TaxTMI 
TaxTMI 
TaxTMI 
2019 (4) TMI 2133
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....f assessment u/s. 147/148 of the Act on the ground of overlooking of Leave Travel Assistance (LTA) by the DCIT in the past years. ii) In the assessee's appeal in ITA No. 233/Ran/2016 for the A.Y 2009-10, which relates to the issue of expenditure of Rs.35.01 lakhs on account of technical know-how written off and allowed u/s. 37(1) of the Act. iii) In the revenue's appeals in ITA No. 59/Ran/18 for the A.Y 2010-11, 222/Ran/16 for the A.Y 2009-10, 223/Ran/16 for the A.Y 2011-12 & 60/Ran/2018 for the A.Y 2013-14, common issue raised by the revenue relates to deletion of provision for warranty expenses. iv) In the revenue's appeal in ITA No. 95/Ran/17 for the A.Y 2007-08, ground no. 2 raised by the revenue relates to tax deduction at source (TDS) on sales promotion expenses & (v) Liquidated damages, Misc. Provision and Provision for LTA vi) in ITA No.222/Ran/16 for the A.Y 2009-10, ground no. 2 raised by the revenue relates to expenditure on horticulture, not related to business expenditure. 3. i) In the assessee's appeals in ITA Nos 231/Ran/2016 & 232/Ran/2016 for the A.Ys 2006-07 & 2008-09, the issue relates to re-opening of assessment u/s. 147/148 of the Act on the ground of ....
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.... it would be worthwhile to examine the issue for which the assessment had to be reopened. We note that Schedule-18 of the Balance Sheet of the appellant company for the impugned issue reads as under:- "EMPLOYEE'S REMUNERATION & BENEFITS Workmen and Staff Welfare Expenses (includes LTA provision 32.16 lakh (prev. Years 41.37 lakhs) made on estimated basis)" 305.56 From the above Schedule 18 of the Balance Sheet, we note that, the information about LTA Provision, was there in the audited books of accounts. Hence, it is not a new tangible material to re-open assessment u/s. 147/148 of the Act. Therefore, reopening of assessment u/s. 147/148 is not valid and hence we allow the grounds raised by assessee. 6. ii) In the assessee's appeal in ITA No. 233/Ran/2016 for the A.Y 2009-10, which relates to the issue of expenditure of Rs.35.01 lakhs on account of technical know-how written off and allowed u/s. 37(1) of the Act. 7. We have heard ld.DR and perused the material available on record. We note that the issue pertains to write off of technical know how expenses. The appellant company, in this regard has submitted that consequent to signing of contract for technology transfer o....
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....enses and Warranty Expenses are charged in the accounts as expenses. We note that providing after sale service is an obligation under any contract of sale for the appellant company. Incurring of the liability therefore is certain. Therefore, the appellant company provides for its' After Sale Service/Warranty' obligation on accrual basis in its Profit & Loss Account. The Company provides for 0.5% on Sale for liabilities under contractual obligations/warranties. This was stated at Clause 6 of the Statement of Accounting Policies of the Company forming part of the Balance Sheet and Profit & Loss Account. The Company follows this policy uniformly and consistently every year in the preparation of the Balance Sheet and Profit & Loss Account. The company has worked out the percentage on Sale on the basis of past factor of actual expenses incurred by it towards warranty liability. This provision of 'After Sale Service' is then reversed back by the Company on the expiration of the Guarantee/Warranty Period and the amount of such expiration is then offered for taxation as income. The appel1ant, therefore, submitted that it is well settled that a business liability had definit....
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.... expense for sales promotion would be of such nature as to require deduction of tax at source. No such enquiry has been conducted by the Ld. Assessing Officer. Sales promotion expenses include Rs.87.86 lakhs as 'freight and incidental charges' and Rs.127.60 lakhs as 'warranty period expenses'. Exhibition and publicity expenses were Rs. 1.47 lakhs and Rs. 0.67 lakhs respectively. The disallowance is completely against the pronouncement of the Apex Court in the case of Dhakeshawari Cotton Mills Ltd. V CIT 26 ITR 775 (SC) wherein it has ruled that "although ITO is not fettered by technical rules of evidence and pleadings, and that he is entitled to act on material which may not be accepted as evidence in a court of law, but there the agreement ends; because it is equally clear that in making the assessment under section 23 (3) he is not entitled to make a pure guess and make an assessment without reference to any evidence or any material at all and there must be something more than bare suspicion to support the assessment under section 23 (3)." The order has also ignored the fact that the sales promotion expenses so purported to be added back already includes Rs.127.60....