9911796707
TMI Blog2021 (9) TMI 217X X X X Extracts X X X X X X X X Extracts X X X X ..... law, the ld CIT (A) has erred in deleting the addition of Rs. 1,75,00,000/- despite the fact that the assessee neither submitted any sufficient/cogent evidence regarding cancellation of the agreement with MDHPL nor did he retract from the statement recorded u/s 131 on 06.08.2008. 3. On the facts and the circumstances of the case and in law, the ld CIT (A) has erred in deleting the addition of Rs. 1,96,132/- on the basis of additional evidence submitted by the assessee during the appellate proceedings without calling for Remand Report on the said issue, which is in clear violation of Rule 46A of the IT Rules. 4. On the facts and the circumstances of the case and in law, the ld CIT (A) has erred in deleting the addition of Rs. 34,692/- on the basis of additional evidence submitted by the assessee during the appellate proceedings without calling for Remand Report on the said issue, which is in clear violation of Rule 46A of the IT Rules. 5. The appellant craves to add, modify or alter any grounds during the course of appeal proceedings." 2. Brief facts of the case are that the assessee are that the assessee is a Public Limited Company, engaged in the business of manufacturing o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the quality norms and the assessee has not earned marketing fees. Since, the assessee has not realised the marketing fees as prescribed in the agreement with MDHPL and hence the assessee has not earned such income. The reply of assessee was not accepted by the AO. The .AO held that agreement executed between assessee and MDHPL prescribed 5 products to be sold and marketed by the assessee, wherein the assessee company in its submission stated about non-fulfilment of condition by MDHPL, one product only Stevia. The assessee has not disclosed about the fate of other products. Further, with regard to non-satisfaction of quality norms, the assessee produced the quality testing report as furnished by the MDHPL dated 25.11.2011 and those got carried out by the assessee of its own in Chromadex (U.S.A). On the basis of aforesaid observation, the AO concluded that the product was up to specification as per the lab report. 4. The AO again issued show cause notice as to why the amount Rs. 1.75 crore offered by the assessee during survey should not be brought to facts. The assessee again filed its reply retreating that the contract with the MDHPL was not materialised, so the amount was not ear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onditions of the contract executed between assessee and MDHPL in its submissions and submitted that MDPHL agreed that assessee will give all support for marketing and distribution of its all herbal products by using his market experience, intelligence, distribution network, contract of distribution stockist, retailer and doctors as well as its house product management expertise. And accordingly, MDHPL agreed to pay Rs. 1.75 crore as marketing fees agreement with them. The assessee also referred and relied upon the statement of its official and on the basis of statement it was submitted that when the statement was given, marketing fees of Rs. 1.75 crore have not accrued. The assessee just entered into agreement in July 2008. There is no purchase by assessee of their products; and if there is no purchase, no question of reconciling their product. Further, the offer of futuristic income cannot be treated as a binding on the assessee, if the income does not accrues by mistake. The assessee also stated that the statement is not binding upon the assessee as it was a wrong admission. On the addition of cash difference of Rs. 34,692/-, the assessee submitted that according to assessee, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent year, the assessee has shown that there was no materialisation of deal with the MDHPL and the assessee has not realised the sale forecast for that year, accordingly addition of Rs. 1.75 crore is not sustainable. For addition on account of difference in cash, the Ld.CIT(A) held that assessee has filed copy of petty cash book balance as on 05.08.2008, which indicates that balance was Rs. 1,15,026/- and considering the balance, the addition of Rs. 34,692/- was deleted. On the additions of Rs. 1,96,132/-, the ld CIT(A) held that in the stock statement of Vivid Margi Investment P Ltd, the stock is duly accounted. For other addition under section 14A, the Ld.CIT(A) held that the assessee has sufficient interest free funds available with it for making investment of earning exempt income, therefore, no interest disallowances under section 14A read with rule 8D Rule 2(ii) is warranted. Aggrieved by deleting the additions, the Revenue has filed present appeal before this Tribunal. 9. We have heard the submission of learned Commissioner of Income-tax - Departmental representative (ld. CIT-DR) for Revenue and the ld.Authorised Representative (AR) for the assessee. With their assistance, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fact that reserve and surplus available with the assessee are in far excess than the investment made by assessee and by relying upon the decision of CIT Vs. Reliance Utilities Power Ltd., (supra). The Hon'ble Bombay High Court in Reliance Utilities & powers Ltd (supra) held if there are funds available both, interest free and interest bearing, then a presumption would arise that investment would be out of interest free funds generated or available with the company. We find that the interest free funds available with the assessee are in far excess than the investment made by the assessee for earning the exempt income. Considering the aforesaid factual matrix, we do not find any legality or infirmity in the order passed by the Ld.CIT(A), which we affirm. In the result this ground of appeal is dismissed. 12. Ground No.2 relates to deleting the addition of Rs. 1.75 crore. The ld. CITDR for the Revenue submits that a survey under section 133A was carried out on the office premises of the assessee. During the survey, the CFO and company secretary of Assessee Company disclosed the additional income of Rs. 1.82 crore. However, while filing the Return of Income, the assessee has offered o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e up of additional income, the official of the assessee clearly states that amount of Rs. 1.75 crore pertains to the agreement entered by assessee with MDHPL on 02.07.2008. The survey was carried out only after 33 days of execution of marketing agreement of assessee with MDHPL. The assessee offered only amount of Rs. 7.77 lakhs, brake up of which pertains to Purchase made from Mittal Trading and Kiran Sales Corporation. The additional income of Rs. 7.77 lakhs offered by assessee is accepted without any variation. The AO made addition of Rs. 1.75 crore only. The ld.CIT(A) while considering the contention of assessee and held that there is no payment by MDHPL of Rs. 1.75 crore. That MDHPL is having a total turnover of Rs. 47,16,255/- only. On the basis of examination of accounts of MDHPL, the ld.CIT(A) held that the accounts of MDHPL supports the contention of the assessee that marketing agreement could not materialised. The ld.CIT(A) further held that as per the marketing agreement, the fees of Rs. 1.75 crore was receivable, which was not materialised. Thus, the addition is not sustainable. 15. We further find that the stand of assessee right from the beginning is that the addition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r concern, no notice of summon was issued. We find that the Ld.CIT(A) after considering the accounts and invoices of Vivid M. Investment that these stocks were duly accounted in the said concern deleted the protective addition. In our view, the Ld.CIT(A) took a reasonable view after verifying the facts. We further find that the assessee made a mere protective addition and not clarified on whom the substantive addition is made. Hence, we affirm the order of ld CIT(A). In the result this ground of appeal is also dismissed. 19. Ground No.4 relates to deleting the addition of Rs. 34,692/-. The ld.CIT(DR) for the Revenue submits that the ld.CIT(A) deleted the addition without calling the remand report and in violation of Rule 46A. 20. On the other hand, the Ld.AR of the assessee supported the order of Ld.CIT(A), the Ld.AR submits that according to assessee, there was no unexplained cash difference at the time of survey. Entire cash has been recorded in the books of accounts. It is not known from the assessment order whether according to the Ld.AO if cash difference was found in short or in excess. In alternative submissions the ld AR for the assessee submits that the bench may take ap ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
