TaxTMI 
TaxTMI 
2019 (7) TMI 1620
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.... filed by the assessee that additional ground raised by the assessee during the course of the hearing was not adjudicated, the appeal was recalled on 14/06/2019 by way of allowing miscellaneous application No. 440/Del/2019 for the limited purpose of admission and adjudication of the additional ground. 4. The additional ground raised by the assessee and noted in the miscellaneous application is reproduced as under: "11.3 That the Ld. DRP/AO has failed to appreciate that the reimbursement of trade scheme to promoters was in the nature of incentives and discounts to retailers and did not contain any element of commission and hence was not subject to TDS under Section 194H of the Act." 5. The learned counsel of the assessee submitted that the issue of disallowance of amount of Rs. 6,35,40,939/- paid to the "Sales Promoters" toward 'trade schemes', under section 40(a)(ia) of the Income-tax Act, 1961 (in short 'the Act') for non-deduction of tax at source was raised as ground No. 11 to 11.2 in the Appeal. It was contended by the assessee that amount was paid by the sales Promoters to the retailers for sales promotion in their area and the assessee has reimbursed that amount to the sa....
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....e, Royal Stag, etc. Primarily the appellant is organized in two business segments in India viz. Manufacturing [Class I] and Distribution [Class II]. 5.4 The learned counsel of the assessee filed paperbook in 2 volumes containing pages 1 to 640 and submitted that certain products of the assessee company were sold to retailers through the agency appointed by the State governments and for enhancing sales of those products the assessee had appointed 'Sales Promoter'. The assessee gives commission to those 'Sales Promoters' for enhancing sales on which the assessee deduct tax at source according the provisions of the Act. In addition to the commission amount, the assessee also reimbursed to those Sale Promoters certain trade discounts given by them to the retailers according to the trade schemes of the assessee. The learned counsel referred to page 124 to 132 of the paper book, which are copy of letter of appointment issued to few 'Sales Promoter of State of Karnataka. The learned counsel referred to relevant terms and condition of the letter of appointment to press his point that 'trade schemes' amount were reimbursed in addition to the separate commission amount allowed to the Sales ....
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....tored by the Tribunal to the Assessing Officer for factual verification whether the transaction is only of reimbursement. Now the assessee in additional ground claiming that reimbursement is of trade discount and therefore not liable for deduction of tax at source. Now the assessee wants to decide this issue by the Tribunal, whereas the learned DR is of the view that this issue should also be restored back to the Assessing Officer for deciding along with the earlier direction of the Tribunal. We agree with the view of the Ld. DR, because once the Tribunal has taken the decision for verification of the transaction whether it is reimbursement, then, it is appropriate to restore for verification whether the reimbursement is for trade discount. In our opinion the issue raised in additional ground is connected with the issue raised in the original ground and thus may be examined by the Assessing Officer along with the verification of the ground restored by the Tribunal (supra). We note that assessee has claimed before us that the trade discount was given by the sale promoters to the retailers and the assessee has reimbursed the same to the sale promoters. In this regard, we direct the A....
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....3,69,60,592/- for FY 2007-08 (i.e. AY 2008-09) by making a Transfer Pricing (TP) adjustment on account of "advertising, marketing and promotion" ('AMP') expenses incurred by the Appellant in the regular course of its business on the ground that it was excessive and should have been reimbursed by the Associated Enterprise "AE". 5.1 That the Hon'ble DRP/Ld. AO/Ld. TPO gravely erred in not appreciating that the Indian transfer pricing provisions are applicable only when there is shifting of profits from one taxable jurisdiction to another and not to extract or generate tax revenue or to create a notional tax charge on a transaction. 5.2 That the Hon'ble DRP/Ld. TPO/Ld. AO grossly erred on facts and in law in ignoring the fact that similar adjustment was deleted by the Ld. Commissioner of Income Tax Appeals ['CIT (A)'] in the Appellant's own case in AY 2005-06. No Transaction much less than International Transaction No Transaction much less than International Transaction 5.3 That the Ld. TPO/Ld. AO/Hon'ble DRP erred in assuming such transaction to be international transaction within the meaning of the term as contained in section 92B of the Act. 5.4 That the Hon'ble DRP / Ld. A....
