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2019 (7) TMI 1620
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....2019, however, on miscellaneous application 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....
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....ds bottled in India Primarily included Blenders Price, Imperial Blue, 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 reimburse....
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....iable for deduction of tax at source. The matter has been accordingly restored 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 r....
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..... Transfer Pricing Officer ('TPO') erred in enhancing the income of the Appellant by INR 1,03,69,60,592/- 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 ....
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....cially determine a limit, i.e. "bright line limit" for AMP expenses based on the average AMP spend of independent companies without taking cognizance of the fact that such application 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....
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....ut prejudice the Hon'ble DRP/Ld. TPO/Ld. AO grossly erred in facts and in law in selecting comparables having dissimilar functional or product or brand profile when compared to Appellant for the purpose of benchmarking the AMP spend. 9.1 We find that 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]. ....
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....7.06 Associated Alcohols & Breweries Ltd. 80.96 0.00 0.00 Associated Distilleries Ltd 54.16 3.90 7.20 B D A Pvt. Ltd. 34.31 11.84 34.51 Bhagat Industrial Corpn. Ltd. 35.42 1.28 3.61 Brihan Maharashtra Sugar Syndicate Ltd. 211.93 5.10 2.41 Daurala Foods & Beverages Pvt. Ltd. 26.11 3.45 13.21 G M Breweries Ltd 448 0.30 0.07 Globus Spirits Ltd. 116.67 1.76 1.51 Hindustan 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 2....
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....iture also promotes the sales made in the market on behalf of the assessee by its third party bottlers. The assessee was incurring AMP expenditure on behalf of the bottlers also. DRP has considered this issue and directs the TPO to calculate the AMP / Sales ratio of the assessee by incorporating the third party sales. The assessee is directed to provide the information regarding the sales by third party bottlers for the AY 2007-08 to 2011-12 before the IPO which shall be incorporated while calculating this ratio. 6.12 In objection 6.10, the assessee has pointed out that the AMP sales ratio was not calculated based on annual financial statement of the comparable companies. DR13 directs the TPO to re-compute the margin 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 30.1....
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....;ble Jurisdictional High Court of Delhi in the case of Maruti Suzuki India Ltd 110/2014, Whirlpool of India Limited 228/2015, Honda Seil Power Products Ltd 346/2015. It is the say of the ld. AR that while making adjustment on this account, the Assessing Officer/TPO has only considered the assessee as a manufacturer. 19. Per contra, the ld. DR strongly supported the findings of the TPO. It is the say of the ld. DR that though the AMP expenditure has been treated as an independent international transaction, operating margin of the appellant should be considered excluding the AMP expense to which the ld. AR retorted that the same treatment should also be given to the comparables. 20. We have given a thoughtful consideration to the orders of the authorities below qua the issue. The co-ordinate bench in the case of L.G. Electronics India Pvt. Ltd ITA No. 6253/DEL/2012 has held as under: "10. At the outset, 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 posit....
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....s which were disposed of by the judgment, i.e. of the three Assessees Canon, Reebok and Sony Ericsson were all of distributors of products manufactured by foreign AEs. The said Assessees were themselves not manufacturers. In any event, none of them appeared to have questioned the existence of an international transaction involving the concerned foreign AE. It was also not disputed that the said international transaction of incurring of AMP expenses could be made subject matter of transfer pricing adjustment in terms of Section 92 of the Act. 44. However, in the present appeals, the very existence of an international transaction is in issue. The specific case of MSIL is that the Revenue has failed to show the existence of any agreement, understanding or arrangement between MSIL and SMC regarding the AMP spend of MSIL. It is pointed out that the BLT has been applied to the AMP spend by MSIL to (a) deduce the existence of an international transaction involving SMC 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 disapp....
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....en provided by one party to the other would by itself constitute a transaction irrespective of whether the consideration for the same has been paid or remains payable or there is a mutual agreement to not charge any compensation for the service or benefit." Even if the word 'transaction' is given its widest connotation, and need not involve any transfer of money or a written agreement as suggested by the Revenue, and even if resort is had to Section 92F (v) which defines 'transaction' to include 'arrangement', 'understanding' or 'action in concert', 'whether formal or in writing', it is still incumbent on the Revenue to show the existence of an 'understanding' or an 'arrangement' or 'action in concert' between MSIL and SMC as regards AMP spend for brand promotion. In other words, for both the 'means' part and the 'includes' part of Section 92B (1) what has to be definitely shown is the existence of transaction whereby MSIL has been 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 ....
