Dy.Commissioner of Income Tax, Circle-4(1)(1), Ahmedabad V. M/s. Spx Flow Technology (India) Pvt.Ltd., Ahmedabad

ITA 3085/AHD/2014

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 8324 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 3 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-03-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 26-09-2019
• Assessment Year: 2010-2011
• Appeal Filed On: 21-11-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: T P HEMANI DATES OF HEARING
• Keywords: Depreciation; Transfer pricing; International transaction; TDS; Set aside
• Section: 43B; 195; 13; 22; 32

Judgement Text

M/S SPX FLOW TECHNOLOGY (INDIA) PVT. LTD. ITA NO. 3085/AHD/2014 PAGE 1 OF 9 IN THE INCOME TAX APPELLATE TRIBUNAL, AHMEDABAD D BENCH, AHMEDABAD [ CORAM : HON BLE JUSTICE P . P BHAT T , PRESIDENT AND PRAMOD KUMAR, VP ] ITA NO . 3085 / AHD / 2014 ASSESSMENT YEAR : 2010 - 11 DEPUTY COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 4 ( 1 )( 1 ) ............. APPELLANT AHMEDABAD VS SPX FLOW TECHNOLOGY ( INDIA ) PVT . LTD . ..... ....... RESPONDENT SURVEY NO . 275, OPP . MURLIDHAR SOCIETY AHMEDABAD 382415 ( PAN NO . AAACS7294B ) APPEARANCES BY VINOD TANWANI FOR THE APPELLANT T . P HEMANI FOR THE RESPONDENT DATES OF HEARING OF THE APPEAL : DECEMBER 20 TH , 2019 DATE OF PRONOUNCING THIS ORDER : MARCH 12 TH , 2020 O R D E R PER BENCH : 1 . THIS IS AN APPEAL , FILED BY THE ASSESSING OFFICER, DIRECTED AGAINST THE ORDER DATED 6 TH AUGUST 2014 PASSED BY THE CIT ( A ) IN THE MATTER OF ASSESSMENT UNDER SECTION 143 ( 3 ) THE INCOME TAX ACT 1961, FOR THE ASSESSMENT YEAR 2010 - 11 . 2 . IN THE FIRST GROUND OF APPEAL, THE APPELLA NT HAS RAISED THE FOLLOWING GRIEVANCE : - M/S SPX FLOW TECHNOLOGY (INDIA) PVT. LTD. ITA NO. 3085/AHD/2014 PAGE 2 OF 9 WHETHER THE LD . COMMISSIONER OF INCOME TAX ( APPEALS )- XIV, AHMEDABAD IS RIGHT IN LAW AND FACTS IN DELETING THE DISALLOWANCE OF DEPRECIATION IN RESPECT OF COMPUTER SOFTWARE . 3 . LEARNED REPRESENTATIVES FAIRLY AGREE THAT THE ISSUE IS NOW COVERED, IN FAVOUR OF THE ASSESSEE, BY COORDINATE BENCH DECISION DATED 12 . 12 . 2018 IN ASSESSEE S OWN CASE FOR THE IMMEDIATELY PRECEDING ASSESSMENT YEAR I . E . AY 2009 - 10, WHEREIN THE COORDINATE BENCH HAS INTER ALIA OBSERVED AS FOLLOWS :- 4 . IN THE ASSESSMENT, THE ASSESSING OFFICER NOTICED THAT ASSESSEE HAS SHOWN COMPUTER SOFTWARE UNDER THE HEAD INTANGIBLE ASSET ON WHICH IT HAS CLAIMED DEPRECIATION @ 60 %. ON QUARRY THE ASSESSEE EXPLAINED THAT ITEM NO . III ( 5 ) OF PART A OF THE NEW APPENDIX - 1 TO INCOME TAX RULE 1962 ENTITLES AN ASSESSEE FOR ALLOWANCE OF DEPRECIATION @ 60 % ON COMPUTER @ 60 % ON COMPUTER INCLUDING COMPUTERS SOFTWARE . THE ASSESSING OFFICER HAS NOT ACCEPTED THE EXPLANATION OF THE ASSESSEE STATING THAT ONCE THE ASSESSEE HAS TREATED SUCH APPLICATION SOFTWARE, BEING LICENSE AS INTANGIBLE ASSETS IN ITS BOOKS THEN THE ASSESSE CANNOT BE PERMITTED TO TREAT THE SAME DIFFERENTLY FOR INCOME TAX PURPOSES . THEREFORE, THE ASSESSING OFFICER HAS HELD THAT THE APPLICATION SOFTWARE BEING LICENSE AR E INTANGIBLE ASSET AND THEY ARE ELIGIBLE FOR DEPRECIATION U / S . 