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....tion of the BLT shall be prejudicial against the Indian subsidiaries licensed to use the brand owned by AEs outside India when compared with Indian entrepreneurs. 5.12 That the Hon'ble DRP/Ld. TPO/Ld. AO erred on facts and in law in ignoring India's position before United Nations (UN) in which marketing intangible issue in the India chapter has been discussed by the Indian tax administration from the perspective of a distributor and not a manufacturer, thereby erred in making AMP addition in the hands of Appellant who is a full-fledged manufacturer. 5.13 Without prejudice to above, Hon'ble DRP / Ld. AO / Ld. TPO erred in making an adjustment in respect of AMP expenses while selectively applying the principles laid down by the Delhi Special Bench in the case of LG Electronics India Pvt. Ltd. [(2013) 29 taxmann.com (Delhi) SB], 6. That the Hon'ble DRP/Ld. TPO grossly erred in making transfer pricing adjustment in relation to the AMP expenditure in complete disregard to the business activities of the Appellant, functions performed by the Appellant under various business segments and transactions undertaken during the year. 6.1 That the Hon'ble DRP/Ld. TPO/Ld. AO erred on facts....
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....at identical issue has been decided by the Tribunal (supra) in order dated 15/03/2019 for assessment year 2007-08 is under: "4. Ground Nos. 7 to 8.8 relates to Transfer Pricing adjustment of Rs. 52.05 crores made on account of Advertisement, Marketing and Sales Promotion Expenses [AMP]. 5. The appellant company is engaged in the business of manufacture and sale of alcoholic beverages in India. Furthermore, the appellant also has a distribution agreement with PR Group and is engaged in the distribution activity of Bottled in Origin [BOI] products imported from PR Group into India. Brands that are imported by the appellant are Chivasa Regal, Marteli, Royal Salute, Absolult, Jacobs Creek etc while the brands bottled in India primarily include Blenders Pride, Imperial Blue, Royal Stag, etc. Primarily the appellant is organized in two business segments in India viz. Manufacturing [Class I] and Distribution [Class II]. 6. Under Class I - Manufacturing, the appellant is manufacturer of alcoholic beverages and bears normal risks associated with its operation. The appellant is characterised as 'manufacturer of alcoholic beverages' under Class I. Under the distribution segment, the app....
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....tan Spirits Ltd 6.28 0.03 0.48 Jagatjit Industries Ltd. 635.94 58.37 9.18 John Distiliehes Pvt. Ltd 429 15.24 3.55 Khemani Distiliehes Pvt. Ltd. 93.35 1.93 2.07 Khoday India Ltd 159.29 4.17 2.62 Lords Distillery Ltd 190.45 1.73 0.91 Mohan Rocky Sprngwater Breweries Ltd 75.64 0.12 0.16 Pioneer Distiliehes Ltd 53.33 0.06 0.11 Radico Khaitan Ltd. 977.68 84.79 8.67 Rangar Brewehes Ltd. 34.22 1.98 5.79 Ravikumar Distiliehes Ltd. 64.99 2.23 3.43 Shaw Wallace & Co. Ltd. (Merged] 249.15 0.10 0.04 Shiva Distiliehes Ltd. 735.89 0.11 0.01 Southern Aghfurane Inds. Ltd. 370.84 20.43 5.51 Tilaknagar Industries Ltd. 112.43 18.41 16.37 United Spihts Ltd. 4678.74 398.69 8.52 Vindhyachal Distilleries Pvt. Ltd. 25 0.11 0.44 Average 3.97 11. According to the Assessing Officer, the mean of the expenditure incurred on AMP/sales of such comparable companies is Brightline and any expenditure in excess of the Brightline is for the development of the marketing intangible that needs to be suitably compensated by the AE. 12. AMP/sales ratio in the case of the assessee is computed as under: Advertising, Sales Promotion an....
