TaxTMI 
TaxTMI 
TaxTMI 
2023 (6) TMI 393
X X X X Extracts X X X X
X X X X Extracts X X X X
....als by the Revenue and cross objections by the assessee arise out of two separate orders of learned Commissioner of Income Tax (Appeals) deleting the penalty imposed under section 271(1)(c) of the Income-tax Act, 1961 (in short 'the Act') 3. Briefly the facts, more or less common in both the assessment years are, the assessee is a resident corporate entity engaged in the business of manufacture and trading of non-alcoholic beverages. For the assessment years under dispute, the assessee had filed its return of income in regular course declaring loss. The returns of income filed by the assessee were subjected to scrutiny and in course of assessment proceeding, the Assessing Officer called for various information and details and ultimately completed the assessments under section 143(3) of the Act making various additions/disallowances. Contesting the additions/disallowances the assessee preferred appeals before learned first appellate authority. While deciding the appeals, learned Commissioner (Appeals) granted relief to the assessee by deleting certain additions completely. Whereas, he partly sustained the disallowance of non-compete fee claimed as revenue expenses. However, he uphe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ent of non-compete fee, however, it is a fact on record that against the decision of the Tribunal in past assessment years, the assessee has preferred appeals before the Hon'ble High Court and substantial question of law on the issue of allowability of deduction in respect of non-compete fee has been admitted by Hon'ble High Court. Even, for the impugned assessment year also the Hon'ble High Court has admitted assessee's appeal on the issue. It is not a case where the assessee has accepted the decision of the departmental authorities on the issue in the past assessment years, but has still claimed deduction in subsequent assessment years. 6. On the contrary, the assessee is doggedly contesting the issue in each and every assessment year and the issue is now pending for adjudication before the Hon'ble Jurisdictional High Court. In fact, the decision of the Tribunal in assessment year 2002-03 upholding the disallowance was rendered, post filing of return of income for the impugned assessment year. It is a fact on record that the assessee has disclosed all material facts relating to payment of non-compete fee and the Assessing Officer was conscious of assessee's claim. 7. That being....
X X X X Extracts X X X X
X X X X Extracts X X X X
....surrender of Kinley water rights. The disallowances so made, were also upheld by learned Commissioner (Appeals). 14. Before us, learned counsel for the assessee fairly submitted that this issue has been consistently decided against the assessee by the Tribunal upto assessment year 2007-08. However, he submitted, in some of the earlier assessment years, assessee's appeals raising substantial question of law on the issue have been admitted by the Hon'ble Jurisdictional High Court. 15. Learned Departmental Representative submitted, the issue is squarely covered against the assessee by the decisions of the Tribunal. 16. We have considered rival submissions and perused the materials on record. The dispute between the parties is whether the non-compete fees paid by the assessee to some of the parties is in the nature of revenue or capital expenditure. On perusal of facts and materials on record, we find that this is a recurring dispute between the parties from assessment years 1999-2000 onwards and has been consistently decided against the assessee, even by the Tribunal. In this regard, we may refer to the following observations of the Tribunal in order dated 12.04.2023, while decidin....
