2018 (1) TMI 1647

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....looms and powerlooms. The assessee is 100% subsidiary of KPR Mills Limited. During the assessment year 2012-13, the assessee paid Rs. 55,44,28,121,/- business promotional expenses to M/s. KPR Mills Limited, the holding company without deducting tax at source. Before the Assessing Officer, the assessee based on the memorandum of agreement dated 24.06.2009, between the holding company and its 100% subsidiary company submitted that it was to share the revenue at the end of the financial year through a book entry on a fixed and predetermined portion i.e., a said percentage of net revenue earned out of the garment exported to the customers list supplied by KPR Mills Limited, transferred to them after retaining 1% on turnover by Quantun Knits (P)....

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....s receipts and have paid the tax on the same. Therefore, the assessee requested that it may be given a benefit of the Supreme Court decision in the case of M/s. Hindustan Coca Cola Beverages (P) Ltd vs CIT[2007] 293 ITC 226(SC) as well as on the subsequent amendments in the Financial Act, 2012. It submitted that these issues were raised before the Assessing Officer during the course of assessment also. The CIT(A) allowed the assessee's appeal. 4. Aggrieved, the Revenue filed this appeal with the following grounds: "1) The order of the learned CIT(A)-I is against the law and facts of the case. 2) The learned CIT(A)-I, Coimbatore has erred in holding that since the recipient has admitted the sum received as income and paid taxes there o....

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....Il cited in [2009] 185 Taxman 438 (Mad) wherein it was held that the decision rendered by the Hon'ble Supreme Court in the case of Hindustan Coca Cola Beverages (P) Ltd was in the light of sections 201(1) and 201(IA) and cannot be applied to a situation where section 40(a)(ia) gets attracted which stands entirely on a different set of circumstances. 7) For these and other grounds that may be adduced at the time of hearing, the order of the learned CIT(A) may be cancelled and that of Assessing Officer be restored." 5. The DR supported the order of the Assessing Officer and argued on the lines of the grounds of appeal. Further, he supported the order of the Assessing Officer based on the Delhi High Court decision in the case of CIT vs....

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....of income the deductor need not be held to be an assessee in default despite failure to deduct tax at source on such payments. In this present case it is observed that deductee has included the payment in its total income and has also filed the return of income. In effect the Department has not suffered any revenue loss and in the circumstances the amendment though procedural in nature, made effective from a subsequent date should also be taken to be applicable to the year under consideration. Therefore the appeal of the assessee is ALLOWED." 7. In this case, we find that the assessee has paid Rs. 54,40,85,961/- as business promotional expenses to M/s. KPR Mills Ltd., the holding company of which, the assessee is a 100% subsidiary. M/s. KP....