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....n of the comparables based on the annual financial statement of the comparables. The assessee is directed to produce the annual financial statement as well as the calculation before the TPO who will verify> the same and recompute the AMP/ Sales margin of the comparables. " 3.3 In view of the same, Ld. TPO initially recalculated the AMP adjustment on the basis of the directions of the DRP which was intimated to this office vide letter dated 30.12.2014, which was subsequently revised on 06.01.2015 recalculating the transfer pricing adjustment to be made. The same is reproduced below:- SI. No Company Name Revised AMP/Sales % 1 Amber Distilleries Ltd. 0.24 2 Bhagat Industrial Corpn. Ltd. 3.61 3 Jagatjit Industries Ltd. 9.85 4 John Distilleries Pvt. Ltd. 3.59 5 Globus Spirits Ltd. 0.46 6 Khoday India Ltd. 2.62 7 Mohan Rocky Spring water Breweries Ltd. 0.16 8 Radico Khaitan Ltd. 9.50 9 Shaw Wallace & Co. Ltd. [Merged] 0 10 Southern Agrifurane Inds. 5.51 11 Ltd. Tilak Nagar Industries Ltd. 24.06 12 United Spirits Ltd. 9.09 Average 5.73 16. Accordingly, adjustment was recalculated on the basis of directions of the DRP as under: &n....
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...., we have to state that the Hon'ble High Court of Delhi in the case of Sony Ericsson Mobile Communications India Pvt Ltd vs CIT 374 ITR 118 has discarded the BLT. The Hon'ble High Court, at para 120 held as under: "120. Notwithstanding the above position, the argument of the Revenue goes beyond adequate and fair compensation and the ratio of the majority decision mandates that in each case where an Indian subsidiary of a foreign AE incurs AMP expenditure should be subjected to the bright line test on the basis of comparables mentioned in paragraph 17.4. Any excess expenditure beyond the bright line should be regarded as a separate international transaction of brand building. Such a broad-brush universal approach is unwarranted and would amount to judicial legislation. During the course of arguments, it was accepted by the Revenue that the TPOs/Assessing Officers have universally applied bright line test to decipher and compute value of international transaction and thereafter applied Cost Plus Method or Cost Method to compute the arm's length price. The said approach is not mandated and stipulated in the Act or the Rules. The list of parameters for ascertaining the comparables fo....
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....MC and (b) to make a quantitative 'adjustment' to the ALP to the extent that the expenditure exceeds the expenditure by comparable entities. It is submitted that with the decision in Sony Ericsson having disapproved of BLT as a legitimate means of determining the ALP of an international transaction involving AMP expenses, the very basis of the Revenue's case is negated. XXX 51. The result of the above discussion is that in the considered view of the Court the Revenue has failed to demonstrate the existence of an international transaction only on account of the quantum of AMP expenditure by MSIL. Secondly, the Court is of the view that the decision in Sony Ericsson holding that there is an international transaction as a result of the AMP expenses cannot be held to have answered the issue as far as the present Assessee MSIL is concerned since finding in Sony Ericsson to the above effect is in the context of those Assessees whose cases have been disposed of by that judgment and who did not dispute the existence of an international transaction regarding AMP expenses. XXX 60. As far as clause (a) is concerned, SMC is a non-resident. It has, since 2002, a substa....
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.... obliged to incur AMP of a certain level for SMC for the purposes of promoting the brand of SMC. XXX 68....................In other words, it emphasises that where the price is something other than what would be paid or charged by one entity from another in uncontrolled situations then that would be the ALP. The Court does not see this as a machinery provision particularly in light of the fact that the BLT has been expressly negatived by the Court in Sony Ericsson. Therefore, the existence of an international transaction will have to be established de hors the BLT." 14. In the light of the aforesaid finding of the Hon'ble High Court, before embarking upon a benchmarking analysis, the Revenue needs to demonstrate on the basis of tangible material or evidence that there exists an international transaction between the assessee and the AE. Needless to mention, that the existence of such a transaction cannot be a matter of inference. 15. The Hon'ble Delhi High Court in case of Whirlpool of India Ltd vs DCIT 381 ITR 154 has held that there should be some tangible evidence on record to demonstrate that there exists an international transaction in relation with incurring of A....
