Appeal details
Counselvise Citation
[2018] 126 COUNSELVISE.COM (IT) 1622 (ITAT-KOLKATA)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
3 year(s) 3 month(s) 23 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
02-02-2018
Appeal Filed By
Department
Order Result
Partly Allowed
Bench Allotted
B
Assessment Year
2010-2011
Appeal Filed On
10-10-2014
Judgement Text
, C , IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH C KOLKATA BEFORE SHRI N.V.VASUDEVAN, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ITA NO. 688 & 1325 / KOL / 2014 ASSESSMENT YEARS :2008-09 EPCOS INDIA PVT. LTD., KULIA KANCHARAPARA ROAD, KALYANI-741251 [ PAN NO.AACI 6950 Q ] DCIT, CIRCLE-11, P-7, CHOWRINGHEE SQUARE, KOLKATA-69 V/S . V/S . ITO, WARD-11(1), P-7, CHOWRINGHEE SQUARE, AAYAKAR BHAVAN, KOLKATA-69 EPCOS INDIA PVT. KULIA KANCHARAPARA ROAD, KALYANI-741251 /APPELLANT .. / RESPONDENT ITA NO. 1718 & 1895/KOL/2014 ASSESSMENT YEAR: 2010-11 EPCOS INDIA PVT. LTD., KULIA KANCHARAPARA ROAD, KALYANI-741251 DCIT, CIRCLE-11, P-7, CHOWRINGHEE SQUARE, KOLKATA-69 V/S . V/S . DCIT, CIRCLE-11, P7, CHOWRINGHEE SQUARE, AAYAKAR BHAVAN,KOLKATA-69 M/S EPCOS INDIA PVT. LTD., KULIA KANCHARAPARA ROAD,KALYANI-741251 /APPELLANT .. / RESPONDENT ITA NO.2553 & 2758/KOL/2013 ASSESSMENT YEAR: 2009-10 EPCOS INDIA PVT. LTD., KULIA KANCHARAPARA ROAD, KALYANI-741251 DCIT, CIRCLE-11, P-7, CHOWRINGHEE SQUARE, KOLKATA-69 V/S . V/S . DCIT, CIRCLE-11, P-7, CHOWRINGHEE SQUARE, AAYAKAR BHAVAN, KOLKATA-69 M/S EPCOS INDIA PVT. KULIA KANCHARAPARA ROAD, KALYANI-741251 ITA NO.688, 1325,1718, 1895/K/13 & 2553 & 2758/K/13 AYS 08-09 10-11 EPCOS INDIA PVT. LTD. VS. ITO WD-11(1)/DIT, CIR -11 KOL. PAG E 2 /APPELLANT .. / RESPONDENT /BY ASSESSEE SHRI ANUP SINHA, AR /BY REVENUE SHRI G. HANGSHING & SHRI SALLONG YADEN, CIT-DR /DATE OF HEARING 11-01-2018 /DATE OF PRONOUNCEMENT 02-02-2018 / O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER:- THESE THREE APPEALS AND CROSS-APPEALS BY SAME ASSE SSEE AND REVENUE ARE DIRECTED AGAINST THE SEPARATE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-XII, KOLKATA VIDE DIFFERENT DATED 14. 03.2014, 18.07.2014 & 12.09.2013. ASSESSMENTS WERE FRAMED BY ITO/DCIT WAR D-11(1)/CIRCLE-11, KOLKATA U/S 143(3) OF THE INCOME TAX ACT, 1961 (HER EINAFTER REFERRED TO AS THE ACT) VIDE THEIR DIFFER ORDERS DATED 29.12.2011, 26 .03.2014 AND 06.03.2013 FOR ASSESSMENT YEARS 2008-09 TO 2010-11 RESPECTIVELY. SHRI G. HANGSHING & SHRI SALLONG YADEN,LD. DEPARTME NTAL REPRESENTATIVE APPEARED ON BEHALF OF REVENUE AND SHRI ANUP SINHA, LD. AUTHORIZED REPRESENTATIVE APPEARED ON BEHALF OF ASSESSEE. 2. IN ALL THE CROSS-APPEALS FILED BY ASSESSEE AS WE LL AS REVENUE, THE FACTS AND CIRCUMSTANCES ARE IDENTICAL THEREFORE ALL THESE APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OFF BY WAY OF THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 3. FIRST WE TAKE UP REVENUES APPEAL IN ITA NO.2758/KOL/2013 FOR AY 09- 10 AS LEAD CASE. THE REVENUE HAS RAISED THE FOLLOWI NG GROUNDS OF APPEAL: 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND AS PER LAW LD. CIT(A) ERRED IN ALLOWING THE COMMISSION EXPENSES AM OUNTING TO RS. 100,66,944/- AS TRADE DISCOUNT. 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND AS PER LAW LD. CIT(A) ERRED IN BY DELETING ADDITION U/S 40(A)(IA) AMOUNTING TO RS. ITA NO.688, 1325,1718, 1895/K/13 & 2553 & 2758/K/13 AYS 08-09 10-11 EPCOS INDIA PVT. LTD. VS. ITO WD-11(1)/DIT, CIR -11 KOL. PAG E 3 100,66,944/- WHICH WAS ADDED BACK BY AO AS NON-DEDU CTION OF TDS ON THE COMMISSION PAYMENT U/S 194H. 3. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND AS PER LAW LD. CIT(A) ERRED IN RESTRICTING THE DISALLOWANCES ON EX PENSES OF DAMAGE GOODS TO 10% I.E. RS. 872556/- INSTEAD OF RS. 87355 61/- EVEN THOUGH ASSESSEE DID NOT PRODUCE ANY EVIDENCE OR DETAILS NE ITHER DURING ASSESSMENT PROCEEDING NOR BEFORE APPELLATE AUTHORIT Y. 4. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND AS PER LAW LD. CIT(A) ERRED IN RESTRICTING THE PROVISION OF DOUBTF UL DEBTS FOR COMPUTING INCOME U/S 115JB AMOUNTING FROM RS.11627000/- TO RS . 2281000/- EVEN THOUGH ASSESSEE DID NOT PRODUCE ANY EVIDENCE O R DETAILS DURING ASSESSMENT PROCEEDING. THE LD. CIT(A) ALSO ERRED IN ALLOWING FRESH EVIDENCE DURING APPELLATE PROCEEDINGS IN VIOLATION OF RULE 46A OF I.T. ACT. 4. THE FIRST ISSUE RAISED BY REVENUE IN GROUNDS NO . 1 AND 2 ARE INTER- RELATED AND THEREFORE BEING TAKEN UP TOGETHER THAT THE LD. CIT(A) ERRED IN DELETING THE ADDITION MADE BY THE AO FOR RS.1,00,66 ,944/- ON ACCOUNT OF NON- DEDUCTION OF TDS U/S 194H READ WITH SECTION 40(A)(I A) OF THE ACT. 5. