TaxTMI 
TaxTMI 
2020 (8) TMI 47
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....ing the rate of lease rental and maintenance charge was not the purpose of the business of the assessee? 2. Whether in facts and on circumstances of the case, the Ld. CIT(A) is legally justified in deleting the disallowance of Rs. 11,16,266/* u/s 40A(2) of the Income Tax Act (the Act) by ignoring the findings of the facts recorded by the Assessing Officer (the AO) that under unrelated party scenario no prudent business man will make supplies to another party by charging only cost and not charging incidental expenditure? 3. Whether in facts and on circumstances of the case, the Ld. CIT(A) is legally justified in deleting addition and disallowance of Rs. 4,68,45,000/* and Rs. 11,16,2661* respectively by substituting his own estimate and by ignoring a fact that the estimate made by the AO was not arbitrary but was based on credible material and by disregarding the decision of Hon'ble Supreme Court in case of Commissioner of Sales Tax, MP vs. HM Esufali HM Abdulai (1973) 90 ITR 271? 4. Whether in facts and on circumstances of the case, the Ld. CIT(A) is legally justified in holding the decision arrival at in one assessment year by his predecessor is binding on him by ignoring....
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....aintenance has been reduced, due to downward re-adjustment of percentage of profit as per the agreement dated 21.02.2009, be not disallowed. The reply of the assessee is reproduced at pages 2 to 11 of the assessment order. The Assessing Officer vide para 2.1 at page-12 of the assessment order noticed that the explanation of the assessee was similar to earlier submission made during the assessment proceedings for Assessment Year 2011-12. Reference was made to the extract of the order for Assessment Year 2011-12 and following the same stand as in the earlier year the expenditure incurred by the assessee during the year equal to the reduction of percentage in the revenue i.e. Rs. 4,68,45,000/- was disallowed. 7. The CIT(A) vide para 3.2.3 at pages 12 onwards after looking at the factual aspects and referring to the decision of the CIT(A) in Assessment Years 2010-11 and 2011-12 deleted the disallowance made by the Assessing Officer. Coming to the second aspect of disallowance of 5% being expenditure attributable to goods sold on cost to cost basis to the sister concern, the said addition was also deleted by the CIT(A) following the findings in the earlier order. 8. The Revenue is in....
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....nce was placed on the following case laws: * Dwarka Prasad Agarwal Vs ITO 52 ITD 239 (Cal) * Rattah Mechanical Works Ltd. Vs ITO 87 Taxman 288 (Chd.) * Shriram Pistons and Rings Ltd. Vs IAC 39 TTJ 132 (Del.) * Roger Enterprises Pvt. Ltd. Vs ITA 52 TTJ 198 (Del.) * Ramji Das Modi Vs DCIT 110 Taxman 107 (JP) * ACIT Vs Bateli Tea Co. Ltd. (2003) SOT 72 * Continental Seeds & Chemicals Ltd. Vs ACIT (2003) SOT 393 13. The ld. CIT(A) after considering the submissions of the assessee observed that the assessee had entered into an agreement for leasing of equipment and construction/maintenance of hospital building with Devki Devi Foundation for consideration of 10% and 6% of annual turnover of the hospital respectively. The said agreements were revised during the relevant assessment year whereby the percentage of fee agreed was revised downward from 10% to 8% and 6% to 5% respectively, in accordance with the terms of supplementary agreement dated 21.02.2009. He further observed that the nexus drawn by the AO between the expenses incurred by the assessee during the year for the purposes of business and downward revision in the fee receivable from M/s Devki Devi Foundation w....
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....pointed out that for the AYs in question on account of the business exigencies the profit sharing percentage had been reduced from 10% to 8%. Although, the AO did not accept the explanation offered by the Assessee, it has been found to be acceptable both by Commissioner of Income Tax - CIT (A) in the order dated 22nd April 2014 and the ITAT in the impugned order." 14. The issue raised before us is squarely covered by the order of the Tribunal in assessee's own case which in turn has been confirmed by the Hon'ble Jurisdictional High Court and following the same parity of reasoning, we find no merit in the ground of appeal no.1 raised by the Revenue before us, hence the same is dismissed. 15. Now, coming to the next issue of disallowance of expenditure attributable to goods sold on cost to cost basis. Similar issue was before the Tribunal in earlier year also. Both the Assessing Officer and CIT(A) have relied upon the respective orders of the Assessing Officer and the CIT(A) in earlier year. For the sake of convenience, we refer to the observations of the Tribunal vide paras 14 to 17 which read as under:- "14. As regards to the disallowance on account of expenditure attributable ....