TMI Blog2023 (7) TMI 1150X X X X Extracts X X X X X X X X Extracts X X X X ..... r year and it was written back in that year is not in dispute. CIT(A) has admitted that the issue in hand is a case of reversal of provision of which income has already been offered in the earlier year. Therefore, we fail to understand why the addition has been sustained by the ld. CIT(A). In A.Ys 2008 09 and 2009 10 [ 2023 (6) TMI 393 - ITAT DELHI] also, similar issue arose but no disallowance was made in this regard as the ld. CIT(A) has deleted the disallowance and no appeal has been filed by the revenue against the decision of the ld. CIT(A).No merit in the addition. We, therefore, direct the Assessing Officer to delete the disallowance - This ground is allowed. Disallowance of traffic challans - HELD THAT:- We find force in the contention of assessee. Similar disallowance was considered by this Tribunal in A.Y 2008 09 as held payment of compounding fee for violation of provision under the Motor Vehicles Act, 1988 and Rules thereunder has held that such expenditure is allowable as business expenditure under section 37(1) - Decided in favour of assessee. Addition on account of deposits from customers - assessee is accepting deposit from customers like distributers/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nue. - ITA No. 5671/DEL/2018 And ITA No. 5810/DEL/2018 - - - Dated:- 18-7-2023 - Shri N.K. Billaiya, Accountant Member, And Shri Anubhav Sharma, Judicial Member For the Assessee : Shri Sachit Jolly, Adv, Ms. Soumya Singh, Adv For the Department : Shri Wasim Arshad, CIT- DR ORDER PER N.K. BILLAIYA, ACCOUNTANT MEMBER:- The above cross appeals by the assessee and Revenue are preferred against the order of the ld. CIT(A) - 42, New Delhi dated 29.06.2018 pertaining to Assessment Year 2010-11. Both the appeals were heard together and are disposed of by this common order for the sake of convenience and brevity. 2. The assessee, in its appeal, has challenged the disallowance on account of: (i) Non-compete fees Rs. 2 0271,336/ (ii) Reversal of provision towards bad and doubtful debt Rs. 8, 34,21,291/ (iii) Amount paid for traffic, challans Rs. 2 ,18,81,852/ . (iv) Deposit from customers Rs. 1,58,09,01,589/ 3. The representatives of bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s regard, we may refer to the following observations of the Tribunal in order dated 12.04.2023, while deciding assessee s appeal for assessment years 2004-05 to 2007-08 in ITA No. 6605/Del/2014 Ors. : 5.1 Issue no. 1: Disallowance of non compete fee is issue arising from the fact that assessee had acquired running businesses of various bottlers companies. Thus, restricting them from sharing their knowledge and know how in relation to the acquired business for specified period. The assessee claimed deduction for the same as deferred revenue expenditure on amortized basis over the period of non-competition. In the assessment order for assessment year 2001-02, being the first year of payment, the assessing Officer disallowed the proportionate deduction on the ground that non compete fee was capital expenditure, resulting in benefit of enduring nature, and therefore, not an allowable as revenue deduction. 5.1.1 Learned CIT(A) had upheld the order of Ld. AO and the issue was carried forward in the assessment year 2002-03 where Tribunal had upheld the view of learned Tax Authorities below. However, the assessee s appeal in this regard stands admitted before Hon ble Delhi High ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee that the ld. CIT(A) himself has accepted that the issue at hand is a case of reversal of provision of which Income has already been offered in the earlier years, therefore, action of the Assessing Officer /ld. CIT(A) has resulted into double addition of the same amount. 18. Per contra, the ld. DR strongly supported the findings of the Assessing Officer. 19. We have carefully perused the orders of the authorities below. Provision was created in the earlier year and it was written back in that year is not in dispute. The ld. CIT(A) has admitted that the issue in hand is a case of reversal of provision of which income has already been offered in the earlier year. Therefore, we fail to understand why the addition has been sustained by the ld. CIT(A). 20. In A.Ys 2008 09 and 2009 10 also, similar issue arose but no disallowance was made in this regard as the ld. CIT(A) has deleted the disallowance and no appeal has been filed by the revenue against the decision of the ld. CIT(A). Considering the past history and considering the totality of the facts, we do not find any merit in the addition. We, therefore, direct the Assessing Officer to delete the disallowance of Rs. 8,3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inate Bench (supra), we delete the disallowance. Ground no. 4 is allowed. 27. Respectfully, following the decision of the coordinate bench, the Assessing Officer is directed to delete the disallowance of Rs. 2,18,81,852/ . This ground is accordingly allowed. 28. Next addition is on account of deposits from customers. 29. The underlying facts in the issue show that the assessee is accepting deposit from customers like distributers/retailers etc as a security deposit. The amount lying as security deposit is at Rs. 1,84,15,10, 571/ . 30. The assessee was asked to furnish party wise details of such deposits and also their confirmations to prove claimants of such deposits. 31. The assessee did not furnish any party wise details and no confirmation of any party was furnished. The details of such security deposit from A.Y. 2002 03 is as under: A.Y Opening Balance [In Rs. ] Closing balance [In Rs. ] 2010-11 152,93,72,281 184,15,10,571 2009-10 182,20,52,443 152,93,72,281 2008-09 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assets are owned by the power generating undertaking and since the assessee is not a power generating company, the ld. CIT(A) grossly erred in applying provisions of Section 41(2) of the Act. 38. Coming to the applicability of provision of Section 41(1) of the Act which is also not applicable on the facts of the case, as twin conditions have to be satisfied (i) deduction in respect of a trading liability should be claimed in the previous year and (ii) the subsequent year liability must be written back effectively resulting into a benefit. 39. Facts on record show that the assessee has not claimed any trading liability. Containers and bottles are shown under the head Current Assets and deposits are shown as Liabilities . There is no evidence brought on record to show that liability has ceased to exist. In our considered view, the cessation of liability can only occur either by operation of law or debtors unequivocally declaring his intention to not honour his liability when payment is demanded by the creditor. 40. For this proposition we draw support from the decision of the Hon'ble Supreme Court in the case of Sugauli Sugar Works [P] Ltd 102, taxmann 713 and the on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that no details were furnished by the assessee. 51. Per contra, the ld. counsel for the assessee reiterated what has been stated before the lower authorities. 52. We have carefully perused the orders of the authorities below. The undisputed fact is that since the assessee is engaged in the business of manufacturing and distribution of non-alcoholic beverages which are perishable in nature, these beverages are supplied in glass and plastic bottles which are susceptible to breakage. Such breakage and expiry of the products leads to inventory losses which was at Rs. 9,29,17,122/- in the year under consideration. 53. We find that the write off of inventory is based on actual loss and not on estimation. Therefore, in our considered view, the ld. CIT(A) was correct in allowing the same as business expenditure. Such action of the ld. CIT(A) cannot be faulted with. This ground is dismissed. 54. Next grievance relates to the deletion of addition of Rs. 7,81,31,170/- made on account of repair and maintenance. 55. The Assessing Officer observed that the assessee debited Rs. 43,40,62,060/- wherein the immediate previous year the assessee company has debited Rs. 28,98,62,640/- an ..... 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