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE IN T HE PRESENT CASE IS A PRIVATE LIMITED COMPANY AND ENGAGED IN THE BUSINESS OF MANU FACTURING AND SALE OF SOFT FERRITE COMPONENTS, DC AND AC CAPACITORS, META LIZED FILMS ETC. THE ASSESSEE IN THE YEAR UNDER CONSIDERATION HAS CLAIME D EXPENSES UNDER THE HEAD TRADE DISCOUNT AND CASH DISCOUNT OF RS.45,71 ,944/- AND RS.54,95,000/- RESPECTIVELY. THE ASSESSEE DURING THE ASSESSMENT PR OCEEDINGS EXPLAINED THAT IMPUGNED DISCOUNTS WERE GIVEN TO ITS CUSTOMERS ON A CCOUNT OF BULK QUANTITY PURCHASED BY THEM. THERE WAS A CONTRACT BETWEEN THE ASSESSEE AND ITS CUSTOMERS WHICH WAS BASED ON PRINCIPAL TO PRINCIPAL BASIS. AS SUCH, THERE WAS NO AGREEMENT OF PRINCIPAL AND AGENCY BETWEEN THE AS SESSEE AND ITS CUSTOMERS THEREFORE THE DISCOUNT OFFERED TO THE CUS TOMERS CANNOT PARTAKE THE CHARACTER OF COMMISSION AS ENVISAGED U/S 194H OF TH E ACT. ITA NO.688, 1325,1718, 1895/K/13 & 2553 & 2758/K/13 AYS 08-09 10-11 EPCOS INDIA PVT. LTD. VS. ITO WD-11(1)/DIT, CIR -11 KOL. PAG E 4 6. HOWEVER, THE AO DURING THE ASSESSMENT PROCEEDING S OBSERVED CERTAIN FACTS AS DETAILED UNDER: I) THE AMOUNT OF DISCOUNT OFFERED TO THE CUSTOMERS WAS SUBJECT TO VARIOUS TERMS AND CONDITIONS THEREFORE IT PARTAKE T HE CHARACTER OF COMMISSION; II) THE AMOUNT OF DISCOUNT WAS SETTLED BY THE ASSE SSEE BY ISSUING CREDIT NOTE TO THE CUSTOMERS. THESE CREDIT NOTICES WERE ISSUED TO THE CUSTOMERS ONLY ON THE HAPPENING OF THE PARTICUL AR EVENT/ ACTIVITY SUCH AS RECEIPT OF PAYMENTS MADE BY THE CU STOMERS. THUS, THE DISCOUNT OFFERED BY THE ASSESSEE IS IN TH E NATURE OF COMMISSION. III) THE DISCOUNT WAS ALSO OFFERED TO THE CUSTOMER S ON ACCOUNT OF PROMPT PAYMENT MADE BY DEALERS TO THE ASSESSEE. THI S AGAIN REFLECTS THAT THE DISCOUNT IS RELATED TO PROVIDING SOME SERVICES LIKE PROMPT PAYMENT. IV) THE AMOUNT OF COMMISSION OFFERED BY THE ASSESS EE IS DIRECTLY LINKED/RELATED TO ITS LIQUIDITY WHICH PROVES THAT T HESE ARE NOT NORMAL DISCOUNT OFFERED BY THE ASSESSEE BUT REPRESE NTS THE AMOUNT OF COMMISSION. V) THE TERMS AND CONDITION BETWEEN THE ASSESSEE AND ITS CUSTOMERS IS OF PRINCIPAL AND AGENT. IN VIEW OF THE ABOVE, THE AO WAS OF THE VIEW THAT A N AMOUNT OF DISCOUNT OFFERED BY THE ASSESSEE IS NOTHING BUT COMMISSION E XPENSES WHICH IS LIABLE FOR DEDUCTION OF TDS U/S 194H OF THE ACT. BESIDES T HE ABOVE THE AO ALSO OBSERVED THAT SIMILAR KIND OF DISALLOWANCES WAS ALS O MADE IN THE ASSESSMENT YEAR 2008-09. THUS, THE AO MADE THE DISALLOWANCE O F RS.1,00,66,944/- ONLY AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 7. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL TO L D. CIT(A). THE ASSESSEE BEFORE THE LD. CIT(A) SUBMITTED THAT THE C ONTRACT OF SALE BETWEEN ITA NO.688, 1325,1718, 1895/K/13 & 2553 & 2758/K/13 AYS 08-09 10-11 EPCOS INDIA PVT. LTD. VS. ITO WD-11(1)/DIT, CIR -11 KOL. PAG E 5 THE ASSESSEE AND ITS CUSTOMERS / DEALERS IS BASED O N PRINCIPAL-TO-PRINCIPAL BASIS. THEREFORE, THE TRANSACTION BETWEEN THE ASSES SEE AND ITS CUSTOMERS REPRESENTS THE SALE PURCHASE ACTIVITIES. THUS, THE DISCOUNT OFFERED CANNOT BE TERMS AS COMMISSION U/S 194H OF THE ACT. THE ASSESS EE IN SUPPORT OF HIS CLAIM HAS ALSO RELIED ON THE JUDGMENT OF HONBLE SU PREME COURT IN THE CASE OF CIT VS. AHMADABAD STAMP FUTURE ASSOCIATION REPORTED IN 348 ITR 378 (SC). THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE DELETED THE ADDITION MADE BY THE AO BY OBSERVING AS UNDER: I HAVE CAREFULLY CONSIDERED THE SUBMISSION PUT FOR TH ON BEHALF OF THE APPELLANT ALONG WITH SUPPORTING DOCUMENTS & CASE LA WS RELIED UPON AND PERUSED THE FACTS OF THE CASE INCLUDING THE CONTENT ION OF THE AO IN THE ASSESSMENT ORDER. IT IS SEEN THAT THE APPELLANT HAS CLAIMED DEDUCTION FOR CASH DISCOUNT AND TRADE DISCOUNT ALLOWED TO THE CUSTOMERS FOR PURCHASING THE PRODUCT OF THE APPELLANT IN BULK QUA NTITIES UNDER SECTION 37(1) OF THE ACT WHILE COMPUTING THE TOTAL TAXABLE INCOME. THE AO IN HIS ORDER PASSED U/S 143(3) OF THE ACT HAS DISALLOWED T HE DEDUCTION CLAIMED ON THE ALLEGED GROUND THAT SIMILAR DISALLOW ANCE WAS MADE IN THE IMMEDIATELY PRECEDING YEAR AND THE APPEAL FOR T HAT YEAR IS STILL PENDING FOR DISPOSAL. FROM THE PERUSAL OF THE DETAI LS FILED BY THE APPELLANT, IT IS OBSERVED THAT IN THE IMMEDIATELY P RECEDING ASSESSMENT YEAR THE DISALLOWANCE OF CASH AND TRADE DISCOUNT WA S MADE ON THE ALLEGED GROUND THAT THE SAME BEING IN NATURE OF COM MISSION PAID TO DIFFERENT PARTIES AND AS NO TAX WAS DEDUCTED AS PER THE PROVISION OF TDS BEFORE MAKING THE PAYMENT UNDER SECTION 40(A)(I A) OF THE ACT. MY ATTENTION WAS INVITED TO THE FACT THAT THE APPEL LANT HAS OFFERED DISCOUNTS TO THE CUSTOMERS AS PER THE CONTRACT OF S ALE ENTERED INTO BETWEEN THE APPELLANT AND THE CUSTOMERS TAKEN PLACE ON A PRINCIPAL TO PRINCIPAL BASIS. FURTHER, MY ATTENTION IS ALSO DRAW N TO THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. AHMEDA BAD STAMP VENDORS ASSOCIATION REPORTED IN 348 ITR 378 (S C) W HEREIN THE HONBLE COURT HAS HELD THAT OFFERING OF DISCOUNT FOR PURCHA SE IN BULK WOULD PARTAKE THE CHARACTER OF DISCOUNT ON TRANSACTION OF SALE AND AS SUCH THE PROVISION OF SECTION 194H OF THE ACT HAS NO