TaxTMI 
TaxTMI 
2014 (3) TMI 1016
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....late to the deletion of addition made on account of dealers commission of Rs. 6,46,11,000/- for failure to deduct TDS on such commission. Ground No.5 relates to the deletion of addition made on account of consultancy charges of Rs. 11,56,22,560/- treating it as capital expenditure. According to the Revenue, this expenditure is capital in nature and has to be allowed u/s 35D of the Act while CIT(A) has allowed it as revenue expenditure. 3. Brief facts of the case are that the assessee-company is into the business of manufacturing, purchase and sale of excavators, loaders, cranes, dumpers and spare parts etc. For the relevant assessment year, the assessee filed its return of income declaring income of Rs. 282,44,84,066/-. During the assessme....
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....mount credited by the assessee is only a provision and not actual payment of commission to the party and till the amounts are credited to the respective party's account, it cannot be said that the same have become finally quantified and hence, the provisions of sec.194H are not attracted. He also followed the decision of the jurisdictional High Court in the case of ACIT vs. Motor Industries Co. (249 ITR 141). He accordingly deleted the addition made by the AO. Against the deletion made by the CIT(A), the Revenue is in appeal before us. 5. Ms.Priscilla Singsit, learned Departmental Representative, supported the order of the AO and submitted that u/s 194-H, whenever a commission or brokerage is credited by the assessee, the assessee is r....
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.... their account and it was credited to the provision account and therefore there was no requirement of making TDS u/s 194H and consequently no disallowance u/s 40a(ia) can be made. In support of this contention, he placed reliance upon the decision of the jurisdictional High Court in the case of Motor Industries Co. (supra) and submitted that in the said case, the Hon'ble High Court was dealing with the applicability of sec.195 and it has been held that liability u/s 195 of the Act would begin to operate only with effect from the date when the collaboration agreement was concluded and not earlier because the foreign collaborator can enforce his right to receive payment only on conclusion of the collaboration agreement and that the mere f....
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....ade by the AO. In view of the same, we do not see any reason to interfere with the finding of the CIT(A) on this issue. This ground of appeal is accordingly rejected. 7. Coming to the second issue of disallowance of consultancy charges of Rs. 11,56,22,560/- as revenue expenditure, the learned DR has relied upon the order of the AO wherein the AO has held that the consultancy charges paid by the assessee to M/s.Mckinsey & Co., was in respect of study report to relocate its sources and to increase the profitability of the company. The AO held that the assessee was getting enduring benefit and therefore it is to be treated as capital expenditure and he has amortized the expenditure for a period of five years. On appeal, the CIT(A) has deleted....