TaxTMI 
TaxTMI 
2015 (12) TMI 294
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.... behalf of Stein Heurtey Bilbao and a debit note was raised by the assessee on 15.1.2008 for the same in Asst Year 2008-09 for Rs. 26,06,750/-. On raising the debit note, the assessee duly offered the same as its income for Asst Year 2008-09 by correspondingly debiting the said party. During the Asst Year 2009-10, the assessee found that the chance of recovery of part of the bill to the tune of Rs. 13,60,091/- was remote and accordingly took a conscious decision to write off the relevant part of the debt in its books of accounts for the year ended 31.3.2009 relevant to Asst Year 2009-10 ( ie. the assessment year under appeal). These details were duly filed before the Learned AO. Before the Learned AO , it was also requested by the assessee that in the books of accounts, it had erroneously shown this transaction as 'advances written off' instead of 'debt written off'. The Learned did not heed to this request of the assessee and proceeded to disallow the said sum of Rs. 13,60,091/- on the ground that the advances were not routed through profit and loss account of any earlier year and further on the ground that the said sum was not made in the course of business activity of the assess....
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....id party had settled the dues other than this amount on 30.7.2009 and hence the subsequent conduct of the said party also justifies the conscious decision taken by the assessee to write off the part of the debit note amount in the sum of Rs. 13,60,091/- in Asst Year 2009-10 itself. We find that the assessee had duly complied with the requirements stipulated in section 36(1)(vii) read with section 36(2) of the Act in claiming the deduction towards bad debts to the tune of Rs. 13,60,091/- and accordingly is duly entitled for deduction. We find that the decision of the Hon'ble Supreme Court in the case of TRF Ltd vs CIT reported in 323 ITR 397 (SC) is directly in favour of the assessee on the impugned issue, wherein it was held that post 1.4.1989, it is not necessary for any assessee to establish that the debt in fact has become bad. The Hon'ble Court has further held that if the debt has been written off in the books of accounts then it would be enough to allow the deduction. Further reliance is placed on the decision of CIT vs Y. Ramakrishna & Sons Ltd reported in 326 ITR 315 (Mad), wherein it was held that:-) "Held, dismissing the appeal, that the transaction of the asessee of f....
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....e disallowed in the facts and circumstances of the case. This issue is also interlinked with the ground no. 4 raised by the revenue. The ground no.2 and 4 raised by the revenue before us are as below:- '2. That the ld.CIT(A) has erred on facts and circumstances of the case and in law in holding that the AO has erred in disallowing the commission paid to sunshine Commotrade Pvt. Ltd amounting Rs. 40,82,939/-. 4. That on the facts and circumstances of the case and in law, the ld.CIT(A) has violated rule 46A by not affording the AO to give his comments on the fresh evidences or counter the same before deleting the disallowance u/s. 40(a)(ia) of Rs. 46,56,333/-." 4.1. The brief facts of this issue is that the assessee entered into an agreement with Sunshine Commotrade Pvt Ltd wherein the said party would render certain services to the asssessee in consideration of 2% commission on total value of contract. The assessee debited a sum of Rs. 87,39,272/- as expenditure incurred towards commission paid to Sunshine Commotrade Pvt Ltd by account payee cheques. According to Learned AO, the said party is a related concern of the assessee company and no details regarding the nature of ser....
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....fore the Learned CIT(A) for seeking relief in respect of disallowance u/s 40(a)(ia) of the Act made by the assessee voluntarily in the return of income to the tune of Rs. 46,56,633/- towards commission paid during the period April 2008 to Feb 2009. It was pleaded before the Learned CIT(A) that the commission payment to the extent of Rs. 46,56,633/- was subjected to deduction of tax at source and the TDS thereon was duly remitted to the account of Central Government on 8.9.2009 which is before the due date of filing the return of income u/s 139(1) of the Act and accordingly prayed for allowing the same as deduction. The Learned CIT(A) after calling for a remand report in this regard sought to delete the addition in view of the provisions of section 40(a)(ia) of the Act in this regard. Aggrieved, the revenue is in appeal before us. 4.4. The Learned AR reiterated all the submissions made by him before the Learned CITA. In response to this, the Learned DR vehemently supported the order of the Learned AO. 4.5. We have heard the rival submissions and perused the materials available on record. We find from the paper book filed by the assessee that Sunshine Commotrade Pvt Ltd had been re....
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....n this regard is placed on the decision of the Hon'ble Apex Court in the case of Radhasoami Satsang vs CIT reported in 193 ITR 321 (SC), wherein it was held that : As we are aware of the fact that, strictly speaking res judicata does not apply to income tax proceedings. Again, each assessment year being a unit, what is decided in one year may not apply in the following year but where a fundamental aspect permeating through the different assessment years has been found as a fact one way or the other and the parties have allowed that position to be sustained by not challenging the order, it would not be at all appropriate to allow the position to be changed in a subsequent year. 4.7. We also find that the Learned AO had an opportunity in the remand proceedings to verify the entire veracity of the claim made by the assessee in the additional ground before the Learned CITA with regard to allowability of deduction of commission to the extent of Rs. 46,56,333/- . We find that the assessee had duly remitted the TDS on 8.9.2009 which is before the due date of filing the return of income u/s 139(1) of the Act and accordingly is entitled for deduction for the same in the previous year it....
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....should be treated as 'contract for sale'because the same view was held by Sales tax authority is not tenable. * Since the appellant is not falling within the scope of subsection (3) of section 194C of the Act, the provisions of subsection (1) of 194C of the Act would be applicable to the assessee. The allegation of the AO that the products made by the vendor for the appellant company were tailor made according to the requirements of the appellant and hence the work assigned by the appellant to its vendor is not a 'contract for sale' instead the work is nature of 'contract for work.' 5.2. On first appeal, the Learned CIT(A) appreciated the fact that the assessee's case falls only under contract for sale and not contract for work. He also held that the definition of work as per Explanation (iv) (e) to section 194C which was introduced with effect from 1.10.2009 has been held to be retrospective in operation by the decision of Bombay High Court in the case of CIT vs Glenmark Pharmaceuticals Ltd reported in 324 ITR 199 (Bom) . He also held that the case before the Bombay High Court was the goods were manufactured by the vendor as per the specification of the assessee and it was....
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....arned DR vehemently supported the order of the Learned AO. 5.5. We have heard the rival submissions and perused the materials available on record. We find that the impugned issue is squarely covered by the decision of this tribunal in assessee's own case for the Asst Year 2008-09 in ITA No. 1143 / Kol / 2011 dated 18.5.2012, wherein the grounds raised before this tribunal and finding given thereon are reproduced herein below:- "1. That the ld.CIT(A) has erred on facts and circumstances of the case and in law by holding that supply of articles as per the specification of the customer would not attract TDS under section 194C and that the present case is one of sale per se and not a contract of work. 2. That the ld.CIT(A) has erred on facts and circumstances of the case and in law by not considering that the work assigned by the assessee to its vendor is not a 'contract for sale' and instead the work is in nature of 'contract for work' 3. That the ld.CIT(A) has erred on facts and circumstances of the case and in law by overlooking the fact that the case of assessee does not any of the exclusions given in 194C(3) of the Act". "4. In regard to ground nos. 1, 2 & 3, which are....