APPLICA TION. MY ATTENTION WAS FURTHER INVITED TO THE FACT THAT BOTH THE CASH/ TRADE DISCOUNTS WERE CLAIMED AS ALLOWABLE DEDUCTION AND THE SAME WAS ALS O ALLOWED IN ALL THE PREVIOUS YEARS UP TO ASSESSMENT YEAR 2007-08. IN THE LIGHT OF THE ABOVE DISCUSSION AND FINDINGS, PERUSING THE FACTS OF THE CASE AND RESPECTFULLY FOLLOWING THE PRINCIPLES ENUNCIATED BY THE HON'BLE SUPREME COURT (SUPRA). I AM OF THE CONSIDER ED OPINION THAT THE OFFERING OF DISCOUNT FOR PURCHASING THE QUANTITY IN BULK BY THE CUSTOMERS ITA NO.688, 1325,1718, 1895/K/13 & 2553 & 2758/K/13 AYS 08-09 10-11 EPCOS INDIA PVT. LTD. VS. ITO WD-11(1)/DIT, CIR -11 KOL. PAG E 6 CANNOT BE TREATED AS PAYMENT OF COMMISSION TO THE C USTOMERS SPECIALLY WHEN THE SALE IS HAPPENING ON A PRINCIPAL TO PRINCI PAL BASIS. HENCE, I AM INCLINED TO AGREE WITH THE APPELLANT AND DIRECT THE AO TO ALLOW DEDUCTION CLAIMED FOR CASH/TRADE DISCOUNT AMOUNTING TO INR 54,95,000/- AND INR 45,71,944/- RESPECTIVELY WHILE COMPUTING TH E TOTAL TAXABLE INCOME AND THIS GROUND OF APPEAL IS ACCORDINGLY ALL OWED. BEING AGGRIEVED BY THE LD. CIT(A) THE REVENUE IS IN SECOND APPEAL BEFORE US. 8. THE LD. DR BEFORE US VEHEMENTLY SUPPORTED THE OR DER OF AO. LD. DR PRAYED BEFORE THE BENCH TO CONFIRM THE ORDER OF AO. ON THE OTHER HAND, THE LD. AR BEFORE US FILED THE P APER BOOK WHICH IS RUNNING FROM PAGES 1 TO 56 AND SUBMITTED THAT THE ASSESSEE COMPANY HAS OFFERED THE AFORESAID CASH/TRADE DISCOUNT TO THE CUSTOMERS FOR PURCHASING THE PRODUCTS IN BULK QUANTITY. THUS, THE DISCOUNTS WERE OFFERED BY THE ASSESSEE COMPANY AS PER THE CONTRACT OF SALE BETWEEN THE ASSESSEE COMPA NY AND ITS CUSTOMER WAS BASED ON PRINCIPAL TO PRINCIPAL BASIS. THE AFORESAI D DISCOUNTS WERE ALLOWED AS BUSINESS EXPENDITURE UNDER THE PROVISION OF SECTION 37 OF THE ACT FOR ALL THE ASSESSMENT YEARS EXCEPT THE ASSESSMENT YEAR 2008-09 , WHERE THE AO HAS STATED THAT OFFERING DISCOUNT ON SALE WOULD PERTAIN THE CHARACTER OF COMMISSION AND AS THERE WAS NO DEDUCTION OF TAX AT SOURCE FR OM SUCH COMMISSION, THE ENTIRE AMOUNT WAS DISALLOWED U/S 40 (A)(IA) OF THE ACT. IN THIS CONNECTION, IT MAY BE STATED THAT THOUGH THERE ARE FAVORABLE DECISIONS OF VARIOUS HIGH COURTS OF THE COUNTRY THAT THE DISCOUN TS OFFERED ON SALES WOULD NOT PARTAKE THE CHARACTER OF COMMISSION, THERE WAS NO DECISION OF THE HON'BLE SUPREME COURT ON THIS POINT. NOW THE ISSUE HAS BEEN SET AT REST BY THE DECISION OF THE HON'BLE SUPREME COURT IN THE MATTER OF AHMEDABAD STAMP VENDORS ASSOCIATION (SUPRA) WHEREIN THE HON'BLE SUP REME COURT HAS HELD THAT OFFERING DISCOUNT FOR PURCHASE IN BULK QUANTITY WOU LD PARTAKE THE CHARACTER OF DISCOUNT ON TRANSACTION OF SALE AND AS SUCH, THE PR OVISION OF SECTION 194H OF THE ACT HAS NO APPLICATION AND HENCE, DISALLOWANCE U/S 40(A)(IA) OF THE ACT CANNOT BE MADE. IN VIEW OF THE ABOVE SUBMISSION ESP ECIALLY IN VIEW OF THE BINDING DECISION OF THE HON'BLE SUPREME COURT, WE W OULD REQUEST YOUR KIND- ITA NO.688, 1325,1718, 1895/K/13 & 2553 & 2758/K/13 AYS 08-09 10-11 EPCOS INDIA PVT. LTD. VS. ITO WD-11(1)/DIT, CIR -11 KOL. PAG E 7 SELF TO ALLOW THE EXPENDITURE INCURRED BY THE ASSES SEE COMPANY UNDER THE HEAD CASH/TRADE DISCOUNT U/S 37(1) OF THE ACT. LD. AR FURTHER SUBMITTED THAT UP TO ASSESSMENT YEAR 2007-08 NO DISALLOWANCE WAS MADE ON ACCOUNT OF DISCOUNT OFFERED TO THE CUSTOMERS THOUGH THE ASSESS MENTS WERE FRAMED U/S 143(3) OF THE ACT. IT WAS ALSO BROUGHT TO OUR NOTIC E THAT FROM THE ASSESSMENT YEARS 2013-14 AND 2014-15 AGAIN NO DISALLOWANCE ON ACCOUNT OF COMMISSION EXPENSES WAS MADE BY THE REVENUE. THUS, KEEPING THE PRINCIPAL LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF RADHASOAMI SATSANG VS. COMMISSIONER OF INCOME TAX (1992) 193 ITR 0321 (SC) WHEREIN IT WAS OBSERVED IN THE ABSENCE OF ANY MATERIAL CHANGE IN T HE FACTS, THE REVENUE SHOULD NOT TAKE A DIFFERENT VIEW IN THE OTHER YEAR. THE LD. AR IN SUPPORT OF ITS CLAIM HAS ALSO FILED THE COPY OF THE ASSESSMENT ORD ERS PERTAINING TO ASSESSMENT YEARS 2013-14 AND 2014-15 WHICH ARE PLAC ED ON RECORD. 8.1 ON THE PRINCIPAL OF CONSISTENCY THE LD. AR ALSO RELIED ON THE JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. DALMIA PROMOTERS AND DEVELOPERS PVT. LTD . IN CIVIL APPEAL NO. 74/2007WHEREIN IT WAS HELD AS UNDER: TAX(APPEALS) BY ITS ORDER DATED 4 TH SEPTEMBER, 1996 TAKING INTO ACCOUNT INTER ALIA THE FACT THAT FOR THE PREVIOUS T HREE ASSESSMENT YEARS THE ASSESSEE FOR SIMILAR INTEREST FROM SUCH FIXED D EPOSITS HAD BEEN HELD TO COME WITHIN THE HEAD BUSINESS INCOME AND, THER EFORE, FOLLOWING THE PRINCIPLE OF CONSISTENCY, IT WAS HELD THAT THIS WOU LD HAVE TO BE FOR THE ASSESSMENT YEAR 1993-94 AS WELL. AN APPEAL FILED B Y THE REVENUE BEFORE THE INCOME TAX APPELLATE TRIBUNAL WAS DISMIS SED ON 1 ST OCTOBER, 2004. THE LD. AR IN SUPPORT OF ITS CLAIM ALSO FILED THE C OPY OF DEALERSHIP AGREEMENT ON SAMPLE BASIS WHICH ARE PLACED ON RECORD. THE REL EVANT CLAUSES OF THE AGREEMENT ARE REPRODUCED AS UNDER: 2. THE RELATIONSHIP BETWEEN EPCOS AND THE DEALER W ILL BE STRICTLY ON PRINCIPAL TO PRINCIPAL BASIS 3. THE DEALER WILL NOT BE ENTITLED TO REPRESENT EPC OS IN ANY MANNER OR FASHION AS EPCOS AGENT AND SHALL HAVE NO RIGHT OR A UTHORITY TO MAKE ANY COMMITMENTS OF EPCOSS BEHALF OR BIND EPCOS IN ANY RESPECT ITA NO.688, 1325,1718, 1895/K/13 & 2553 & 2758/K/13 AYS 08-09 10-11 EPCOS INDIA PVT. LTD. VS. ITO WD-11(1)/DIT, CIR -11 KOL. PAG E 8 AND FOR ANY PURPOSE WHATSOEVER AND TO ASSIGN ANY BE NEFITS, RIGHTS OR OBLIGATION HEREIN TO ANY OTHER PERSON(UNLESS OTHERW ISE SPECIFIED). 