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....ses. XXX 39. It is in this context that it is submitted, and rightly, by the Assessee that there must be a machinery provision in the Act to bring an international transaction involving AMP expense under the tax radar. In the absence of any clear statutory provision giving guidance as to how the existence of an international transaction involving AMP expense, in the absence of an express agreement in that behalf, should be ascertained and further how the ALP of such a transaction should be ascertained, it cannot be left entirely to surmises and conjectures of the TPO. XXX 47. For the aforementioned reasons, the Court is of the view that as far as the present appeals are concerned, the Revenue has been unable to demonstrate by some tangible material that there is an international transaction involving AMP expenses between WOIL and Whirlpool USA. In the absence of that first step, the question of determining the ALP of such a transaction does not arise. In any event, in the absence of a machinery provision it would be hazardous for any TPO to proceed to determine the ALP of such a transaction since BLT has been negatived by this Court as a valid method of determining the existe....
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....diture arising from an international transaction, having regard to the arm's length price. The income / expenditure must arise qua an international transaction, meaning thereby that the (i) income has accrued to the Indian tax payer under an international transaction entered into with an associated enterprise; or (ii) expenditure payable by the Indian enterprise has accrued / arisen under an international transaction with the foreign AE. The scheme of Chapter X of the Act is not to benchmark transactions between the Indian enterprise and unrelated third parties in India, where there is no income arising to the Indian enterprise from the foreign payee or there is no payment of expense by the Indian enterprise to the associated enterprise. Conversely, transfer pricing provisions enshrined in Chapter X of the Act do not seek to benchmark transactions between two Indian enterprises. 31. The Revenue has strongly objected for the aggregated bench marking analysis for the AMP. According to the Revenue, the assessee company has not been able to demonstrate that there is any logic or rationale for aggregation or that the transactions of advertisement expenditure and the other transactions....
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....ating margins excluding AMP & Selling and distribution expenses Operating margins including all operating expenses Operating margins excluding AMP expenses Operating margins excluding AMP & Selling and Distribution expenses 1 2007-08 7.04% 27.04% 28.03% 5.11% 6.63% 10.60 2 2008-09 23.56% 42.08% 42.90% 5.83% 9.64% 12.75 3 2009-10 19.31% 34.05% 34.04% 3.65% 5.86% 8.10 4 2010-11 17.57% 23.50% 31.23% 6.73% 8.40% 11.49 5 2011-12 15.08% 20.37% 28.14% 3.31% 5.60% 8.19 22. The aforesaid chart clearly decides the quarrel in favour of the assessee and against the revenue. It can be seen that the operating margin excluding AMP and selling and distribution expenses of the assessee for the year under consideration is 28.03% whereas that of the comparables is 10.60% which is much higher and if the operating margin including all the operating expenses is taken, the same is 7.04% in the case of the appellant and 5.11% in the case of comparables. The margin excluding AMP expenses only is 27.04% in the case of the appellant and 6.63% in the case of comparables. In the light of the recisions of the Hon'ble High Court discussed elsewhere and in the of....
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....al in nature and has been disallowed by his predecessors. Past history of disallowance of brand expenses as considered by the Assessing Officer is as under: AY Brand expenses debited in P& LA/c %age of disallowance Brand expenses disallowed, being capital nature Brand expenses disallowed in TP Total brand expenses disallowed CIT(A)/D RP ITAT 2002-03 311,818,080 10% 31,181,808 NIL 31,181,808 Addition Deleted Appeals pending at ITAT 2003-04 377,548,605 20% 75,509,720 NIL 75,509,720 2004-05 389,550,709 10% 38,955,070 132,400,000 171,355,070 2005-06 467,342,660 10% 46,734,266 89,395,976 136,130,242 2006-07 529,677,093 10% 52,967,709 59,991,091 112,958,800 DRP (stands abated) 25. Taking a leaf out of the past history of the assessee, the Assessing Officer disallowed Rs. 8,21,29,536/- following the directions of the DRP. 26. Before us, the ld. counsel for the assessee, at the very outset, stated that this issue has been settled in favour of the assessee and against the revenue by the order of the Hon'ble jurisdictional High Court of Delhi and the Tribunal in earlier assessment years. 27. Per contra, the ld. DR could not bri....