X X X X Extracts X X X X
X X X X Extracts X X X X
....mount of Rs. 1,02,73,245/- was claimed as reimbursement of sales tax expenses to Salute Beverages, Guntur, on account of old transactions. The Assessing Officer observed, though, the assessee has furnished letter dated 06.03.2007 of Salute Water House Pvt. Ltd., however, there was no mention of the amount as compensation claimed towards tax dues. Thus, alleging absence of cogent evidence, the Assessing Officer disallowed the said amount. Further, he disallowed various other amounts representing provision for sales tax, expenditure incurred to removed plants and machinery, provision for settlement of employees compensation etc. The assessee contested the aforesaid disallowances before learned Commissioner (Appeals). After considering the submission of the assessee in the context of facts and materials on record, learned Commissioner (Appeals) upheld the disallowances. However, in respect of expenditure incurred towards shifting of machinery from one plant to another in case of Brindavan Beverages, he directed the Assessing Officer to allow depreciation on such cost. 20. Before us, learned counsel for the assessee submitted that in earlier years, the assessee had entered into contra....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rovision. Further, the Assessing Officer has made a categorical observation that no evidence has been furnished to demonstrate that the expenses were actually incurred by the assessee. The factual position remained unaltered before learned Commissioner (Appeals). Even, on perusal of written submission furnished before the Assessing Officer placed in the paper-book, we find, except quoting some facts and figures relating to certain expenses, some of which, have been classified as provision, no evidence has been furnished by the assessee to substantiate the fact that expenditure was actually incurred during the year. Since, assessee's claim is not supported by any evidence, we are inclined to uphold the decision of learned Commissioner (Appeals) on the issue. Ground raised is dismissed. 23. In ground no. 4, the assessee has challenged the disallowance of Rs. 41,32,403/- representing payment made towards traffic rule violation. On perusal of record, it is observed, the assessee incurred expenses of Rs. 41,32,403/- towards traffic challans for violation of certain rules/regulation. Being of the view that the payment made was for an offence and prohibited by law, the Assessing Officer ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ts earlier decisions, has decided the issue against the assessee. For better appreciation, the relevant observations of the Tribunal is reproduced hereunder: "9. Issue no. 6. Lastly coming to the disallowance expenses incurred on Ice-Boxes the same is the basis of grounds raised exclusively in A.Y. 2006-07 and 2007-08. In this regard it can be observed that assessee had made expenditure on sign board, Iceboxes etc. provided to vendors which were accounted under the head 'Marketing Expenses'. Ld. CIT(A) has allowed the claim of Sign board as revenue expenditure, however, treated the Ice-Boxes as part of plant and machinery and allowed depreciation in assessee's own case for A.Y. 2002-03. The Tribunal has disallowed expenses hold the same to be capital in nature. 9.1 On Behalf of the assessee it is submitted that there is no enduring benefit to the assessee and the purpose of expenditure is to increase the sales at the outlets/vendors therefore, the expenditures were incurred for the purpose of business promotion and advertisement. It is submitted the Ice-boxes do not have as life and scrapped soon. 9.2 The issue is dealt by Co-ordinate Bench, in the case of assesse....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he facts are, the assessee had outsourced packing and processing work to third parties on payment of processing charges. While completing the assessment, the Assessing Officer disallowed 10% of the processing charges on ad-hoc basis. Whereas, while deciding assessee's appeal, learned Commissioner (Appeals) deleted the disallowance on the ground that the assessee had produced party-wise details of such charges, which are subjected to TDS. 34. At the time of hearing, learned counsel for the assessee submitted before us that while dealing with identical issue in assessee's own case in assessment years 2004-05 to 2007-08 (supra), the Tribunal has restored the issue to the Assessing Officer with a direction to examine the issue on the basis of evidences filed by the assessee. 35. Learned Departmental Representative submitted, in view of the earlier decision of the Tribunal, the issue may be restored back to the Assessing Officer. 36. Having considered rival submissions, we find, while dealing with identical issue in assessee's own case in assessment years 2004-05 to 2007-08 (supra), the Tribunal has restored the issue to the Assessing Officer with the following directions: "7. Issu....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ing heard. 38. In the result, the appeal is allowed for statistical purposes. ITA No. 3449/Del/2015 (Assessee's Appeal) AY: 2009-10 39. Ground no. 1 is general in nature, hence, does not required adjudication. 40. In ground no. 2 and its sub-grounds, the assessee has challenged disallowance of deduction claimed of non-compete fee. This ground is identical to ground no. 2 with its sub-grounds of ITA No. 3448/Del/2015. Facts being identical, our decision therein, will apply mutatis mutandis to this appeal as well. Accordingly, grounds are dismissed. 41. In ground no. 3 and its sub-grounds, the assessee has challenged disallowance of expenditure incurred towards traffic challans. This amount is identical go ground no. 4 of ITA No. 3448/Del/2015 decided in the earlier part of the order. Consistent with the view taken by us therein, we delete the disallowance. This ground is allowed. 42. In ground no. 4, the assessee has challenged the disallowance of expenditure incurred on Ice boxes. This ground is identical to ground no. 5 of ITA No.3448/Del/2015 decided by us in the earlier part of the order. Following our decision therein, we decide the issue against the assessee. This ground....