18.1. EPCOS SHALL SELL THE SAID PRODUCTS TO THE DEA LER AT LIST PRICE RULING AT THE TIME OF DELIVERY LESS NORMAL TRADE DI SCOUNT ON SUCH LIST PRICE WHICH WILL BE NOTIFIED TO THE DEALER, FROM TI ME TO TIME. THE LIST PRICES ARE THE MAXIMUM PRICES. THE DEALER IS, HOWEV ER, FREE TO CHARGE LOWER PRICES THAN THE PRICES MENTIONED IN THE LIST PRICE. 25.1 THE PAYMENTS SHALL BE MADE TO EPCOS BY THE DEA LERS BEFORE DISPATCH, UNLESS CREDIT FACILITY HAS BEEN GRANTED O R AGREED 25.2. IN CASE CREDIT FACILITY IS GIVEN, PAYMENT SHO ULD BE MADE AS PER BUSINESS POLICY LETTER INTIMATED TO THE DEALER FROM TIME TO TIME. THE LD. AR VEHEMENTLY SUPPORTED THE ORDER OF LD. CI T(A). 8. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD; IN CLUDING THE JUDICIAL PRONOUNCEMENTS CITED AND PLACED RELIANCE UPON. THE ISSUE, IN THE INSTANT CASE, RELATES TO WHETHER THE AMOUNT OF COMMISSION O FFERED BY THE ASSESSEE IS IN THE NATURE OF COMMISSION AS ENVISAGED U/S 194H O F THE ACT. AT THIS JUNCTURE, WE FIND IMPORTANT TO REFER TO THE MEANING OF COMMIS SION OR BROKERAGE AS PROVIDED IN EXPLANATION TO SECTION 194H OF THE ACT WHICH READS AS UNDER: EXPLANATION.FOR THE PURPOSES OF THIS SECTION, (I) COMMISSION OR BROKERAGE INCLUDES ANY PAYMEN T RECEIVED OR RECEIVABLE, DIRECTLY OR INDIRECTLY, BY A PERSON ACT ING ON BEHALF OF ANOTHER PERSON FOR SERVICES RENDERED (NOT BEING PRO FESSIONAL SERVICES) OR FOR ANY SERVICES IN THE COURSE OF BUYI NG OR SELLING OF GOODS OR IN RELATION TO ANY TRANSACTION RELATING TO ANY ASSET, VALUABLE ARTICLE OR THING, NOT BEING SECURITIES; FROM THE ABOVE PROVISION, IT IS CLEAR THAT SOME SER VICES SHOULD BE PROVIDED BY THE PERSON OR ANY OTHER SERVICES IN THE COURSE OF B UYING AND SELLING OF GOODS. IN THE INSTANT CASE, THE ASSESSEE HAS BEEN SUPPLYIN G GOODS TO ITS DEALERS ON PRINCIPAL TO PRINCIPAL BASIS AS EVIDENT FROM THE AG REEMENT AS DISCUSSED ABOVE. THEREFORE, WE FIND THAT THERE WAS NO RELATIONSHIP B ETWEEN THE ASSESSEE AND ITS CUSTOMERS AS OF PRINCIPAL AND AGENTS. THEREFORE , THE AMOUNT OF DISCOUNT ITA NO.688, 1325,1718, 1895/K/13 & 2553 & 2758/K/13 AYS 08-09 10-11 EPCOS INDIA PVT. LTD. VS. ITO WD-11(1)/DIT, CIR -11 KOL. PAG E 9 OFFERED BY THE ASSESSEE CANNOT BE TERMED AS COMMISS ION U/S 194H OF THE ACT. MOREOVER, THE ISSUE OF DISCOUNT OFFERED BY THE ASSE SSEE HAS BEEN DULY SETTLED BY THE HONBLE SUPREME COURT IN THE CASE AHMADABAD STAMP VENDORS ASSOCIATION (SUPRA) WHEREIN IT WAS HELD AS UNDER : WE ARE SATISFIED THAT 0.50% TO 4% DISCOUNT GIVEN T O THE STAMP VENDORS IS FOR PURCHASING THE STAMPS IN BULK QUANTI TY AND THE SAID DISCOUNT IS IN THE NATURE OF CASH DISCOUNT. IN THE CIRCUMSTANCES, WE CONCUR WITH THE IMPUGNED J UDGEMENT THAT THE IMPUGNED TRANSACTION IS A SALE. CONSEQUENTLY, SECTI ON 194H OF THE INCOME-TAX ACT, 1961, HAS NO APPLICATION. THERE IS NO DISPUTE THAT THE DISCOUNT WAS OFFERED B Y THE ASSESSEE TO ITS DEALERS IN RELATION TO THE SALES MADE BY IT TO THEM . THUS THE PROVISIONS OF SECTION 194H DOES NOT APPLY TO THE IMPUGNED DISCOUN T OFFERED BY THE ASSESSEE. THUS, WE DO NOT FIND ANY REASON TO INTERF ERE IN THE ORDER OF LD. CIT(A). HENCE THE GROUND OF APPEAL FILED BY THE REV ENUE IS DISMISSED. 9. NEXT ISSUE RAISED BY REVENUE IN GROUND NO. 3 IS THAT THE LD. CIT(A) ERRED IN RESTRICTING THE DISALLOWANCE OF THE EXPENSES OF DAMAGE TO 10% I.E. FROM RS. 87,35,561/- TO RS. 8,72,556/-. 10. THE ASSESSEE, IN THE YEAR UNDER CONSIDERATION H AS CLAIMED THE EXPENSES OF RS.87,35,561/- UNDER THE HEAD DAMAGES. ON QUESTION BY THE AO ABOUT THE NATURE OF DETAILS OF SUCH EXPENSES THE AS SESSEE FAILED TO FILE THE NECESSARY DETAILS. THEREFORE THE AO MADE THE DISALL OWANCE OF RS. 87,35,561/- AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 12. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEF ORE THE LD. CIT(A). THE ASSESSEE BEFORE THE LD. CIT(A) SUBMITTED THAT ON MA NY OCCASIONS THE GOODS SOLD TO THE CUSTOMERS WERE REJECTED ON ACCOUNT OF L OW QUALITY. THESE GOODS WERE EITHER BROUGHT BACK TO THE FACTORY FOR REPAIRI NG OR THESE GOODS WERE SCRAPPED AT THE CUSTOMERS END. THE GOODS WHICH WERE BROUGHT BACK FOR THE PURPOSE OF REPAIRING AND THE COST INCURRED THEREON IN THE FORM OF FREIGHT ITA NO.688, 1325,1718, 1895/K/13 & 2553 & 2758/K/13 AYS 08-09 10-11 EPCOS INDIA PVT. LTD. VS. ITO WD-11(1)/DIT, CIR -11 KOL. PAG E 10 CUSTOM DUTY, OCTROI, EXCISE DUTY AND SALES TAX AS W ELL AS COST OF SCRAPPING WORK WAS CATEGORIZED UNDER THE HEAD DAMAGES. THE CO ST OF DAMAGES WAS DIRECTLY RELATED TO THE BUSINESS ACTIVITIES OF THE ASSESSEE AND THEREFORE, THE SAME IS ELIGIBLE FOR DEDUCTION U/S 37(1) OF THE ACT . 