TaxTMI 
TaxTMI 
2013 (5) TMI 729
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.... The ground of the assessee is that the learned CIT(A) erred on facts and in law in restricting the deduction of commission @4.5% against the actual commission paid. In support thereof, it is mentioned that he should have allowed the full amount of the commission paid after finding that the assessee was entitled to the deduction for the services rendered by the agents. As against the aforesaid, the ground in the appeal of the revenue is that the learned CIT(A) erred in directing the Assessing Officer to allow commission to the sales agents @4.5% in respect of services rendered by them for procuring orders from the association of State Road Transport Undertakings. 2. The learned counsel briefly summarized the facts of the case that the assessee has been manufacturing Automotive Pistons and Rings, which are sold to State Government Enterprises. It availed of the services of the agents to procure orders from the enterprise. In lieu of services rendered by them, commission was paid at different rates of the amount involved in orders varying between 3% to 5%. The Assessing Officer disallowed the payment of commission on the ground inter alia that there was no need to employ agents fo....
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....mission agents is not in doubt. We, therefore, hold that the assessee's claim of payment of commission to various agents for rendering various services by them to the assessee in the course of supplying various goods to the State Road Transport Undertaking or other enterprises is an allowable deduction while computing the assessee's profit from business. We, therefore, direct the Assessing Officer to allow the assessee's claim. The orders of the authorities below on this point are reversed and the issue is decided in favour of the assessee." 2.1 In reply, the learned DR fairly submitted that the facts are similar and the issue stands covered by the decision of the Tribunal, referred to above. 2.2 As the matter stands covered by the decision of a co-ordinate bench of the Tribunal in the case of the assessee itself, the earlier decision obtains the nature of a binding preceding. Respectfully following the decision, it is held that the assessee is entitled to the deduction of the whole of the commission paid to the agents. (iii) I.T.A. No.213/D/08 - Appeal of the assessee: (iv) I.T.A. No.2860/D/08 - Appeal of the revenue: Assessment year:2004-05 3. Ground No.1 in the....
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....,834 - Rs. 18,36,916), the case of the learned counsel is that the composition of this part of miscellaneous income may be examined by the Assessing Officer. If the income is in the nature of turn over, the same may be included in the total turn over and if not, it may be excluded from the total turn over. The learned DR had no objection to remit this matter to the Assessing Officer for fresh adjudication in the light of aforesaid submission of the learned counsel. We have considered the facts of the case and submissions made before us. From the submissions of the learned counsel, it is obvious that no part of this income represents export turn over. Therefore, there is no question of including any part thereof in the total turn over as in the case of income arising on account of fluctuation in the rate of foreign exchange. Further, total turn over can only mean the receipts by way of sale of goods. Therefore, the composition of income is required to be examined by the Assessing Officer for including only that part of the income in the total turn over which represents consideration received for sale of goods. Accordingly, this matter is restored to the file of the Assessing Officer....
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.... to the assessee as such import of raw material has been for the purpose of its own production. However, sale of licenses does not lead to the profit, which has to be treated under the third proviso. It is fairly submitted that segregation as above was not submitted before the Assessing Officer or the learned CIT(A). Therefore, it is submitted that the matter may be restored to the Assessing Officer for examination. The learned CIT-DR had no objection to such verification. In the course of hearing, the decision of Hon'ble Bombay High Court in the case of CIT Vs. Kalpatru Colours and Chemicals (2010) 328 ITR 451, also came up for discussion. In this case, it has been held that the whole of the amount received on transfer of license amounts to profit and not the difference between sale consideration and the face value of the licence. The rival parties submitted that the matter may be remitted to the Assessing Officer for fresh decision after considering this decision of Hon'ble Bombay High Court. Accordingly, the ground is remitted to the file of the Assessing Officer for fresh decision in accordance with law. Thus, this ground is treated as partly allowed for statistical purposes. ....
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.... No.70/1988 decided on 29.04.2008. The very same agreement in question in the present appeal was also in issue in that reference. Consequently, this question proposed at paragraph (a) does not require any further consideration and has already been decided in favour of the assessee. This decision has been placed in the paper book on page Nos.54 and 55. Further, the SLP filed before the Hon'ble Supreme Court has been dismissed as per decision placed in the paper book on page no.56 bearing No.CC 12154/2009 dated 03.11.2009. In view of this decision, ground No.1 is dismissed. 7.1 Ground No.2 is against the finding of the learned CIT(A) that the fees paid to foreign technician is revenue in nature. AS in the case of royalty expenses, the Assessing Officer had treated 25% of the fees as capital expenditure. It is a common case of both the parties that the issue stands covered by the decision of the Tribunal, referred to earlier, in which it has been held that the expenditure is revenue in nature. For the sake of ready reference, paragraph No.40 of the decision of the Tribunal is reproduced below:- "Ground No.2 is directed against the CIT(A)'s order in deleting the addition of....