32 OF THE ACT @ 25 %. CONSEQUENTLY, THE ASSESSING OFFICER HAS DISALLOWED THE EXCESS CLAIM OF DEPRECIATION OF RS . 2,24,464 /- ADDED TO THE TOTAL INCOME OF THE ASSESSEE OF THE ASSESSEE . THE ASSESSE E HAS PREFERRED APPEAL BEFORE THE LD . CIT ( A ). THE LD . CIT ( A ) HAS ALLOWED THE APPEAL OF THE ASSESSEE 5 . WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD . IT IS NOTICED THAT AS PER RULE 5 OF INCOME TAX RULES 1962 DEPRECIATION ALLOWANCE U / S . 32 OF THE INCOME TAX ACT SHALL BE CALCULATED AT THE PERCENTAGE SPECIFIED IN THE SECOND COLUMN OF THE TABLE IN APPENDIX 1 EFFECTIVE FROM ASSESSMENT YEAR 2006 - 07 ON WARDS DEPRECIATION IS TO BE CALCULATED @ PRESCRIBED IN NEW APPENDIX - 1 ENTRY AT SERIAL NO . 5 OF PART - III ( WHICH DEALS WITH RATE DEPRECIATION ON MACHINERY AND PLANT ) OF THE SAID TABLE REFERRED TO COMPUTER, INCLUDING COMPUTER SOFTWARE AND THE RATE OF DEPRECIATION PRESCRIBED IN THE SAID TABLE AGAINST THIS ENTRY IS 60 % . AS PER NOTE 7 BELOW THE SAID TABLE COMPUTER SOFTWARE MEANS ANY COMPUTER PROGRAM RECORDED IN ANY DISC, TAPE, PERFORATED MEDIA OTHER INFORMATION STORAGE DEVICE . IN THE LIGHT OF THE ABOVE PROVISION OF INCOME TAX, WE OBSERVED THAT INCOME TAX ACT DOES NOT MAKE ANY DIFFERENCE BETWEEN TH E SYSTEM SOFTWARE AND APPLICATION SOFTWARE, THEREFORE, WE JUSTIFY THE DECISION OF LD . CIT ( A ) IN ALLOWING THE CLAIM OF THE ASSESSEE OF DEPRECIATION @ 60 % ON THE COMPUTER SOFTWARE . ACCORDINGLY THIS GROUND OF REVENUE IS DISMISSED . M/S SPX FLOW TECHNOLOGY (INDIA) PVT. LTD. ITA NO. 3085/AHD/2014 PAGE 3 OF 9 4 . WE SEE NO REASONS TO TAKE ANY OTHER VIEW OF THE MATTER THAN THE VIEW SO TAKEN BY THE COORDINATE BENCH . RESPECTFULLY FOLLOWING THE SAME, WE APPROVE THE CONCLUSION ARRIVED AT BY THE LEARNED CIT ( A ) AND DECLINE TO INTERFERE IN THE MATTER . 5 . GROUND NO 1 IS THUS DISMISSED . 6 . IN TH E SECOND GROUND OF APPEAL, THE APPELLANT HAS RAISED THE FOLLOWING GRIEVANCE : - WHETHER THE LD . CIT ( APPEALS )- XIV AHMEDABAD IS RIGHT IN LAW AND ON FACTS IN DELETING THE ADDITION U / S . 145A OF THE ACT OF RS . 44,54,433 /- 7 . LEARNED REPRESENTATIVES FAIRLY AGREE THAT THE ISSUE IS NOW COVERED, IN FAVOUR OF THE ASSESSEE, BY COORDINATE BENCH DECISION DATED 12 . 12 . 