12.1 THE ASSESSEE ALSO SUBMITTED THAT NECESSARY DET AILS WERE FILED BEFORE THE AO VIDE LETTER DATED 25.02.2013. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE THE LD. CIT(A) DELETED THE ADDITION MADE B Y THE AO IN PART BY OBSERVING AS UNDER: I HAVE CAREFULLY CONSIDERED THE SUBMISSION PUT FOR TH ON BEHALF OF THE APPELLANT ALONG WITH SUPPORTING DOCUMENTS/DETAILS F URNISHED AND PERUSED THE FACTS OF THE CASE INCLUDING THE CONTENT ION OF THE AO IN THE ASSESSMENT ORDER. IT IS SEEN THAT THE APPELLANT HAS CLAIMED DEDUCTION WHILE CALCULATING TOTAL TAXABLE INCOME IN RESPECT O F DAMAGES PERTAINING TO REJECTED GOODS WHICH WERE SOLD BY THE APPELLANT TO THE CUSTOMERS PREVIOUSLY. THE AO IN HIS ORDER PASSED U/S 143(3) O F THE ACT HAS DISALLOWED THE DEDUCTION CLAIMED ON THE GROUND THAT NO DETAILS WERE PRODUCED BEFORE THE AO TO PROVE THAT THE EXPENDITUR E WAS INCURRED FOR BUSINESS PURPOSE AND FURTHER SIMILAR DISALLOWANCE W AS MADE IN THE IMMEDIATELY PRECEDING YEAR AND THE APPEAL FOR THAT YEAR IS STILL PENDING FOR DISPOSAL. IN THE COURSE OF APPELLATE PROCEEDINGS, MY ATTENTIO N WAS INVITED TO THE FACT THAT THE APPELLANT HAD MADE AVAILABLE BEFORE T HE AO AT THE TIME OF ASSESSMENT PROCEEDINGS VIDE ITS LETTER DATED 25 TH FEBRUARY, 2013 WHICH CONTAINED A BRIEF NOTE ON JUSTIFICATION OF VARIOUS EXPENSES INCURRED UNDER THE HEAD DAMAGES AND FURTHER THE APPELLANT HA D ALSO ENCLOSED SAMPLE COPIES OF THE DOCUMENTS EVIDENCING THE FACT THAT THE EXPENSES ON DAMAGES HAVE ACTUALLY BEEN INCURRED BY THE APPEL LANT. THE COPY OF THE LETTER ENCLOSING THE DETAILS WAS ALSO FILED BEF ORE ME. ON PERUSAL OF THE SAME, I FIND THAT WHEN THE GOODS ARE REJECTED B Y THE CUSTOMERS DUE TO QUALITY PROBLEMS, THE SAID GOODS ARE BROUGHT BAC K TO THE FACTORY FOR REPAIR/SCRAPPING OR SCRAPPING MIGHT HAVE BEEN DONE AT CUSTOMERS END, DEPENDING UPON THE PROBLEM, CONDITION OF THE GOODS AND THE COSTS OF BRINGING BACK THE GOODS TO THE FACTORY. IT IS ALSO NOTED THAT THE EXPENSES DEBITED TO DAMAGES ACCOUNT IN RELATION TO REJECTED GOODS ARE FREIGHT, CUSTOMS DUTY, OCTROI, EXCISE DUTY AND SALES TAX PAI D ON RETURNED GOODS AND COST OF SCRAPPING. IT IS ALSO SEEN THAT NO MATE RIAL EVIDENCE HAS BEEN BROUGHT ON RECORD BY THE AO TO SUGGEST THAT A NY OF THE EXPENSES CLAIMED UNDER THIS HEAD HAS BEEN INCURRED OTHER THA N THE PURPOSE OF THE BUSINESS OF THE APPELLANT. UNDER THIS CIRCUMSTA NCES, I AM OF THE ITA NO.688, 1325,1718, 1895/K/13 & 2553 & 2758/K/13 AYS 08-09 10-11 EPCOS INDIA PVT. LTD. VS. ITO WD-11(1)/DIT, CIR -11 KOL. PAG E 11 VIEW THAT THE AO IS NOT JUSTIFIED IN DISALLOWING TH E ENTIRE CLAIM OF EXPENSES OF RS. 87,35,567/- UNDER THIS HEAD. IN THE LIGHT OF THE ABOVE, DISCUSSION/FINDINGS, PER USING THE ENTIRE FACTS OF THE CASE AND NATURE OF EXPENSES, I AM OF THE CONSID ERED VIEW THAT 10% OF EXPENSES CLAIMED UNDER THIS HEAD CAN REASONABLY BE TREATED AS DISALLOWABLE EXPENSES NOT INCURRED FOR THE PURPOSE OF THE BUSINESS OF THE APPELLANT. THEREFORE, I RESTRICT THE DISALLOWAN CE TO RS.8,72,556/- BEING 10% OF THE TOTAL CLAIM AS AGAINST RS.87,35,56 7/- MADE BY THE AO. THUS, THIS GROUND OF APPEAL IS PARTLY ALLOWED. BEING AGGRIEVED BY THIS ORDER OF LD. CIT(A) BOTH RE VENUE AND ASSESSEE ARE IN APPEAL BEFORE US. 13. THE REVENUE IS IN APPEAL BEFORE US AGAINST THE RELIEF GRANTED BY THE LD. CIT(A) TO THE TUNE OF 90% OF DAMAGES EXPENSES WHERE AS THE ASSESSEE IS IN APPEAL BEFORE US AGAINST THE CONFIRMATION OF THE AD DITION MADE BY THE AO TO THE TUNE OF 10% OF COST OF DAMAGES IN ITA NO. 2253/ KOL/2013. THE GROUND OF ASSESSEE APPEAL IN ITA NO. 2253/KOL/2013 FOR A.Y 2009-10 GOES AS UNDER:- 1. THAT ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) [HEREI NAFTER REFERRED TO AS LD. CIT(A)] ERRED IN RESTRICTING THE EXPENDITU RE INCURRED BY THE APPELLANT UNDER THE HEAD DAMAGES DURING THE YEAR UNDER CONSIDERATION TO NINETY PERCENT OF THE ACTUAL EXPEN DITURE INCURRED BY THE APPELLANT AND THEREBY NOT ALLOWING THE EXPENDITURE INCURRED TO THE EXTENT OF TEN PERCENT WITHOUT ASSIGNING ANY REASONS AND EVEN AFTER ACCEPTING THE FACT THAT THE REQUISITE DETAILS TO SU BSTANTIATE THE CLAIM WERE FILED BY THE APPELLANT BEFORE HIM AS WELL AS B EFORE THE ASSESSING OFFICER. 