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....disallowance while relying upon his predecessor's order in earlier years and noting that expenditure on sales and marketing was required to refresh the memory of the consumer of the products manufactured by the assessee and hence there was no enduring benefit. The Revenue is aggrieved by this finding of the Ld. CIT (A). 8.2 During the course of proceedings, the Ld. AR. pointed out that the issue was squarely covered in favour of the assessee vide this Tribunal's order dated 14.03.2016 passed in Assesse's own case for the immediately preceding years, i.e., AY 2002-03 and 2003-04. It was further pointed out that the aforesaid issue had also been decided in favour of the assessee by Hon'ble High Court of Delhi vide order dated 6.04.2016 passed in ITA No. 224/2016 and 225/2016 in the case of assessee's sister concern, viz., M/s Seagram Distilleries Pvt Ltd.. The Ld. AR also cited Hindustan Aluminium Corporation Limited v. CIT: 159 ITR 673, CIT v. Berger Paints (India) Ltd. (254 ITR 503), CIT v. Salora International (308 ITR 199) (Del.), CIT v. Casio India Ltd. (335 ITR 196) (Del) and CIT v. Adidas India Marketing Ltd. (195 Taxman 256) (Del.) to support his contentions. 8.3 The Ld. ....
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....scertained liability. 8.4 That the Hon'ble DRP/Ld. AO erred in facts and in law in arriving at a conclusion that transit breakages cannot be integrally linked to sale unlike the provision of warranty which requires outflow of funds to settle the obligation. 11.1 The Coordinate bench of the Tribunal (supra) has decided identical issues raised in assessment for 2007-08 observing as under: "32. Ground No. 10 to 10.4 relates to disallowance of Rs. 1,12,16,288/- made on account of provision for transit breakages. 33. During the course of scrutiny assessment proceedings, the A.O found that the assessee has claimed deduction on account of provision for transit breakages amounting to Rs. 1,12,16,288/-. 34. At the very outset, the ld. counsel for the assessee fairly stated that such disallowance has been upheld by the Hon'ble High Court of Delhi vide order dated 23.10.2015 in ITA No. 237/2015 Seagram Distilleries Pvt Ltd in assessee's own case for assessment year 2001-02. The ld. counsel for the assessee further stated that the order passed by the jurisdictional High Court of Delhi has been confirmed by the Hon'ble Supreme Court vide order dated 11.07.2016. ....
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....ted under section 194H on pure reimbursements. 9.1 That the Hon'ble DRP/Ld. AO grossly erred on facts and in law in arriving at the conclusion that tax is required to be deducted under section 194H on pure reimbursements. 9.2 That the Hon'ble DRP/Ld. AO grossly erred in not appreciating that tax was duly deducted at source by the Appellant on the "Commission" paid to Sales Promoter but on reimbursements, which does not have any element of "income", no tax was required to be deducted. 12.1 We find that the Coordinate bench of the Tribunal (supra) while adjudicating the Grounds No. 11 to 11.2 of the appeal, remanded the matter back to the file of the Assessing Officer for verification of the documentary evidences filed by the assessee and verify whether the impugned disbursement were reimbursement and if found so, the same might be allowed at deduction. The relevant finding of the Tribunal is reproduced as under: "39. Ground Nos. 11 to 11.2 relate the disallowance of Rs. 6,35,40,939/- made u/s 40(a)(ia) of the Act. 40. During the course of scrutiny assessment proceedings, the A.O noticed that the assessee has disbursed an amount of Rs. 6,35,40,939/- on account of reimburseme....
