TMI Blog2020 (3) TMI 219X X X X Extracts X X X X X X X X Extracts X X X X ..... sed. Bad debt u/s 36(1)(vii) - CIT(A) sustained the addition made by the Assessing Officer, the reasons of which have already been reproduced in the preceding paragraphs - HELD THAT:- We find the assessee is changing its stand from time to time. He has made one statement before the Assessing Officer whereas before the CIT(A) he has come out with another theory. In any case the assessee has not substantiated the reasons for changing its stand before the two lower authorities. It is not coming out from the record as to when and how Maruti Suzuki Ltd. Company has stated or written to the assessee that they are not going to make any more payments against the outstanding balance. Since, nothing is coming out from the record, therefore, considering the totality of the facts of the case and in the interest of justice, we deem it appropriate to restore this issue to the file of the AO with a direction to give one more opportunity of hearing to the assessee to substantiate the claim of deduction. AO shall decide the issue as per fact and law after giving due opportunity of being heard to the assessee. We hold and direct accordingly. The grounds raised by the assessee are allowed for st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disallowance of expenditure incurred by the appellant towards payment on account of running royalty. 2.1 That on the facts and in the circumstances of the case, the Ld. CIT(A) erred on facts and in law in not considering the submissions made and the judicial precedents cited by the Appellant to show why the preceding years order ought not to be followed as a good precedent. 4. The facts of the case, in brief, are that the assessee company is engaged in the business of manufacturing of various body parts for small vehicles, including the side bumper frame works, rear frame work, cener pillar, etc for Maruti Suzuki India Ltd. It filed its return of income on 28/11/2012 declaring loss of ₹ 52,48,917/-. The Assessing Officer during the course of assessment proceedings noted that the assessee has debited an amount of ₹ 3,73,97,245/- on account of royalty on sales to the Profit Loss Account. He asked the assessee to explain as to why royalty paid during the year should not be capitalized treating the same as intangible assets. In absence of any explanation from the assessee and following the order of his predecessor for assessment year 2011-12 on the same issue, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red opinion that the royalty paid by the assessee in the peculiar facts and circumstances of the present case, was in the nature of revenue expenditure incurred by the assessee. Therefore, we set aside the orders of the authorities below on this issue and decide it in favour of the assessee. Accordingly, ground No. 3 of assessee is allowed and ground No. 1 of the Revenue is dismissed. 8. Since, the Ld. CIT(A) has allowed only 75% of the royalty payment as revenue in nature, therefore, respectfully following the decision of the Tribunal in assessee s own case in the immediately preceding assessment year, we hold the entire royalty payment as revenue in nature. Accordingly the ground raised by the assessee is allowed and the ground raised by the Revenue is dismissed. 9. In the result, ground raised by the Revenue is dismissed and the grounds raised by the assessee are allowed. ITA No.5946/Del/2016(By the assessee) 10. The grounds of appeal no.1 and 1.1 by the assessee read as under:- 1. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred on facts and in law in confirming the disallowance of ₹ 1,17,38,409/- which the assessing offic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to F.Y 2010-11 were actually raised by M/s Maruti Suzuki Ltd during the year under reference. This contention was never raised before the A.O, thereafter, in the written submissions dated 20.07.016, the appellant once again changed the contention and submitted as under:- 2.5 It was in these circumstances, that when the issue of balance outstanding for considerably a long period was broached with Maruti, it said that according to it there was no outstanding with reference to those balances as it had already made full payment against invoices after taking into account the price variation that had taken place from time to time. Therefore when it became clear that Maruti would not be making any more payments against the outstanding balances shown in the books of accounts of the Appellant, the Appellant had no other go than to write off the outstanding balances against which Maruti stated that they would not be making, any further payments against those balances. 2.6 Immediately upon coming to know this, the Appellant wrote off the receivable outstanding against Maruti and claimed deduction in the income tax- return for the Assessment Year under consideration i.e. A.Y. 2012- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the duty of the first appellate authorities to pass a speaking order after proper appreciation of facts. Referring to the decision of the Hon'ble Supreme Court in the case of Indian Tube Co. (P) Ltd. vs CIT [1992] 60 Taxman 399 (SC), he submitted that the Hon'ble Supreme Court has held that true nature and character of the disputed claim must be determined with reference to the substance of the matter and not by the mere entry or nomenclature which the assessee had chosen to give. Relying on various other decisions placed in the paper book, he submitted that the amount should be allowed as bad debt and cannot be disallowed as prior period expenditure. He further submitted that the tax rates for the current year as well as preceding year are the same and the assessee is not going to derive any benefit, therefore, the amount of ₹ 1,17,38,409/- should be allowed as deduction to the assessee. 15. The Ld. DR on the other hand heavily relied on the order of the Assessing Officer and Ld. CIT(A). He submitted that the assessee is changing its stand time and again. Before the Assessing Officer, the assessee has mentioned that the amount was deducted by Maruti Suzuki Ltd. a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see are allowed for statistical purposes only. 17. The ground raised by the assessee read as under:- 3. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred on facts and in law in confirming the disallowance of the expenditure incurred by the appellant, on staff welfare to the extent of ₹ 8,55,000/- on the ground that the expenditure to this extent did not appear to be in accordance with the attendance policy of the appellant. 18. The facts of the case, in brief, are that the Assessing Officer during the assessment proceedings noted that the assessee has claimed staff welfare expenditure of ₹ 1,89,54,834/-. From the details furnished by the assessee, he noted that the amount of ₹ 25,74,500/- has been withdrawn in its account on various dates without any description/merits and nature of expenses. Since the assessee could not substantiate evidence to his satisfaction regarding the withdrawal of such huge amount towards staff welfare expenses, the AO made addition of ₹ 25,74,500/- treating the same as expenditure otherwise than wholly and exclusively incurred for business purposes. 19. In appeal, the Ld. CIT(A) restricted s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rently these expenses claimed by the appellant are neither uniform nor in accordance with the attendance policy of the company. Such expenses cannot be considered as being staff welfare expenses. The appellant has not been able to furnish any satisfactory explanation with regard to the claim of these expenses. The disallowance made by the A.O on this account is accordingly restricted to the amount of ₹ 8,55,000/- being the Sunday working rewards. This ground of appeal is partly allowed. 20. Aggrieved by such order of the Ld. CIT(A), the assessee is in appeal before the Tribunal. 21. The Ld. Counsel for the assessee referring to page 100 of the paper book drew the attention of the Bench to the attendance reward policy of the assessee company. Referring to page 101 of the paper book drew attention of the Bench to the monthly attendance reward of the assessee company which is debited under the staff welfare expenses. Referring to page 103 to 239 of the paper book, he drew attention of the Bench to the date wise and month wise attendance reward which is as per policy of the assessee company. He submitted that the expenditure being wholly and exclusively incurred for the p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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