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....ional transaction or for the determination of ALP of such transaction. Although, under Section 92B read with Section 92F (v), an international transaction could include an arrangement, understanding or action in concert, this cannot be a matter of inference. There has to be some tangible evidence on record to show that two parties have "acted in concert". XXX 37. The provisions under Chapter X do envisage a 'separate entity concept'. In other words, there cannot be a presumption that in the present case since WOIL is a subsidiary of Whirlpool USA, all the activities of WOIL are in fact dictated by Whirlpool USA. Merely because Whirlpool USA has a financial interest, it cannot be presumed that AMP expense incurred by the WOIL are at the instance or on behalf of Whirlpool USA. There is merit in the contention of the Assessee that the initial onus is on the Revenue to demonstrate through some tangible material that the two parties acted in concert and further that there was an agreement to enter into an international transaction concerning AMP expenses. XXX 39. It is in this context that it is submitted, and rightly, by the Assessee that there must ....
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....rating profit/ income as declared and accepted in respect of the international transactions." 21. In our understanding of the facts and law, mere agreement or arrangement for allowing use of their brand name by the AE on products does not lead to an inference that there is an "action in concert" or the parties were acting together to incur higher expenditure on AMP in order to render a service of brand building. Such inference would be in the realm of assumption/surmise. In our considered opinion, for assumption of jurisdiction u/s 92 of the Act, the condition precedent is an international transaction has to exist in the first place. The TPO is not permitted to embark upon the bench marking analysis of allocating AMP expenses as attributed to the AE without there being an 'agreement' or 'arrangement' for incurring such AMP expenses. 22. The aforesaid view that existence of an international transaction is a sine qua non for invoking the transfer pricing provisions contained in Chapter X of the Act, can be further supported by analysis of section 92(1) of the Act, which seeks to benchmark income / expenditure arising from an international transaction, having regard ....
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....t of the inter-linked transaction. This would be also in consonance with Rule 10B(1)(e), which mandates only arriving at the net profit margin by comparing the profits and loss account of the tested party with the comparable. The TNM Method proceeds on the assumption that functions, assets and risk being broadly similar and once suitable adjustments have been made, all things get taken into account and stand reconciled when computing the net profit margin. Once the comparables pass the functional analysis test and adjustments have been made, then the profit margin as declared when matches with the comparables would result in affirmation of the transfer price as the arm's length price. Then to make a comparison of a horizontal item without segregation would be impermissible." 21. In light of the aforementioned discussion, we find that the TPO has considered this at length and has submitted a report dated 26.2.2019. The said report can be summarised in the following chart: S.no Asst Year Assessee Comparables Operating margins including ail operating expenses Operating margins excluding AMP expenses Operating margins ex....
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.... under section 37(1) of the Act, being 20% of the brand expenses (excluding already considered for transfer pricing adjustment) on the ground that such expenditure resulted in an enduring benefit to the Appellant. 7.1 That the Hon'ble DRP erred in confirming the disallowance on account of brand expenses in complete ignorance of the fact that the disallowance had been deleted by the CIT(A) in the orders passed in appellant's own case for AYs 2002-03, 2003- 04, 2004-05 and 2005-06. 7.2 Without prejudice to ground 7, the Hon'ble DRP / Ld. AO erred on facts and in law in not allowing depreciation under section 32 of the Act while disallowing brand expenses as being capital in nature. 10.1 We find that issue in dispute has been decided in favour of the assessee by the Tribunal (supra) in order dated 15/03/2019 for assessment year 2007-08 as under: "23. Ground Nos. 9 to 9.2 relates to disallowance of Rs. 8,21,29,536/- u/s u/s 37(1) of the Act being 20% of the brand expenses. 24. During the course of scrutiny assessment proceedings, the A.O observed that the assessee has debited brand expenses of Rs. 70,58,03,632/- under the head "Advertisement and S....
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....6. Therefore, question No. 3 does not arise for consideration." 30. The Tribunal in assessee's own case for assessment year 2004-05 and 2005-06 in ITA No. 3525/DEL/2009 and 2770/DEL/2011 has held as under: "8.0 The last issue involved in the present batch of appeals raised by the revenue pertains to deletion of addition of Rs. 3,89,55,070/- in AY 2004-05 and Rs. 4,67,32,266/- being 10% of brand expenses made by the AO treating the same as being capital in nature. 8.1 The brief facts involved therein are that the assessee company had claimed brand expenses amounting to Rs. 38,95,50,709/- for AY 2004-05 and Rs. 46,73,42,660/- for AY 2005-06. These expenses comprised of expenditure on event management, business promotion, merchandising, printing of brochures/mailers, market research etc. to determine the consumer reaction to company's products. The AO vide order dated 28.12.2006 for AY 2004-05 and vide order dated 08.12.2008 for AY 2005-06 disallowed 10% of such expenditure as being capital in nature on the premise that the benefit of such expenditure is enduring in nature and available to the assessee over a period of time than being restricted to the r....