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....spectfully, following the aforesaid decision, the order of the learned CIT(A) in this matter is upheld and the ground of the revenue is dismissed. 7.3 Ground No.4, regarding the deduction of commission, stands decided against the revenue when ground No.1 in the appeal of the assessee was decided (supra). 7.4. Ground No.5 is against the finding of the learned CIT(A) that the expenditure of Rs. 1,50,96,609/- incurred on account of new model development is revenue expenditure. Assessing Officer had treated the expenditure to be capital expenditure for research and development. The admitted position is that this issue also stands covered against the revenue by the decision of the Tribunal referred to above, in which research and development expenses amounting to Rs. 1,56,16,310/-, were disallowed by the A.O. by treating them to be capital in nature. Thus, this ground is similar to ground No.3 (supra). Accordingly, this ground is decided against the revenue. 7.5. Ground No.6 is against the finding of the learned CIT(A) that excise duty amounting to Rs. 39,59,37,563/- is to be excluded from the total turn over for the purpose of computing deduction u/s 80HHC. It is the admitted ....
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....intenance of Plant & Machinery items. ii) Identify model machines and then work on for improving operations based on the improvements done on TPM model machines. iii) Training of workmen on various TPM activities for standardization of manufacturing operations at various stages. iv) To keep the work place neat and clean. v) To keep the things sorted out and in arranged waY." 9.4 The details of expenditure are mentioned as under:- a) Fees paid to M/s Japan Institute of Plant Management (JIPM) on account of training provided on TPM activities. b) TPM audit fees paid to JIPM c) Expenditure incurred for printing banners, display sign boards, TPM slogans, flags etc. in the factory. d) Expenditure incurred on training workshops under the TPM initiative. 9.5 It is mentioned that this expenditure is ongoing expenditure, incurred to improve the productivity levels of the workman. The ratio of the expenses to the total turn over in this and earlier two years has been 0.13%, 0.19% and 0.21% respectively. The finding of the learned CIT(A) is that the expenditure is in the revenue field as it has been incurred for inc....
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.... B.C. Srinivasa Setty (1981) 128 ITR 294 (Supreme Court). 9.7 In reply, the learned counsel distinguished various cases relied upon by the learned CIT-DR regarding acquisition of technical know-how etc. by mentioning that the expenditure led to acquisition of an intangible asset which granted benefit of enduring nature to the assessee. He also distinguished the decision in the case of Arvind Mill Limited Vs. CIT, (1992) 197 ITR 422 (Supreme Court), relied upon by the Assessing Officer, by mentioning that the assessee had paid betterment charges in respect of premises owned by the assessee. In so far as the assessee is concerned, the expenses have been incurred on the employees for enhancing productivity levels. Thus, the expenses are in the nature of training expenses incurred in relation with the employees. These are revenue expenses. 9.8 We have considered the facts of the case and submissions made before us. The question-whether, an expenditure is revenue or capital in nature is a vexed question of facts and law. No single test is determinative of the issue. General speaking, an expenditure which leads to acquisition or creation of a new asset is capital in nature. The exp....
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....see had not enhanced in any manner. Rather it created a positive image of the product of the assessee for the smooth conduct of the business, therefore, the expenditure incurred by the assessee was in the nature of revenue expenditure. The Bench while arriving at this conclusion placed reliance on the decision of Hon'ble Supreme Court in the case of Empire Jute Manufacturing Co. Ltd. VS. CIT 124 ITR 1 = (2002-TIOL-238-SC-IT) wherein the test for determination of the nature of expenditure incurred has been prescribed. It has been held that if the advantage consists merely in facilitating the assessee's trading operations or enabling the management and conduct of the assessee's business to be carried on more efficiently or more profitably while leaving the fixed capital untouched, the expenditure would be on revenue account even though the advantage may endure for an indefinite future. Since the issue is covered by the decision of LT.A.T. Jodhpur Bench in the case of Tirupati Microtech. (P) Ltd. (supra), we hold that the amount of RS.95,254/- is allowable as revenue expenditure. Accordingly, we set aside the order of Id.CIT(A) and direct the Assessing Officer to allow the....