2018 IN ASSESSEE S OWN CASE FOR THE IMMEDIATELY PRECEDING ASSESSMENT YEAR I . E . AY 2009 - 10, WHEREIN THE COORDINATE BENCH HAS INTER ALIA OBSERVED AS FOLLOWS :- 6 . DURING THE COURSE OF ASSESSMENT, THE ASSESSING OFFICER NOTICED THAT ASSESSEE HAS SHOWN AMOUNT RECEIVABLE ON ACCOUNT OF UN - UTILIZED / CLOSING BALANCE ON ACCOUNT OF MODVAT / CENVAT CREDIT UNDER LOAN AND ADVANCES AND THE SAME WAS NOT INCLUDED IN THE VALUE OF CLOSING STOCK . THE ASSESSING OFFICER WAS OF THE VIEW THAT IT IS REQUIRED AS PER PROVISIONS OF SECTION 145A OF THE ACT THAT TAXES / DUTY / CESS / FEES RELATED TO STOCK NEED TO BE INCLUDED IN THE VALUE OF CLOSING STOCK, THEREFORE, ASSESSEE WAS ISSUED SHOW CAUSED TO EXPLAIN WHY THE CLOSING BALANCE / UNUTILIZED MODVAT / CENVAT SHOULD NOT BE ADDED TO THE CLOSING STOCK AS PER THE PROVISIONS OF SECTION 145A OF THE ACT . THE ASSESSEE EXPLAINED THAT THE ASSESSEE COMPANY HAS BEEN CONSISTENTLY FOLLOWING THE EXCLUSIVELY METHOD O F ACCOUNTING IN RESPECT OF MODVAT ( EXCISE DUTY PAID ON PURCHASE OF RAW MATERIALS ) AND THEREFORE CENVAT CREDIT ON INPUT IS DEBITED TO A SEPARATE ACCOUNT I . E . MODVAT CREDIT RECEIVABLE WHICH IS UTILIZED FOR THE PAYMENT OF EXCISE DUTY ON FINISHED PRODUCT . THER EFORE, THERE WAS NO QUESTION OF TREATING UNUTILIZED MODVAT CREDIT AS INCOME IN THE YEAR . THE ASSESSEE HAS ALSO STATED THAT ABOVE METHOD WAS TAX NEUTRAL . THE ASSESSING OFFICER HAS NOT ACCEPTED THE EXPLANATION OF THE ASSESSEE AND HELD THAT IN VIEW OF THE EXP RESS PROVISION OF SECTION 145A OF THE ACT THE UN - UTILIZED BALANCES OF TAXES NEED TO BE INCLUDED IN THE VALUE OF CLOSING STOCK , THEREFORE, THE ASSESSING OFFICER HAS INCLUDED THE SAME OF RS . 55,28,044 /- IN THE VALUE OF CLOSING STOCK . AGGRIEVED ASSESSEE HAS FILED APPEAL BEFORE THE LD . CIT ( A ) HAS DELETED THE ADDITION MADE BY THE ASSESSEE . 7 . WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD CAREFULLY . IN THIS CONNECTION, WE HAVE NOTICED THAT ASSESSEE WAS FOLLOWING SIMILAR METHOD IN THE P RECEDING YEARS AND THERE WERE NOTES IN THE AUDIT REPORT THAT IF THE ADJUSTMENT ON ACCOUNT OF SECTION 145A WAS MADE, THERE WOULD BE NO EFFECT ON THE INCOME . IT IS NOTICED THAT THE ASSESSEE IS FOLLOWING EXCLUSIVE METHOD OF ACCOUNTING FOR LAST MANY YEARS AND M/S SPX FLOW TECHNOLOGY (INDIA) PVT. LTD. ITA NO. 3085/AHD/2014 PAGE 4 OF 9 ALL PURCHASES AND SALES OF GOODS ARE ACCOUNTED NET OF MODVAT INCLUDING INVENTORY I . E . OPENING STOCK AND CLOSING STOCK . ON THIS ISSUE THE HON'BLE ITAT BENCH OF AHMEDABAD IN THE CASE OF ALPANIL INDUSTRIES V . ACIT IN ITA NO . 169 / AHD / 2005 AND 170 / AHD / 2005 FOR A . Y . 1999 - 2000 & 2000 - 2001 HAS DISCUSSED THE PRINCIPLE RELATED TO VALUATION OF CLOSING STOCK U / S . 