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....f the appeals. 11. The Grounds Nos. 8 to 8.4 of ITA No.911/Del/2015 for assessment year 2008-09, Grounds Nos. 8 to 8.4 of ITA No. 912/Del/2015 for assessment year 2009-10, Ground No. 8 to 8.4 of ITA No. 913/Del/2015 for assessment year 2010-11 and Grounds No. 8 to 8.4 of ITA No. 914/Del/2015 for assessment year 2011-12, are related to disallowance of provision for transit breakages on the ground that same is contingent in nature. The above grounds raised in respective years are identical and thus, for convenience, the Ground Nos. 8 to 8.4 of ITA No. 911/Del/2015 for assessment year 2008-09 are reproduced as under: 8. That the Hon'ble DRP/Ld. AO erred on facts and in law in disallowing the provision for transit breakages amounting to INR 118,73,371/-, holding the same to be contingent in nature. 8.1 That the Hon'ble DRP/Ld. AO grossly erred on facts and in law in arriving at the conclusion that there is no certainty that if breakages have occurred in the past they would occur in the future also, thereby neglecting the fact that the such provision was made on scientific basis based on breakages in the past. 8.2 That the Hon'ble DRP/Ld. AO also failed....
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.... the actual transit breakages for AY 2001-02 as revenue expenditure consistent with the settled legal position. The Assessees would also be permitted to get the benefit of the reversal of the provision for transit breakages made in the AYs in question accordance with law." 38. The Assessing Officer is directed to examine the issue in light of the findings of the Hon'ble High Court [supra]. Accordingly, Ground No. 10 to 10.4 is treated as allowed for statistical purposes." 11.2 Thus, respectfully, following the finding of the coordinate bench of the Tribunal, we direct the Assessing Officer to examine the issue in the light of the directions given by the Tribunal(supra) in para 38 of the order. The grounds raised by the assessee on this issue in respective appeals are accordingly allowed for statistical purposes. 12. The Ground Nos. 9 to 9.2 of ITA No. 911/Del/2015 for assessment year 2008-09, Grounds Nos. 9 to 9.2 of ITA No. 912/Del/2015 for assessment year 2009-10, Grounds Nos. 9 to 9.2 of ITA No. of 913/Del/2015 for assessment year 2010-11 and Ground No. 9 to 9.2 of ITA No. 914/Del/2015 for assessment year 2011-12 are related to disallowance of ....
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....f the Act, the Assessing Officer made the disallowance. 43. The assessee raised objections before the DRP but without any success. 44. Before us, the ld. counsel for the assessee stated that in assessee's sister concern Seagram Distilleries [supra] for assessment year 2005-06 to 2009-10, the first appellate authority has allowed the ground on principle basis that withholding tax obligations do not arise in the case of pure reimbursements and the matter was set aside to the Assessing Officer to verify whether the payments made by the assessee were in the nature of reimbursements and while giving effect to the order of the first appellate authority and after verification, the Assessing Officer was convinced that the impugned disbursement were in the nature of reimbursements and allowed the entire amount claimed by the assessee. 45. In our considered opinion, verification needs to be done in the case of the appellant. We, accordingly, set aside this issue to the file of the Assessing Officer/TPO with a direction to examine the documentary evidences to be filed by the assessee and verify whether the impugned disbursements are reimbursement and if found so, th....
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....usiness consideration and not with the intention to earn exempt income. 10.2 That the DRP/Ld. AO grossly erred on facts and in law in not appreciating that the Tax Audit Report of the Appellant clearly provides that no expenditure has been incurred for earning income which is exempt. 13.2 The identical issue has been decided by the coordinate bench of Tribunal (supra) as under: "46. Ground No. 12 to 12.3 relates to the disallowance of Rs. 12.68,781/- u/s 14A of the Act. 47. At the very outset, we have to state that the assessment year under consideration is assessment year 2007-08 and, therefore, Rule 8D of the Income tax Rules, 1962 does not apply, but at the same time, we find that there is no exempt income claimed by the assessee during the year under consideration. Therefore, the ratio laid down by the Hon'ble High Court of Delhi in the case of Cheminvest Ltd 378 ITR 33 and CIT Vs. Holcim 272 CTR 282 squarely apply wherein the Hon'ble High Court has held that where there is no exempt income, there cannot be any disallowance u/s 14A of the Act. Respectfully following the same, we direct the Assessing Officer to delete the disallowance of Rs.....