14. AS THE ISSUE RAISED BY REVENUE & ASSESSEE IS CO MMON, THEREFORE WE CLUBBING THE SAME FOR THE PURPOSE OF ADJUDICATION. THE LD. AR BEFORE US ENCLOSED DETAILS OF EXPENSES R ELATED TO DAMAGES AMOUNTING TO INR 87,35,561/- FOR THE REFERENCE ALON G WITH SOME SAMPLE COPIES OF DOCUMENTS. ON A PERUSAL OF THE AFORESAID DETAILS, YOUR KIND-SELF MAY APPRECIATE THAT WHEN THE GOODS ARE REJECTED BY THE CUSTOMERS DUE TO QUALITY PROBLEMS, THE SAID GOODS ARE BROUGHT BACK TO THE FA CTORY FOR REPAIR/SCRAPPING OR IT MAY BE DONE AT CUSTOMERS END, DEPENDING UPON THE PROBLEM CONDITION OF THE GOODS AND THE COSTS OF BRINGING BACK THE GOODS TO THE FACTORY. THE ITA NO.688, 1325,1718, 1895/K/13 & 2553 & 2758/K/13 AYS 08-09 10-11 EPCOS INDIA PVT. LTD. VS. ITO WD-11(1)/DIT, CIR -11 KOL. PAG E 12 EXPENSES DEBITED TO DAMAGES ACCOUNT IN RELATION T O REJECTED GOODS ARE FREIGHT, CUSTOMERS DUTY, OCTROI, EXCISE DUTY AND SA LES TAX PAID ON RETURNED GOODS AND COST OF SCRAPPING. THUS, YOUR KIND-SELF M AY APPRECIATE THAT THE ABOVE EXPENSES INCURRED BY THE ASSESSEE COMPANY TO THE CUSTOMERS PREVIOUSLY ARE INCURRED FOR THE PURPOSE OF CARRYING OUT THE BUSINESS OF THE ASSESSEE COMPANY AND AS SUCH THE SAME SHOULD BE ALL OWED U/S 37(1) OF THE ACT. PLEASE NOTE THAT DURING THE ASSESSMENT YEAR 20 08-09, THE ADDITION RELATING TO THESE EXPENSES HAVE BEEN MADE BY THE LD . ASSESSING OFFICER WITHOUT GIVING ANY OPPORTUNITY TO THE ASSESSEE COMP ANY TO FILE ANY DETAILS/DOCUMENTS UNDER THE AFORESAID HEAD. DURING THE RELEVANT ASSESSMENT YEAR, THE ASSESSEE COMPANY IS HAVING IN ITS POSSESS ION ALL THE DETAILS RELATING TO EXPENSES FOR DAMAGES WHICH ARE PLACED ON PAGES 4 0 TO 60 OF THE PAPER BOOK. ON THE OTHER HAND, THE LD. DR SUBMITTED THAT THE EX PLANATION WAS FILED BY THE ASSESSEE AT THE TIME OF ASSESSMENT WITHOUT FILING T HE DOCUMENTARY EVIDENCES. THE ASSESSEE FAILED TO FILE THE DETAILS OF THE SALE S MADE TO THE PARTIES WHICH WERE RETURNED BACK. THE LD. DR VEHEMENTLY SUPPORTED THE ORDER OF THE AO. 15. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSE D THE MATERIAL AVAILABLE ON RECORD. IN THE INSTANT CASE, THE ASSESSEE HAS IN CURRED COST OF RS.87,35,561/- UNDER THE HEAD DAMAGES. AS PER THE A SSESSEE, THE GOODS WHICH WERE RETURNED BACK BY THE CUSTOMERS ON ACCOUN T OF LOW QUALITY TO THE FACTORY. THE COST INCURRED ON THE REPAIRS OF SUCH G OODS WAS CLASSIFIED AS DAMAGES. THE COST OF DAMAGES WAS INCLUSIVE OF FREIG HT CUSTOM DUTY, OCTROI, EXCISE DUTY, SALES TAX ETC. THE COST INCURRED BY TH E ASSESSEE IS PLACED ON PAGES 40 TO 60 OF THE PAPER BOOK. THE LD. AR ALSO D REW OUR ATTENTION ON THE SAMPLE DOCUMENTS IN SUPPORT OF EXPENSES INCURRED ON DAMAGES WHICH ARE PLACED ON PAGES 46 TO 60 OF THE PAPER BOOK. AFTER P ERUSAL OF THE PAPERS FILED BY THE ASSESSEE WE NOTE THAT THESE DOCUMENTS HAVE N OT BEEN DOUBTED BY THE LOWER AUTHORITIES. ITA NO.688, 1325,1718, 1895/K/13 & 2553 & 2758/K/13 AYS 08-09 10-11 EPCOS INDIA PVT. LTD. VS. ITO WD-11(1)/DIT, CIR -11 KOL. PAG E 13 16. INDEED THE ASSESSEE HAS NOT PRODUCED DETAILS O F THE SALES WHICH WERE RETURNED BACK BY THE PARTIES BUT IN OUR CONSIDERED VIEW THIS CANNOT BE THE SOLE BASIS FOR MAKING DISALLOWANCE OF DAMAGE EXPENSES CL AIMED BY THE ASSESSEE. THE AO HAS NOT POINTED OUT ANY DEFECT IN THE SUBMIS SION MADE BY THE ASSESSEE BEFORE REJECTING THE CLAIM MADE BY IT. IN VIEW OF THE ABOVE, WE HOLD THAT THE AO CANNOT JUST BRUSH ASIDE THE DETAILS FIL ED BY THE ASSESSEE AND DRAW A CONCLUSION THAT THE EXPENSES ARE NOT INCURRED IN CONNECTION WITH THE BUSINESS OF THE ASSESSEE. WE NOTE THAT SUFFICIENT D ETAILS WERE DULY FILED BY THE ASSESSEE AT THE TIME OF ASSESSMENT PROCEEDINGS IN S UPPORT OF THE COST INCURRED ON THE DAMAGES AND NO DEFECT OF WHATEVER H AS BEEN POINTED OUT BY THE AO. THE LD. DR HAS ALSO NOT BROUGHT ANYTHING ON RECORD CONTRARY TO THE FINDING OF LD. CIT(A). THUS, WE HOLD THAT THE COST INCURRED FOR THE DAMAGE OF GOODS IS DIRECTLY CONNECTED WITH THE BUSINESS ACTIV ITIES OF THE ASSESSEE AND ACCORDINGLY ELIGIBLE FOR DEDUCTION U/S 37(1) OF THE ACT. THUS, THE GROUND OF APPEAL RAISED BY THE REVENUE IS DISMISSED AND THE G ROUND OF APPEAL RAISED BY THE ASSESSEE IS ALLOWED. 17. THE NEXT ISSUE RAISED BY THE REVENUE IN THIS A PPEAL IS THAT THE LD. CIT(A) ERRED IN RESTRICTING THE DISALLOWANCE OF RS. 1,16,27,000/- TO RS. 22,81,000.00 ON ACCOUNT OF PROVISION OF DOUBTFUL DE BTS WHILE COMPUTING THE INCOME U/S 115JB OF THE ACT. THE ASSESSEE IN THE YEAR UNDER CONSIDERATION HAS CL AIMED THE DEDUCTION OF RS. 1,16,27,000/- WHILE DETERMINING THE BOOK PROFIT U/S 115JB OF THE ACT. THE DEDUCTION WAS CLAIMED BY THE ASSESSEE FOR THE ACTUA L BAD DEBTS WRITTEN OFF THROUGH PROVISION FOR DOUBTFUL BAD DEBTS ACCOUNT UN DER CLAUSE (I) OF EXPLANATION 1 TO SECTION 115JB OF THE ACT. HOWEVER, THE DEDUCTION CLAIMED BY THE ASSESSEE WAS DISALLOWED BY THE AO WHILE DETERMI NING THE PROFIT U/S 115JB OF THE ACT ON THE GROUND THAT NO DETAIL WAS PROVIDE D BY THE ASSESSEE IN SUPPORT OF HIS CLAIM. THUS, THE AO DISALLOWED THE C LAIM OF THE ASSESSEE AND ITA NO.688, 1325,1718, 1895/K/13 & 2553 & 2758/K/13 AYS 08-09 10-11 EPCOS INDIA PVT. LTD. VS. ITO WD-11(1)/DIT, CIR -11 KOL. PAG E 14 ADDED A SUM OF RS. 1,16,27,000/- WHILE DETERMINING THE BOOK PROFIT UNDER THE PROVISIONS OF MAT. 