145A OF THE ACT . THE RELEVANT PORTION IS REPRODUCED AS UNDER :- ' SECTION 145A REQUIRES REVALUATION OF NOT INVENTORY ALONE BUT ALSO REQUIRES REVALUATION OF PUR CHASE AND SALES . ON REVALUATION OF PURCHASE BY INCLUDING THE AMOUNT OF EXCISE DUTY IN RESPECT OF WHICH MODVAT CREDIT IS AVAILABLE TO THE ASSESSEE, THE PURCHASE OF THE ASSESSEE WILL INCREASE RESULTING IN CORRESPONDING DECREASE IN THE PROFIT OF THE ASSESSEE . THE ASSESSEE 'S CONTENTION THAT VALUE OF CLOSING STOCK IS CREDITED IN THE PROFIT AND LOSS ACCOUNT TO SET OFF THE VALUE OF UNCONSUMED ITEMS OF PURCHASE AND THEREFORE, BOTH SHOULD HAVE SAME BASIS CANNOT BE CONTROVERTED . THE ONLY EXCEPTION TO THIS THEORY IS THAT WHEN THE MODVAT VALUE IS LESS THAN THE COST THEN EFFECTIVELY UNREALIZED LOSS IS ALLOWED AS A DEDUCTION TO THE ASSESSEE ON THE WELL SETTLED PRINCIPLES . IN THE INSTANT CASE, THE LOWER AUTHORITIES WERE OT JUSTIFIED IN REVALUING ONLY CLOSING STOCK SO AS T O INCLUDE THE AMOUNT OF EXCISE DUTY PAID ON PURCHASE WITHOUT REVALUING THE CORRESPONDING PURCHASES . WE HAVE GONE THROUGH THE GUIDELINES EXPLAINED BY THE ICAI AND FIND OURSELVES IN AGREEMENT THEREWITH THAT THERE WILL NOT BE ANY EFFECT ON THE PROFIT OF LOSS ARRIVED AT EITHER BY FOLLOWING INCLUSIVE METHOD OF ACCOUNTING OR EXCLUSIVE METHOD OF ACCOUNTING FOR EXCISE DUTY . THE ONLY EFFECT WILL BE THAT - THE EXCISE DUTY PAYABLE ON CLOSING STOCK OF FINISHED GOODS WILL BE TO THE EXTENT NOT DEPOSITED WITH THE GOVERNMEN T BEFORE THE DUE DATE OF FURNISHING OF RETURN WILL BE ADDED TO THE INCOME OF THE ASSESSEE IN VIEW OF PROVISION OF SECTION 43B OF THE ACT . IN VIEW OF THE DISCUSSION MADE HEREINABOVE, IN OUR CONSIDERED OPINION, THERE WILL BE NO EFFECT IN THE TAXABLE PROFIT O F THE ASSESSEE BY INCLUDING THE AMOUNT OF EXCISE DUTY PAID ON PURCHASE IN THE VALUE OF CLOSING STOCK OF RAW MATERIAL, WHETHER AS RAW MATERIAL OR AS FORMING PART OF WORK - IN PROGRESS OR FINISHED GOODS . WE THEREFORE, SET ASIDE THE ORDERS OF THE LOWER AUTHORIT IES ON THIS ISSUE IN BOTH THE YEAR UNDER APPEAL AND ALLOW THE GROUNDS OF APPEAL OF THE ASSESSEE .' 8 . WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD CAREFULLY . AFTER CONSIDERING THE FINDING OF THE LD . CIT ( A ) ALONG WITH JUDICIAL FINDING, WE CONSIDER THAT THERE WILL BE NO EFFECT IN THE TAXABLE PROFIT OF THE ASSESSEE BY INCLUDING THE AMOUNT OF EXCISE DUTY PAID ON PURCHASE IN THE VALUATION OF CLOSING STOCK OF RAW MATERIAL SINCE THE ASSESSEE WAS FOLLOWING EXCUSIVE METHOD OF ACCOUNTING AS ELAB ORATED IN THE FINDINGS OF THE LD . CIT ( A ) , THEREFORE, WE DO NOT FIND ANY REASON TO INTERFERE IN THE DECISION OF LD . CIT ( A ). ACCORDINGLY THE APPEAL OF THE REVENUE IS DISMISSED . M/S SPX FLOW TECHNOLOGY (INDIA) PVT. LTD. ITA NO. 3085/AHD/2014 PAGE 5 OF 9 8 . WE SEE NO REASONS TO TAKE ANY OTHER VIEW OF THE MATTER THAN THE VIEW SO TAKEN BY THE COORDINATE BENCH . RESPECTFULLY FOLLOWING THE SAME, WE APPROVE THE CONCLUSION ARRIVED AT BY THE LEARNED CIT ( A ) AND DECLINE TO INTERFERE IN THE MATTER . 9 . GROUND NO 2 IS THUS DISMISSED . 