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....ursement and if found so, the same might be allowed as deduction. The respective grounds of the appeal are accordingly allowed for statistical purposes. 13. The assessee has also raised additional ground in all the appeals from ITA No. 911/Del/2015 for assessment year 2008-09 to ITA No. 914/Del/2015 for assessment year 2011-12, on the issue of disallowance under section 40(a)(ia) of the Act on the ground that reimbursement made to the sale promoters were in respect of trade discount and therefore the assessee was not required to deduct tax at source and thus no disallowance was required. Since we have already adjudicated the additional ground raised by the assessee in assessment year 2007-08, to have consistency in our decision on the issue in dispute, the additional ground raised in all the respective appeals are restored back to the file of the Assessing Officer with directions identical to the directions issued in assessment year 2007-08. Thus, the additional grounds raised by the assessee are accordingly allowed for statistical purposes. 13.1 The Grounds Nos. 10 to 10.2 of ITA No. 911/Del/2015 for assessment year 2008-09 and Ground Nos. 10 to 10.2 of ITA No. 912/Del/2015 for ....
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....11.3 of ITA No. 911/Del/2015 for assessment year 2008-09, Ground Nos. 11 to 11.3 of ITA No. 912/Del/2015 for assessment year 2009-10, Ground Nos. 10 to 10.3 of ITA No. 913/Del/2015 for assessment year 2010-11 and Ground Nos. 10 to 10.3 of ITA No. 914/Del/2015 for assessment year 2011-12 are related to disallowance of unexplained expenses alleged to be payment to excise officials under section 37(1) of the Act. The grounds raised in respective appeal being identical, the Ground Nos. 11 to 11.3 of ITA No. 911/Del/2015 for assessment year 2008-09 are reproduced as under for brevity: 11. That the Hon'ble DRP/Ld. AO erred on facts and in law in making the disallowance under Section 37(1) of the Act amounting to INR 1,080,000/- treating the same as unexplained expenses on complete conjectures and surmises by completely ignoring the submissions filed by the Appellant. 11.1 That the Hon'ble DRP/Ld. AO grossly erred on facts and in law in not appreciating that the seized document pertained to the period of 2001-02 and hence could not have been the subject matter of the present proceedings. 11.2 That the Hon'ble DRP/Ld. AO grossly erred in not appreciating that the documents otherwise ....
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....d that the expenses of Rs. 15,000/- per month were paid to Excise Officials for getting the licence and fee of Rs. 75,000/- per month needed to be paid. It is the submission of the ld. counsel for the assessee that the sheet of paper which were recovered during the course of search conducted on 15.02.2011 pertained to assessment year 2002-03 and, therefore, the same is outside the purview of section 153A proceedings for the impugned assessment years. It is also his submission that the observations made by the Assessing Officer were based on isolated reading of all the pages instead of reading of altogether. We find merit in the above argument of the ld. counsel for the assessee. The submission of the ld. counsel for the assessee that the paper relates to assessment year 2002-03 could not be controvert by the ld. DR. We find the Assessing Officer on the basis of the seized paper relating to assessment year 2002-03 presumed that similar expenditure must have been incurred by the assessee for which he made additions in both the years under appeal. We find the issue is now settled in favour of the assessee by the decision of the Hon'ble Supreme Court in the case of CIT vs. Sinhagad....
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....der the provisions of Section 40(A)(3) of the Act. 15.1 The coordinate bench of Tribunal (supra) has decided the issue of disallowance of cash payments on the basis of the documents seized from the premises of Sri Sameer Goyal in assessment year 2007-08 observing as under: "55. Ground No. 14 relates to the disallowance of Rs. 45,000/- u/s 40A(3) of the Act. 56. Facts show that on the basis of search conducted on the premises of the N.V. Distilleries, Ambala and its proprietor Shri Samir Goyal, some document was found and seized. On reading the said document, the Assessing Officer formed a belief that the assessee has paid cash payment of Rs. 45,000/- to Excise Official. The Assessing Officer was of the firm belief that the provision of section 40A(3) of the Act squarely applied and accordingly made the addition of Rs. 45,000/-. 57. Before us, the ld. counsel for the assessee drew our attention to the said seized document which was seized from the premises of Shri Samir Goyal and pointed out that the said document does not contain any date nor any year. Therefore, it is unlawful to consider the same for the year under consideration. On perusal of the said document, the ld. DR....