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....nexplained expenses. 49. Facts on record show that during the course of search conducted on the premises of the assessee on 15.02.2011, a diary belonging to Shri Purwez Patel, EVP Manufacturing was seized. In this diary, some projected cost of investments in Shaiv Distilleries, Goa has been drawn/computed for some discussion with its director. On perusing the said diary, the Assessing Officer was of the opinion that the assessee is making payment of Rs. 15000/- p.m. to the Excise Inspector and Rs. 75,000/- as licence fees. The Assessing Officer formed a belief that the appellant has not discharged the onus cast upon it by section 292C of the Act and accordingly, made disallowance of Rs. 10.80 lakhs. 50. Objection of the assessee did not result in any relief. 51. Before us, the ld. counsel for the assessee drew our attention to the decision of the Tribunal in ITA Nos 3847 & 3848/DEL/2017 wherein the Tribunal has deleted the disallowance. 52. Per contra, the ld. DR could not bring any distinguishing decision in favour of the revenue. 53. We have carefully perused the order of the authorities below and have considered the decision of the Tr....
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....icated , thus respectfully following the decision of the coordinate bench of the Tribunal we direct the Assessing Officer to delete the respective additions. The respective grounds of the appeal are accordingly allowed. 15. The ground No. 12 to 12.3 of ITA No. 911/Del/2015 for assessment year 2008-09, ground No. 12 to 12.3 of ITA No. 912/Del/2015 for assessment year 2009-10, ground No. 11 to 11.3 of ITA No. 913/Del/2015 for assessment year 2010-11 and ground No. 11 to 11.3 of ITA No. 914/Del/2015 for assessment year 2011-12 are related to disallowance made under section 40A(3) of the Act for payment made in cash on the basis of the documents seized from the premises of Sri Sameer Goyal. The about grounds raised being identical, for brevity, the ground No. 12 to 12.3 of ITA No. 911/Del/2015 for assessment year 2008-09 are reproduced as under: 12. That the Hon'ble DRP/Ld. AO erred on facts and in law in making the disallowance under section 40A(3) of the Act amounting to INR 45,000/- by holding that the payment is made in cash to the excise authorities on mere conjectures and surmises. 12.1 That the Hon'ble DRP/Ld. AO grossly erred on facts and in law in not appr....
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....p; 30000.00 Guard 6000.00 10000.00 Office 10000.00 10000.00 Miscellaneous 10000-00 10000.00 Four departments 10000.00 Total -5 46030.00 70000.00 59. A perusal of the same shows that it is nothing but a dumb document which requires no consideration. Moreover, it is an undisputed fact that the documents were seized from the premises of Samir Goyal and, therefore, any relevance to be deduced from the same has to be in the case of Samir Goyal and not the assessee keeping in mind that the assessment has been framed u/s 153A of the Act. We, accordingly, do not find any merit in the addition and direct the Assessing Officer to delete the same. Ground No. 14 is allowed." 15.2 In view of the identical issue involved in grounds raised in present appeals before us, respectfully following the finding of the Coordinate bench of the Tribunal (supra) , the delete the additions in dispute in the respective ground raised and accordingly those grounds of the appeals are allowed. 16. The ground Nos. 13 to 13.1 of ITA No.911/Del/2015 for assessment year 2008-09 and ground Nos. ....
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....hi in the case of Anand Swarup Khandelval 177 Taxman 450. 64. Per contra, the ld. DR strongly supported the findings of the Assessing Officer and reiterated that the name of the file was cash.xls and therefore, the impugned payments must have been made in cash. 65. We have heard the rival submissions and have given thoughtful consideration to the orders of the authorities below. It is true that the disallowance is based on the file cash.xls. It is equally true that the payments have been made by way of account payee cheques/RTGS. In our considered opinion, such payments do not attract the provisions of section 40A(3) of the Act. Moreover, the assessee has also furnished the ledger account of M/s Sky View in the books of the assessee for the period 01.04.2007 to 31.03.2011. It appears that the Assessing Officer has not examined the details from correct perspective. In the interest of justice and fair play, we restore this issue to the file of the Assessing Officer. The Assessing Officer is directed to verify from the ledger account of Sky View and verify whether payments have been made by A/c payee cheques/RTGS and after satisfying himself, no addition need be made....