10 . IN THE THIRD GROUND OF APPEAL, THE APPELLANT HAS RAISED THE FOLLOWING GRIEVANCE : - WHETHER THE LD . CIT ( APPEALS )- XIV AHMEDABAD IS RIGHT IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS . 59,06,000 /- ON ACCOUNT UNDER VALUATION OF STOCK . 11 . LEARNED REPRESENTATIVES FAIRLY AGREE THAT THE ISSUE IS NOW COVERED, IN FAVOUR OF THE ASSESSEE, BY COORDINATE BENCH DECISION DATED 12 . 12 . 2018 IN ASSESSEE S OWN CASE FOR THE IMMEDIATELY PRECEDING ASSESSMENT YEAR I . E . AY 2009 - 10, WHEREIN THE COORDINATE BENCH HAS INTER ALIA OBSERVED AS FOLLOWS :- 9 . DURING ASSESSMENT, THE ASSESSING OFFICER HAS ASKED THE ASSESSEE TO FURNISH THE COPY OF STATEMENT OF STOCK STATEMENT SUBMITTED TO THE BANK . FROM THE PERUSAL OF THE STOCK STATEMENT SUBMITTED BY THE ASSESSEE, THE ASSESSING OFFICER HAS OBSERVED THAT VALUE OF STOCK REFLECTED IN STOCK STATEMENT SUBMITTED TO THE BANK DID NOT MATCH WITH THE VALUE OF STOCK REFLECTED IN THE BALANCE SHEET OF THE ASSESSEE COMPANY . ON FURTHER VERIFICATION, THE ASSESSING OFFICER NOTICED THAT ASSESSEE HAS SHOWN THE VALUE OF STOCK IN BANK STATEMENT SUBMITTED FOR THE MONTH OF MARCH, 2009 TO THE BANK AT RS . 9,63,99,250 /- WHEREAS IN THE BOOKS OF THE ASSESSEE THE TOTAL VALUE OF STOCK AS ON 31ST MARCH, 2009 WAS SHOWN AT RS . 9,22,57,381 /-. CONSEQUENTLY THE DIFFERENCE IN STOCK TO THE AMOUNT OF RS 41,41,869 /- WAS TREATED BY THE ASSESSING OFFICER AS UNDERVALUATION OF STOCK BY THE ASSESSEE AND THE SAME WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE . ASSESSE FILED APPEAL BEFORE THE LD . CIT ( A ). THE LD . CIT ( A ) HAS DELETED THE APPEAL . 10 . WE HAVE HEARD RIVAL CONTENTION AND PERU SED THE MATERIAL ON RECORD . IT IS NOTICED THAT THE ASSESSEE HAS FILED STOCK STATEMENT TO THE BANK REFLECTING THE POSITION OF CLOSING STOCK AS ON 24TH MARCH, 2009 . HOWEVER, IN THE BALANCE SHEET OF THE ASSESSEE, THE POSITION OF STOCK WAS SHOWN AS ON 31ST MAR CH, 2009 . THE ASSESSING OFFICER HAS NOT DISPROVED THESE MATERIAL FACTS THAT THE DIFFERENCE IN THE VALUATION OF CLOSING STOCK WAS ARISEN BECAUSE OF DIFFERENCE IN THE DATES AS PER WHICH CLOSING STOCK WAS REFLECTED IN THE BANK STATEMENT AND IN THE BOOKS OF AC COUNT OF THE ASSESSEE . RELIANCE IS ALSO PLACED ON THE JUDICIAL PRONOUNCEMENT OF THE HON BLE HIGH COURT IN THE CASE OF RIDDHI STEEL AND TUBES LTD . ( TAX APPEAL NO . 846 OF 2013 ). CONSIDERING THESE FACTS, WE DO NOT FIND ANY ERROR IN THE DECISION OF LD . CIT ( A ). IN THE RESULT, THIS GROUND OF APPEAL OF THE REVENUE IS DISMISSED . M/S SPX FLOW TECHNOLOGY (INDIA) PVT. LTD. ITA NO. 3085/AHD/2014 PAGE 6 OF 9 12 . WE SEE NO REASONS TO TAKE ANY OTHER VIEW OF THE MATTER THAN THE VIEW SO TAKEN BY THE COORDINATE BENCH . RESPECTFULLY FOLLOWING THE SAME, WE APPROVE THE CONCLUSION ARRIVED AT BY THE LEARNED CIT ( A ) AND DECLINE TO INTERFERE IN THE MATTER . 13 . GROUND NO 3 IS THUS DISMISSED . 