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.... 16.1 The identical issue has been decided by the Coordinate bench of the Tribunal(supra) in assessment year 2007-08 observing as under: "60. Ground No. 15 relates to the disallowance of Rs. 40,61,565/- made u/s 40A(3) of the Act. 61. From a perusal of the seized material, the Assessing Officer found that the assessee has made cash payments of Rs. 91.98 lakhs from June/July 2006 to April 2008, most of which exceeded Rs. 20,000/-. The assessee was asked to explain as to why the same should not be disallowed u/s 40A(3) of the Act. 61. The assessee filed a detailed reply with necessary documentary evidences claiming that the payments have not been made in cash. The detailed reply of the assessee did not find any favour with the Assessing Officer and the Assessing Officer proceeded by making addition of Rs. 40.61 lakhs u/s 40A(3) of the Act. 62. Objection was raised before the DRP but the same was dismissed. 63. Before us, the ld. counsel for the assessee drew our attention to the chart exhibited at page 16 of the paper book and pointed out that the payments have been made in terms of the consulting agreement in respect of variable component payment by way of account payee c....
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....verification or nonproduction of the parties. For brevity, the ground No. 15 to 15.4 of ITA No. 911/Del/2015 for assessment year 2008-09 are reproduced as under: 15. That the Hon'ble DRP/Ld. AO erred on facts and in law in making the disallowance under section 37(1) of the Act amounting to INR 12,32,16,392/- for want of verification/non production in respect of certain parties with whom company had undertaken transactions in its ordinary course of its business. 15.1 That the Hon'ble DRP/Ld. AO grossly erred in law in violating the principles of natural justice by completing the impugned assessment on mere surmises and conjectures without appreciating that the identities of said parties were undisputed as all the evidences and documents have been placed on record by the Appellant. 15.3 That the Hon'ble DRP/Ld. AO erred in proceeding to complete the assessment and making disallowance in respect of such parties in utter haste wherein a time period of less than 10 days was allowed to the parties to file voluminous details of its 5 years transaction with assessee. 15.4 That the Hon'ble DRP/Ld. AO erred on facts and in law in completely disregarding the fact that the Appellant ha....
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....motion expenses - Rs. 41,00,827 M/s Ramp Edge Marketing and Sales promotion expenses - Rs. 3,09,883 M/s Nucleus Advertising & Communications a) Marketing and Sales promotion expenses -Rs. 1,20,34,023 b) Purchase of marketing material - Rs M/s Mission Xcellence a) Marketing and Sales promotion expenses -Rs. 14,33,692 b) Purchase of marketing material - Rs M/s Ghaio Mai & Sons a) Commission -Rs. 2,99,77,531 b) Non-Trade Scheme reimbursements / Other M/s Paras Enterprise Reimbursements NIL - Rs. 6,94,110 M/s Fairdeal Agencies a) Commission - Rs. 2,01,084 b) Non-Trade Scheme reimbursements / Other BTB Advertising NIL M/s S.S. Enterprises NIL M/s Concern Event Promotions Pvt. Ltd. Marketing and Sales promotion expenses - Rs. 20,74,305 M/s Studio Print Art NIL M/s Excel Advertising Agency Marketing and Sales promotion expenses - Rs. 14,310 M/s Dilip Print House Marketing and Sales promotion expenses - Rs. 5,12,505 Total 7,16,79,359 71. The ld. counsel for the assessee further stated that the assessee has provided the PAN details and updated addresses of parties as available with the assessee. It was further p....