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....Act for want of verification /non-production in respect of payments made to certain parties. 67. During the course of investigation proceedings, some parties were identified with whom the assessee had transactions during the year. The name of the parties are as under: (a) M/s Classic Alcobev Pvt. Ltd (b) M/s Classic Distributor Company. (c) M/s Jaiswal Traders (d) M/s Monarch enterprises (e) M/s Ramp Edge (f) M/s Nucleus Advertising & Communications (g) M/s Mission Xcellence (h) M/s Ghaio Mai & Sons (i) M/s Paras Enterprise (j) M/s Fairdeal Agencies (k) BTB Advertising (l) M/s S.S. Enterprises (m) M/s Concern Event Promotions Pvt Ltd (n) M/s Studio Print Art (o) M.s Excel Advertising Agency (p) M/s Dilip Print House 68. The assessee was asked to furnish evidences of transactions with the above parties. The assessee filed detailed reply vide submissions dated 18.02.2014, 25.02.2014 and 28.02.2014. 69. After considering the submissions of the assessee, the Assessing Officer issued notice u/s 133(6) of the Act to the....
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....to whom notices were sent u/s 133(6) of the Act, no transactions were entered into by the assessee. It is the say of the ld. counsel for the assessee that vide submissions dated 28.02.2014, the assessee has furnished additional documents being agreement entered into with the parties, details of transaction entered into with these parties, copies of ledger account, invoices and CST registration certificates. The ld. counsel for the assessee concluded by saying that in spite of the direct evidences, the Assessing Officer has made additions, which is uncalled for. 72. Per contra, the ld. DR strongly supported the findings of the lower authorities. 73. We have heard the rival submissions and have given thoughtful consideration to the orders of the authorities below. As per details in the chart furnished by the ld. counsel for the assessee, it can be seen that in respect of four parties, the assessee has done no transaction. Therefore, there is no point in issuing notice u/s 133(6) of the Act to these parties. 74. In respect of other parties, since the assessee has furnished complete details in the form of invoice, agreement, CST registration certificates and ....
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....e assessee. The assessee is directed to produce necessary evidence in support of its claim before the Assessing Officer. The ground of the appeal is accordingly allowed for statistical purposes. 20. The ground No. 12 to 12.2 of ITA No. 914/Del/2015 for assessment year 2011-12 relates to addition on account of undisclosed sales of Rs. 54,27,600/-. The respective grounds are reproduced as under: 12. That the Hon'ble DRP/Ld. AO erred on facts and in law in making a disallowance of INR 54,27,600/- by holding that there are certain unaccounted sales (as evidence from shortage of stock) in complete disregard to the evidence placed on record by the Appellant and on conjectures and surmises. 12.1 That the Hon'ble DRP/Ld. AO erred on facts and in law in not appreciating that the difference between the physical stock and the stock register was primarily due to non-reduction of bottled cases (which have either broken in transit or in bond) from the stock register as any reduction in stock register on account of transit breakage or bond breakage would require a pre-approval from excise authorities. 12.2 Without prejudice to the above, Hon'ble DRP/Ld. AO erred on f....
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....eakages from July to January as certified (Ref Ann 2.1 to 2.7 of submissions) Breakages from Feb 1 to Feb 15 Total breakages upto the date of search Blenders Pride Litre 64.54 3.23 67.77 Blenders Pride Quart 199.90 8.26 208.16 Blenders Pride Pint 57.41 5.21 62.62 Blenders Pride Nip 6.52 - 6.52 Total Blenders Pride 16.70 345.07 Fue! Vodka Quart 29.00 2.00 31.00 Fuel Vodka Pint 62.08 1.46 63.54 Fue! Vodka Nip 15.19 1.66 16.85 Total Fuel Vodka 4.76 111.39 100 Pipers Litre 2.32 - 2.32 100 Pipers Quart 10.74 0.26 11.00 Total 100 Pipers 0.26 13.32 Something Special Quart 0.17 - 0.17 Total Something Special 0.17 0.17 That in addition to above, during the course of physical check, it was submitted that the personnel from department did not count the following: * 4 cases of Blenders Pride Pint; * 9 cases of Blenders Pride NIP; * 1 case of 100 Pipers Quart. b) The shortage of stoc....
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....t 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 and not an actual difference. g) Further, the products manufactured by the applicant are subject to strict excise regulations and very movement of stock is monitored by the excise authorities. They had not reported any discrepancy in the production or sale of the products for the period under consideration or any of the earlier years. h) Reliance was placed on judgment of Hon'ble Delhi High Court (HC) in case of CIT vs D.D Gears Ltd. 25 Taxmann.com 562 wherein HC accepted the submissions of assessee that its products are excisable and the excise authorities were present in the premises to monitor the production and dispatches from the bonded section. They had not reported any discrepancy in the production or sale of the products for the period under consideration or any of the earlier years. This fact was missed by the Assessing Officer who, contrary to the excise records, erroneously concluded that there were discrepancies, in th....