld. CIT(A), his order, on this issue is hereby upheld and the grounds of appeal raised by the Revenue is dismissed. 14. Ground No. 2 raised by the Revenue relates to disallowance of commission expenses of ₹ 1,10,58,743/-. 15. Brief facts qua the issue are that the assessee is a dealer of Caterpillar Inc. USA. During the year, the assessee has made commission payment amounting to ₹ 1,10,58,743/- to TRS Enterprises, SAS Enterprises and Chhundu Enterprises. During the year under consideration, the assessee company paid an amount of ₹ 1,10,58,743/- on account of commission on sales to following parties: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntiate and explain the services rendered by those parties to consider this expenditure as genuine business expenditure. Thus, the A.O. added back the whole amount of ₹ 1,10,58,743/-, on the contention that nature of consultancy actually offered by the said parties was not explained by the assessee and the assessee has failed to prove the genuineness of business expenditure. 16. Aggrieved by the stand so taken by the Assessing Officer the assessee carried the matter in appeal before the Ld. CIT(A) who has deleted the addition made by the Assessing Officer. Aggrieved by the order of the Ld. CIT(A), the Revenue is in appeal before us. 17. Before us, the ld. DR for the Revenue, has primarily reiterated the stand taken by the Assessing Officer which we have already noted in our earlier para and the same is not being repeated for the sake of brevity and on the other hand the ld. Counsel for the assessee has defended the order of ld CIT(A). 16. We have heard both the parties and perused the material available on record. We note that ld Assessing Officer has failed to appreciate the facts of the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ayment. As submitted by Counsel for the assessee, that the assessee had submitted copies of invoices during the course of assessment proceedings to the A.O. in support of its claim. Based on the same, the A.O. only took cognizance of the action of the DIT(Investigation) who summoned the two parties and took their statements on oath. The same could not be considered by the A.O. and hence his comments were sought by remanding the matter back during the appellate proceedings. It is observed that A.O. has made various allegations and the assessee has submitted rebuttal to each such allegation during the appellate proceedings. It is observed that the A.O. has not brought any corroborative evidence in support of his allegation except making only such allegation. On perusal of statement by third parties no adverse inference could be drawn. Based on facts placed on record, in absence of any evidence of payments being not genuine, we do not find any justification in the action of the A.O. in treating the impugned commission payments as not being expended wholly and exclusively for the purpose of business. In view of the facts narrated above, we note that the addition made on account of comm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... can be claimed as reimbursement from Caterpillar. Assessee submitted a copy of the sales and service agreement. We note that during the year under consideration, the assessee incurred total warranty cost of ₹ 15,99,76,159/-, which was back to back claimed as reimbursement from Caterpillar. However, out of the total claim made by the assessee of ₹ 15,99,76,159/-, Caterpillar accepted warranty claim of ₹ 15,17,74, 140/- and denied balance claim for reimbursement of ₹ 82,02,019/- as not liable to be covered under warranty. 22. We note that pursuant to the agreement entered into between the Caterpillar and the assessee, the assessee is entitled to claim reimbursement of warranty expenses from Caterpillar claimed by its customer. At the cost of repetition, we state that during the year under consideration, the assessee incurred total warranty cost of ₹ 15,99,76,159/- claimed as reimbursement from Caterpillar out of which warrant only claim of ₹ 15,17,74,140/- was accepted by the Caterpillar. Balance warranty claim of ₹ 82,02,019/- was denied by the Caterpillar and was not reimbursed to the assessee. The assessee in its books of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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