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....l/2015 for assessment year 2010-11 and ground Nos. 14 of ITA No. 914/Del/2015 for assessment year 2011-12 relates to initiation of penalty proceedings under section 271(1)(c) of the Act. As these grounds raised are premature, same are dismissed. 19. The ground No. 14 to 14.3 of ITA No. 911/Del/2015 for assessment year 2008-09 relates to disallowance of cash payment of Rs. 1,40,000/- under section 40A(3) of the Act. 19.1 The Ld. counsel of the assessee before us submitted that relevant payment was made by cheque and not by cash. In this regard he referred to page 572 of the paper book showing payment by cheque. 19.2 The Ld. DR, on the other hand, submitted that if on verification, the payment is found to be made by cheque, then issued might be decided in accordance with law. 19.3 We have heard the rival parties on the issue in dispute. In view of the contention of the Ld. counsel of the assessee, the issue in dispute need verification by the Assessing Officer as to whether the payment has been made by the cheque and if found so, the Assessing Officer is directed to delete the addition. The issue in dispute is accordingly restored to the file of the Assessing Officer for necessar....
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....l submission and perused the relevant material on record. We find that the assessee made detailed representation before the learned Dispute Resolution Panel which is reproduced as under: "18.3 The assessee give a detailed reply explaining the reason for shortage of stock and also submitted the stock was fuily recorded in the books and physically stock was short and hence there cannot be any unaccounted sales. The submissions (given at Page 102 to 104 of the DRP application for AY 2011-12) and arguments of the assessee on this issue are summarized as under:- a) At the outset, it is imperative to note that the stock was found less as per physical verification as compared to a higher number of cases recorded in the books. Thus, the books of the assessee have reflected more sales and hence, there cannot be any unaccounted sales in any circumstances. Unaccounted Sales is possible only in reverse situation i.e when stock is iess in books and more as per physical verification, in any case, the reasons for deviation and reconciliation has also been provided. That aggregate position of breakages not reduced from Stock Register was shown as under: Brand Name Pack size Breakages from....
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....ntrolled and supervised. Like in the instant case, every month the Excise Officer certifies the breakages occurred during transit and/ or while lying in bond. The breakages are physically counted by the Excise Officer and thereafter, a sheet incorporating such details brand wise, quantity wise breakages is prepared, signed and handed over to the Company personnel in-charge of the Bond. e) During the course of physical check, the personnel from their office did not count certain stocks due to the reason that they were lying on the corner and were looking old and shabby which has not been considered by Ld. AO. Further, it was submitted that Ld. AO may corroborate this fact with the team which conducted stock verification that day at Z - 45/3, Okhla Phase-ll, New Delhi. For further information, it was also submitted that the above process of verification of stock was witnessed by Shri Manoj Kumar, Bond Inspector, Excise Department who was also physically present in the Bond at the time of survey. f) The difference as indicated by the Ld. AO was primarily due to procedure of recording the stock (after certifying breakages) in the Stock Register which is governed by the Excise rules....
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....s for the A.Y. 2011-12, noted as below: "During the course of search and survey proceedings at Okhla office of NV group revealed that stock of brands of the assessee company were found less as per following details: Band No. of cases found short Average price per case(Rs.) Total value of found Short (Rs.) Blenders Pride 358 10800 3866400 Fuel Vodka 468 3000 1404000 100 Pipers 14 10800 151200 Something Special 1 6000 6000 Total 54,27,600 The assessee was asked to explain as to why Rs. 54,27,600/- may not be added to assessee's income as undisclosed sale. The assessee vide its submission dieted 22.02.2014 filed its reply which is summarized below and which has been duly considered. The assessee submitted that the difference between the physical stock and stock recorded in the stock register was due to nonreduction of bottles which have either broken in transit or in the bond. The assessee also submitted the copies of orders from excise authorities authorizing the breakages. The assessee submitted that order is from breakages from October 2009 to June 2010. However, the assessee could not furnish proof for the breakages/order of ....