18. AGGRIEVED ASSESSEE PREFERRED AN APPEAL TO THE L D. CIT(A). THE ASSESSEE BEFORE THE LD. CIT(A) SUBMITTED THAT IT HA S CREATED PROVISION IN THE EARLIER YEARS WHICH WAS DULY OFFERED TO TAX UNDER T HE PROVISION OF BAD DEBTS. THE FOLLOWING DETAILS WAS FURNISHED BY THE ASSESSEE TO THE LD. CIT(A).: PROVISION FOR DOUBTFUL DEBT ADDED BACK IN COMPUTATI ON UNDER MAT: ASSESSMENT YEAR AMOUNT(INR) 1997-98 FILE NOT TRACEABLE 1998-99 13,99,000 1999-2000 NIL 2000-2001 FILE NOT TRACEABLE 2001-02 18,18,000 2002-03 96,000 2003-04 NIL 2004-05 NIL 2005-06 NIL 2006-07 NIL 2007-08 19,70,000 2008-09 25,77,000 2009-10 14,86,000 TOTAL 93,46,000 IN VIEW OF THE ABOVE, THE ASSESSEE SUBMITTED THAT T HE AMOUNT OF PROVISION RETURN BACK DURING THE YEAR SHOULD BE ALLOWED AS DE DUCTION AS PER CLAUSE (I) OF EXPLANATION 1 TO SECTION 115JB OF THE ACT. THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE DELETED THE ADDITION IN PART MADE BY THE AO BY OBSERVING AS UNDER:- DECISIONS: I HAVE CAREFULLY CONSIDERED THE SUBMISSION PUT FORT H ON BEHALF OF THE APPELLANT ALONG WITH SUPPORTING DOCUMENTS/DETAILS F URNISHED AND PERUSED THE FACTS OF THE CASE INCLUDING THE CONTENT ION OF THE AO IN THE ASSESSMENT ORDER. IT IS SEEN THAT WHILE CALCULATING THE BOOK PROFIT UNDER THE PROVISIONS OF SECTION115JB OF THE ACT, THE APPE LLANT HAS CLAIMED DEDUCTION OF AN AMOUNT OF INR 1,16,27,000/- UNDER T HE HEAD PROVISION FOR DOUBTFUL DEBTS WRITTEN BACK. THE IN HIS ORDER PASSED UNDER SECTION 143(3) OF THE ACT HAD DISALLOWED THE DEDUCTION CLAI MED ON THE ALLEGED GROUND THAT IT WAS AN ACTUAL BAD DEBT WRITTEN OFF T HROUGH THE PROVISION ACCOUNT AN FURTHER CONTENDED THAT NO DETAILS OF BAD DEBT WRITTEN OFF AND ITA NO.688, 1325,1718, 1895/K/13 & 2553 & 2758/K/13 AYS 08-09 10-11 EPCOS INDIA PVT. LTD. VS. ITO WD-11(1)/DIT, CIR -11 KOL. PAG E 15 ADDED BACK WHILE DETERMINING THE COMPUTATION OF TOT AL INCOME IN ALL THE PAT YEARS WERE MADE AVAILABLE TO HIM DURING THE ASS ESSMENT. IN SUPPORT OF THIS ISSUE OF APPEAL, MY ATTENTION WA S DRAWN TO THE ACCOUNTING TREATMENT FOLLOWED BY THE APPELLANT WHIL E WRITING OFF THE BAD DEBT THROUGH THE PROVISION FOR BAD DEBT ACCOUNT CRE ATED EARLIER. FROM THE SAID TREATMENT, IT IS APPARENT THAT AT THE TIME OF WRITING OFF ACTUAL BAD DEBT THROUGH PROVISION ACCOUNT, THE PROVISION FOR B AD DEBT CREATED EARLIER IS TO BE REVERSED AN CREDITED TO PROFIT AND LOSS ACCOUNT. HOWEVER, DU9E TO CANCELLATION OF CONTRA ENTRIES, THE SAID AM OUNT ARE NOT BEING REFLECTED ON THE FACT OF THE PROFIT AND LOSS ACCOUN T. THUS, WHENEVER THE BAD DEBT I WRITTEN OFF THROUGH THE PROVISION FOR BA D DEBT ACCOUNT AN EQUAL AMOUNT IS CREDITED TO THE PROFIT AND LOSS ACC OUNT ON ACCOUNT OF RELEASE OF PROVISION FOR BAD DEBT. FURTHER, WAS STA TED BEFORE ME THAT THE PROVISION FOR BAD DEBT HAS BEEN ADDED BACK WHILE CO MPUTING THE BOOK PROFIT IN EARLIER YEARS. A LIST OF THE AMOUNTS ADDE D BACK UNDER THE HEAD PROVISION FOR DOUBTFUL DEBT IN ALL THE PAST YEAR WE RE MADE AVAILABLE BEFORE ME. ON ACCOUNT OF PERUSAL OF THE SAME, I FIN D THAT THE APPELLANT IN THE PAST YEARS HAS ADDED BACK AN AMOUNT OF INR 9 3,46,000/- WHILE COMPUTING THE BOOK PROFIT. IN THE INSTANT CASE OF THE APPELLANT, IT IS OBSERVE D THAT THE APPELLANT HAS ADDED BACK AN AMOUNT OF INR 93,46,000/- IN THE PAST YEARS UNDER THE HEAD PROVISION FOR BAD DEBT BUT THE APPELLANT HAS C REDITED THE AMOUNT OF PROVISION FOR BAD DEBT WRITTEN BACK AMOUNTING TO IN R 1,16,27,000/- IN THE YEAR UNDER CONSIDERATION THE PROFIT AND LOSS AC COUNT. HENCE, I RESTRICT THE CLAIM OF THE APP UNDER THE PROVISION O F CLAUSE (I) OF THE EXPLANATION 1 APPENDED BELOW SECTION 115JB OF THE A CT TO INR 93,46,000/- AS AGAINST THE TOTAL CLAIM OF INR 1,16, 27,000/- I.E. ACTUAL AMOUNT OF ADDITIONS MADE BY THE APPELLANT IN PAST Y EARS. IN THE LIGHT OF THE ABOVE DISCUSSION & FINDINGS AND TAKING INTO ACCOUNT THE FACTUAL AND LEGAL POSITION, I DIRECT THE AO TO ALLOW THE APPELLANT AN AMOUNT OF IINR 93,46,000/- WHILE COMPUTING THE BOOK PROFIT UNDER THE PROVISIONS OF SECTION115EJB OF THE ACT. THUS, THIS GROUND OF APPEAL IS PARTLY ALLOWED. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A) THE REVENUE IS IN APPEAL BEFORE US. 19. THE LD. DR BEFORE US SUBMITTED THAT NO DETAILS WHATSOEVER WERE FURNISHED BY THE ASSESSEE DURING THE ASSESSMENT PRO CEEDINGS. THE DETAILS FILED BY THE ASSESSEE BEFORE THE LD. CIT(A) WERE AD MITTED IN CONTRAVENTION TO THE PROVISION OF RULE 46A OF THE INCOME TAX RULES. THUS, THE LD. DR PRAYED ITA NO.688, 1325,1718, 1895/K/13 & 2553 & 2758/K/13 AYS 08-09 10-11 EPCOS INDIA PVT. LTD. VS. ITO WD-11(1)/DIT, CIR -11 KOL. PAG E 16 BEFORE THE BENCH TO RESTORE THE IMPUGNED ISSUE TO T HE FILE OF AO FOR FRESH ADJUDICATION IN ACCORDANCE WITH LAW. ON THE OTHER HAND, THE LD. AR RAISED NO OBJECTION I F THE MATTER IS REMANDED BACK TO THE FILE OF AO FOR FRESH ADJUDICATION. 20. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSE D THE MATERIAL AVAILABLE ON RECORD. IN THE INSTANT CASE, WE NOTE THAT THE LD . CIT(A) HAS ADMITTED THE FRESH EVIDENCES IN CONTRAVENTION TO THE PROVISION O F RULE 46A OF INCOME TAX RULES. WE NOTE THAT THE NECESSARY DETAILS OF THE PR OVISION CREATED BY THE ASSESSEE IN EARLIER YEARS WERE NOT SUPPLIED BY THE ASSESSEE TO THE AO AT THE TIME OF ASSESSMENT PROCEEDINGS. IN VIEW OF THE ABOV E, WE ARE OF THE VIEW THAT THE ISSUE OF PROVISIONS FOR DOUBTFUL DEBTS WRITTEN BACK BY THE ASSESSEE FOR RS.1,16,27,000/- NEEDS TO BE EXAMINED BY THE AO. IN RESPECT OF ISSUE IT WAS AGREED BY BOTH THE PARTIES THAT THE ISSUE MUST BE R ESTORED BACK TO THE FILE OF AO FOR FRESH EXAMINATION. ACCORDINGLY, WE REMIT BAC K THE ISSUE TO THE FILE OF AO TO EXAMINE AFRESH AND TO DECIDE THE ISSUE IN ACC ORDANCE WITH LAW. AO MUST GIVE REASONABLE OPPORTUNITY TO THE ASSESSEE BE FORE PASSING ORDER ON THIS POINT. CONSEQUENTLY, THE GROUND OF APPEAL RAISED BY THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. 21. IN THE RESULT, REVENUES APPEAL IS PARTLY ALLOW ED FOR STATISTICAL PURPOSE AND ASSESSEES APPEAL ITA NO.2553KOL/2013 IS ALLOWE D. COMING TO REVENUES APPEAL IN ITA NO.1895/KOL/2014 FOR A.Y. 10-11 . 22. GROUND NO. 1 AND 2 ARE INTER-RELATED AND THEREF ORE BEING TAKEN UP TOGETHER. IT IS RELEVANT TO OBSERVE HERE THAT THE F ACTS IN GROUND NO. 1 & 2 OF THIS APPEAL ARE SIMILAR TO THE FACTS IN ITA NO.2758 /KOL/2013 AND THE FINDINGS GIVEN IN ITA NO.2758/KOL/2013 SHALL APPLY TO THIS C ASE ALSO WITH EQUAL FORCE. CONSEQUENTLY, REVENUES GROUNDS IS DISMISSED. ITA NO.688, 1325,1718, 1895/K/13 & 2553 & 2758/K/13 AYS 08-09 10-11 EPCOS INDIA PVT. LTD. VS. ITO WD-11(1)/DIT, CIR -11 KOL. PAG E 17 23. NEXT GROUND NO. 3 IN THIS APPEAL OF REVENUE IS THAT LD. CIT(A) ERRED IN RESTRICTING THE DISALLOWANCES ON EXPENSES OF DAMAGE GOODS TO 10% I.E. RS.28,12,555/- INSTEAD OF R.2,81,25,553/-. 24. SAME GROUND OF THE APPEAL OF REVENUE HAS ALREAD Y DEALT IN THE RESPECTIVE ISSUES BY US IN OR ABOVE STATED ORDER IN ITA NO. 2758/KOL/2013 IN PARA 15 & 16 OF THIS ORDER AND NO NEED FOR SEPARATE ADJUDICATION. HENCE, THIS GROUND OF REVENUES APPEAL IS DISMISSED. 25. NEXT ISSUE RAISED BY REVENUE IN GROUND NO.4 IS THAT LD. CIT(A) ERRED IN RESTRICTING THE PROVISION OF DOUBTFUL DEBTS FOR COM PUTING INCOME U/S. 115JBB OF THE ACT TO RS.70,39,025/-. 26. WE HAVE ALREADY DEALT THIS ISSUE ELABORATELY IN REVENUES APPEAL IN ITA NO.2758/KOL/2013 WHILE ADJUDICATING THE GROUND OF A PPEAL OF REVENUE IN ITA NO.2758/KOL/2013 AND SINCE WE HAVE ALLOWED THIS GRO UND FOR STATISTICAL PURPOSE HENCE, THIS GROUND OF REVENUE, FOLLOWING TH E SAME ANALOGY. CONSEQUENTLY, REVENUES APPEAL IS ALLOWED FOR STATI STICAL PURPOSE. 27. IN THE RESULT, REVENUES APPEAL IS PARTLY ALLOW ED FOR STATISTICAL PURPOSE. COMING TO ASSESSEES APPEAL IN ITA NO.688 & 1718/KO L/2014/2014 FOR A.YS 08-09 & 10.11 . 28. SOLITARY ISSUE RAISED BY ASSESSEE IN BOTH THE A PPEAL AND WE HAVE ALREADY DEALT THIS ISSUE ELABORATELY WHILE ADJUDICA TING THE GROUND OF ASSESSEES APPEAL IN ITA NO.2253/KOL/2013 IN PARA 1 5 & 16 OF THIS ORDER. SINCE WE HAVE ALLOWED THIS GROUND OF APPEAL OF ASSE SSEE AND FOLLOWING THE SAME ANALOGY WE ALSO ALLOW THIS GROUND OF ASSESSEE S APPEAL. 29. IN THE RESULT, BOTH APPEAL OF ASSESSEE IS ALLOW ED. COMING TO REVENUES APPEAL IN ITA NO.1325/KOL/2014 FOR A.Y. 08-09 . 30. SOLITARY ISSUE RAISED BY REVENUE IN THIS APPEAL IS THAT LD. CIT(A) ERRED IN RESTRICTING THE DISALLOWANCE OF R.1,06,86,737/- ON ACCOUNT OF EXPENSES ON DAMAGE GOODS. 31. IT IS RELEVANT TO OBSERVE HERE THAT THE FACTS I N GROUND NO. 1 OF THIS APPEAL ARE SIMILAR TO THE FACTS IN GROUND NO.3 IN I TA NO.2758/KOL/2013 FOR A.Y. ITA NO.688, 1325,1718, 1895/K/13 & 2553 & 2758/K/13 AYS 08-09 10-11 EPCOS INDIA PVT. LTD. VS. ITO WD-11(1)/DIT, CIR -11 KOL. PAG E 18 2009-10 AND THE FINDINGS GIVEN IN ITA NO.2758/KOL/2013 SHALL APPLY TO THIS CASE ALSO WITH EQUAL FORCE. HENCE, THIS GROUND OF R EVENUES APPEAL IS DISMISSED. 32. IN THE RESULT, REVENUES APPEAL IS DISMISSED. 33. TO SUMMARIZE:- ITA NO. A.Y. APPEAL BY RESULT 2758/K/13 09-10 REVENUE PARTLY ALLOWED FOR STATIS TICAL PURPOSE 2553/K/13 09-10 ASSESSEE ALLOWED 1895/K/14 10-11 REVENUE PARTLY ALLOWED FOR STATIST ICAL PURPOSE 1718/K/14 10-11 ASSESSEE ALLOWED 688/K/14 08-09 ASSESSEE ALLOWED 1325/K/14 08-09 REVENUE DISMISSED ORDER PRONOUNCED IN THE OPEN COURT 02/02/2018 SD/- SD/- (' ) ( ) (N.V.VASUDEVAN) (WASEEM AHMED) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) KOLKATA, *DKP, SR.P.S )- 02 / 02 /201 8 / COPY OF ORDER FORWARDED TO:- 1. /ASSESSEE-M/S EPCOS INDIA PVT. LTD., KULIA KANCHRAP ARA ROAD,KALYANI-741251 2. /REVENUE-ITO WARD-11(1)/DCIT, CIRCLE-11, P-7, CHOWR INGHEE SQUARE, KOLKAT-69 3. 4 5 / CONCERNED CIT KOLKATA 4. 5- / CIT (A) KOLKATA 5. 8 ''4, 4, / DR, ITAT, KOLKATA 6. = / GUARD FILE. BY ORDER/ , /TRUE COPY/ SR. PRIVATE SECRETARY, HEAD OF OFFICE/DDO 4,
