2018 (10) TMI 1888

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....d, the facts of the case are that the assessee is engaged in trading of auto parts, accessories and lubricants. On perusal of the return filed by the assessee, it was observed by the Assessing Officer that the assessee showed to have received a sum of Rs. 1,91,65,000/- from M/s Exxonmobil Lubricants Pvt. Ltd., on which tax of Rs. 3,83,300/- was deducted at source. This receipt was not included in the Profit & Loss Account of the assessee. On being called upon to explain the reasons for non-inclusion of this amount, the assessee stated that the sum of Rs. 1.91 crore and odd was taken as liability which was included in creditors list because the amount received was a contractual receipt under Marketing Assistance Programme (MAP) as per Agreem....

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....e assessee under four different distribution MAP Agreements. Copy of the first agreement for a sum of Rs. 10.60 lac is available in the paper book, which provides that Exxonmobil Lubricants Pvt. Ltd. wanted to provide the assessee with funds to assist it in marketing of MOBIL and/or ESSO products. Clause 4 of the Agreement provides that: "Distributor (the assessee) shall amortize or repay MAP payment in accordance with the Second Schedule." Clause 6 of the Agreement, which is relevant for our purpose, reads as under:- "6. Right to demand immediate payment EMLPL may at its option demand immediate payment of an amount equal to the Unamortized Balance multiplied by the Amortization Rate, upon the happening of one or more of t....

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....nts comes to Rs. 1,91,65,000/-, which pertains to part of the year under consideration and the remaining part to the subsequent year. The assessee, in turn, is passing over the amount of incentive given under the MAP Agreement to the sub-distributors at the time of their lifting the goods, which payment, during the year, totaled at Rs. 1.29 crore and odd. The remaining amount of Rs. 62.03 lac will be adjusted against payment to be made in the subsequent year by the sub-distributors at the time of their further purchase. It is relevant to note that the MAP payment received by the assessee comes with certain conditionalities, such as, the assessee has to provide bank guarantee and there is an obligation to lift the stocks. In case the assesse....