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TMI Blog2019 (12) TMI 627X X X X Extracts X X X X X X X X Extracts X X X X ..... 5, (Assessee's Appeal) 2. The assessee in appeal has assailed the order of Commissioner of Income Tax (Appeals) by raising following grounds : "1.0 Disallowance of Commission paid to Mr. Atul Kirloskar u/s. 40A(2) - Rs. 1,80,00,000/-. The learned CIT(A) erred on facts and law in upholding disallowance of Rs. 1,80,00,000/- being commission paid to Mr. Atul Kirloskar u/s. 40A(2). 2.0 Disallowance out of Aircraft Expenses - Rs. 1,11,22,180/- The learned CIT(A) erred on facts and law in upholding the disallowance of Rs. 1,11,22,180/- being Aircraft Expenses. The learned CIT(A) has made ad-hoc disallowance without considering the facts. 3.0 The assessee craves leave, to add, to alter, and to modify any of the above grounds of appeal." 3. Shri C.H. Naniwadekar appearing on behalf of the assessee submitted that the ground No. 1 of the appeal is in respect of disallowance of commission paid to Shri Atul Kirloskar. The Tribunal in earlier assessment years i.e. assessment years 2007-08, 2008-09 and 2009-10 has allowed the payment of commission to the Directors. The only reason for disallowing commission to Shri Atul Kirloskar is that he was appointed Director on the last date of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment year under appeal, the Commissioner of Income Tax (Appeals) has disallowed commission Rs. 1,80,00,000/- paid to Shri Atul Kirloskar on the ground that he was appointed Director on the last date of the financial year ending on 31-032010 and there is no plausible explanation for paying such huge commission to the Directors appointed on the last date of financial year. We observe that the authorities below have not examined the issue in proper perspective. For making disallowance u/s. 40A(2) the onus is on the Revenue to show that payments made by assessee to persons referred in clause (b) are excessive or unreasonable with regard to fair market value of the goods or services received by the assessee. In the present case the authorities below have failed to examine terms and conditions of appointment of Shri Atul Kirloskar. If the terms of appointment allow payment of such commission at the time of appointment, the commission paid to Shri Atul Kirloskar is allowable, provided the commission paid is within the limits specified under Companies Act. We are of considered view that this issue needs revisit to the file of Assessing Officer for reexamination in the light of our a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... does not specify the manner of recording satisfaction u/s. 14A of the Act. The recording of satisfaction is subjective. The assessee has not made any suo-moto disallowance u/s. 14A for earning exempt income. After examining the assessment order we observe that the Assessing Officer has recorded satisfaction before applying the provisions of Rule 8D. Hence, we do not find any merit in the contention of the assessee. Accordingly, the solitary issue raised in the appeal by the assessee is without any merit and hence, dismissed. 10. In the result, the appeal of assessee in ITA No. 406/PUN/2015 is dismissed. ITA No. 79/PUN/2015, (Revenue's Appeal) 11. The Revenue in appeal has assailed the order of Commissioner of Income Tax (Appeals) by raising following grounds : "1. Whether on the facts and circumstances of the case and in law, the CIT(A) was justified in deleting the addition on account of late delivery fees of Rs. 1,87,95,310/- by admitting the new evidences, without giving an opportunity to the A.O. to examine the same at his level and without appreciating that the provision has not been made on a scientific basis? 2. Whether on the facts and circumstances of the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . AR furnished the order of Tribunal in ITA No. 1919/PUN/2014 for assessment year 2009-10 decided on 17-07-2019. The ld. AR further submitted that the ground No. 6 of the appeal is with respect to the disallowance of Aircraft expenditure and is corresponding to ground No. 2 of the appeal by the assessee. 13. The ld. DR fairly admitted that majority of the issues raised in the appeal by the Revenue are similar to the one adjudicated by the Tribunal in appeal by the Revenue in assessee‟s own case in assessment year 200910. However, the ld. DR strongly supported the findings of Assessing Officer and prayed for reversing the findings of CIT(A) in respect of the issues agitated by the Revenue in appeal. 14. Both sides heard. Orders of the authorities below perused. The ground No. 1 of the appeal by the Revenue is with respect to deleting the addition on account of "late delivery fees‟ Rs. 1,87,95,310/- (liquidated damages). We find that identical ground was raised by the Revenue in assessment year 2009-10. The Tribunal in assessment year 2009-10 vide order dated 17-07-2019, following the decision rendered in assessment year 2008-09 has restored this issue back to the fil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ordingly, ground No. 3 of the appeal by Revenue is allowed for statistical purpose. 17. The ground No. 4 of the appeal is with respect to disallowance of commission u/s. 40A(2) of the Act, paid to the Directors. We find that this issue was considered by the Tribunal in appeal by Revenue in assessee‟s case in assessment year 2009-10. The commission paid to the Directors was allowed by the Tribunal. Hence, we do not find any reason to interfere with the findings of Commissioner of Income Tax (Appeals) on this issue. Accordingly, the same is upheld and ground No. 4 of the appeal is dismissed. 18. In ground No. 5 of the appeal the Revenue has assailed the findings of Commissioner of Income Tax (Appeals) in holding the subsidy received by the assessee from Maharashtra Government under Package Scheme of incentive, 2001 as capital receipt. The Tribunal in the case of Innoventive Industries Ltd. Vs. DCIT in ITA No. 601/PN/2013 for assessment year 2009-10 decided on 24-03-2017 has held that the incentive received under the Package Scheme of incentive is capital in nature. We further observe that the Co-ordinate Bench in appeal by the Revenue in ITA No. 1919/PUN/2014 (supra) ..... 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