TMI Blog2021 (9) TMI 914X X X X Extracts X X X X X X X X Extracts X X X X ..... eding year, find merit in the contention of the assessee that it was a case where a portion of cost of asset claimed by the assessee had been met directly by M/s. Usha International Ltd. in the form of subsidy or grant and it was rightly excluded by the assessee from the actual cost of the asset in order to determine the cost of acquisition for the purpose of Section 43(1) of the Act as specifically provided in Explanation 10 thereto. The amount of incentive received by the assessee from M/s. Usha International Ltd. specifically for the purchase of van was not in the nature of any benefit or perquisite which had arisen from business so as to treat the value of the same as business income of the assessee in terms of Section 28(iv) - assessee that the case of the assessee is covered by Explanation 10 to Section 43(1) of the Act and not by Section 28(iv) of the Act. Therefore, delete the addition made by the AO u/s. 28(iv) . Addition of freight inward expenses - HELD THAT:- As freight inward expenses claimed by the assessee were incurred in cash and the same were supported by only self-made vouchers - The claim of the assessee for the freight inward expenses to that extent, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f companies like M/s. Cotton Grieves and M/s. Usha International Ltd. The return of income for the year under consideration was filed by it on 29.09.2011 declaring total income at ₹ 11,88,753/-. The said return was selected for scrutiny through CASS. It was noticed by the AO that the assessee on 31.03.2011 had received Special Redistributors' Incentive of ₹ 4,08,200/- from M/s. Usha International Ltd. in the form of credit notes. As noted by the AO, this incentive was given for the purchase of a van which was supposed to be used for the promotion of the products of M/s. Usha International Ltd. According to the AO, this benefit in the form of incentive had arisen to the assessee in the course of business and the same was liable to tax under the head profits and gains of business or profession as per Section 28(iv) of the Act. The assessee, however, had treated this amount of incentive as liability in his balance-sheet. The AO, therefore, required the assessee to offer its explanation as to why the said amount should not be brought to tax as business income as per the provision of Section 28(iv) of the Act. In reply, it was submitted by the assessee that the amoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provided with this incentive. Assessee is among the very few dealers who received it due to his larger sales. So, this incentive is directly linked with the turnover of the assessee. The incentive so received is not very different from what a staff of Usha International would have received by way of production bonus for achieving higher production. Even Conditionality of spending it for the purpose of purchasing a van and painting it with the Logo of parent company doesn't make it a liability for the assessee, as this van was never meant to be returned back to the parent company. This fact was also confirmed by the Usha International itself vide its letter dated in response to the direct queries in this regard. As far as demonstration of products of Usha is concerned, it is very obvious that same products are sold by the assessee. So, in a way it is demo of assessee's own sales items. Therefore, Ins saying that this incentive doesn't arise as any benefit to him, instead benefit was to the Usha, whose logo was painted on the Van. doesn't hold the ground. Usha International, sales its products through its distributors and increase in the sale of distributors only may ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the carrying out the business activity as distributor of M/s. Usha International. Though, as per claim of the assessee, it has been given for purchase of Van which has to be utilized for the demonstration of product of the M/s. Usha International but there is no doubt that it is benefit to the appellant as owner of the said Van. 5.3.6. In a latest decision in the case of M/s. Mahindra Mahindra Ltd, the Hon'ble Apex Court has given their view on the provision of section 28(iv) that provision of section 28(iv) will be applicable on the income arises from business or profession and the benefit which is received has to be some other form rather than in shape of money . Thus, it is clear that Special Redistributor Incentive received by the appellant firm in the form of credit notes though as to be used for purchase of Van but is income arises during business activities and taxable in terms of provisions of section 28(iv) of the I.T. Act. As per appellant submission that they have considered the Special Redistributor Incentive as subsidy in the year of purchase of van cannot be accepted without any evidence as appellant itself disclosed it as Special Redistributor I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rectly relatable to the asset acquired, so much of the amount which bears to the total subsidy or reimbursement or grant the same proportion as such asset bears to all the assets in respect of or with reference to which the subsidy or grant or reimbursement is so received, shall not be included in the actual cost of the asset to the assessee. 4.1. As rightly contended by the ld. Counsel for the assessee, the amount of incentive in question thus was received from M/s. Usha International Ltd. for the specific purpose of purchase of van which was to be utilised for the display and demonstration of the logo of M/s. Usha International Ltd. and since the said amount was actually utilised for purchase of van in the immediately succeeding year, I find merit in the contention of the ld. Counsel for the assessee that it was a case where a portion of cost of asset claimed by the assessee had been met directly by M/s. Usha International Ltd. in the form of subsidy or grant and it was rightly excluded by the assessee from the actual cost of the asset in order to determine the cost of acquisition for the purpose of Section 43(1) of the Act as specifically provided in Explanation 10 thereto. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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