14 . IN THE FOURTH GROUND OF APPEAL, THE APPELLANT HA S RAISED THE FOLLOWING GRIEVANCE : - WHETHER THE LD . CIT ( APPEALS )- XIV AHMEDABAD IS RIGHT IN LAW AND ON FACTS IN DELET ING THE DISALLOWANCE OF FOREIGN TRAVEL EXPENSES TO RS . 10,16,468 /-. 1 5 . LEARNED REPRESENTATIVES FAIRLY AGREE THAT THE ISSUE IS NOW COVERED, IN FAVOUR OF THE ASSESSEE, BY COORDINATE BENCH DECISION DATED 12 . 12 . 2018 IN ASSESSEE S OWN CASE FOR THE IMMEDIATELY PRECEDING ASSESSMENT YEAR I . E . AY 2009 - 10, WHEREIN THE COORDINATE BENCH HAS INTER ALIA OBSERVED AS FOLLOWS :- 11 . DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT ASSESSEE HAS INCURRED ON FOREIGN TRAVEL FOR RS . 14, 36,110 /- . ON QUARRY THE ASSESSEE HAS SUBMITTED DETAILS AND STATED THAT FOREIGN TRAVEL EXPENSES WERE INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS OF THE COMPANY AS THE EMPLOYEES OF THE COMPANY SUCH AS ACCOUNTANT / DY . MANAGERS, DEVELOPMENT MAN AGERS, SENIOR MARKETING MANAGER, ETC . HAD VISITED SINGAPORE, CHINA, NEITHERLAND, ITALY AND BELGIUM ON VARIOUS DATES FOR BUSINESS PROMOTION ETC .. THE ASSESSING OFFICER HAS NOT ACCEPTED THE EXPLANATION OF THE ASSESSEE STATING THAT THE ASSESSEE HAS ONLY SUBMI TTED THE GENERAL EXPLANATION AND ASSESSEE HAS NOT SUBMITTED THE DETAIL OF PARTIES TO WHOM THEY MET ABROAD FOR BUSINESS PURPOSES PROMOTION / MARKETING . THEREFORE, THE CLAIM OF FOREIGN TRAVELLING EXPENSES OF RS . 14,36,110 /- WAS DISALLOWED AND ADDED TO THE TOTA L INCOME OF THE ASSESSEE . AGGRIEVED ASSESSEE HAS FILED APPEAL BEFORE THE LD . CIT ( A ). THE LD . CIT ( A ) HAS PARTLY ALLOWED THE APPEAL OF THE ASSESSEE BY RESTRICTING THE DISALLOWANCE TO RS . 2,38,363 /. 12 . WE HAVE HEARD THE RIVAL CONTENTION AND PERUSED THE MATERIAL ON RECORD CAREFULLY . THE ASSESSEE HAS SUBMITTED THE DETAILS OF EMPLOYEES WHO HAD TRAVELLED ABROAD, DURATION OF VISIT, COUNTRIES VISITED, NATURE AND AMOUNT OF EXPENSES AND PURPOSE OF TRAVEL . THE ASSESSEE HAS ALSO SUBMITTED THAT ANNUAL TURNOVER OF T HE ASSESSEE WAS MORE THAN RS . 43,85,60,522 /- , THEREFORE, THE FOREIGN TRAVEL EXPENDITURE OF RS . 14,36,110 /- WAS TOTALLY RELEVANT AND SUPPORTED BY THE DOCUMENTARY EVIDENCES . IT IS OBSERVED THAT COMPLETE DETAILS OF EMPLOYEES WHO TRAVELED ABROAD, COUNTRIES VIS ITED, NATURE AND AMOUNT OF EXPENSES AND PURPOSE OF TRAVEL BUT PROVIDED TO THE ASSESSING OFFICER THEREFORE THE ASSESSING OFFICER WAS NOT JUSTIFIED IN DISALLOWING THE EXPENSES MERELY ON THE SUSPICION WITHOUT CONSIDERING THE EVIDENCES PLACED ON RECORD AND WIT HOUT DISPROVING THE DETAILS AND EVIDENCES SUBMITTED BY THE ASSESSEE . IN THE LIGHT OF THE ABOVE FACTS AND M/S SPX FLOW TECHNOLOGY (INDIA) PVT. LTD. ITA NO. 3085/AHD/2014 PAGE 7 OF 9 CIRCUMSTANCES, WE ARE INCLINED WITH THE FINDING OF LEARNED CIT APPEAL . THEREFORE, WE DO NOT FIND ANY MERIT IN THE APPEAL OF THE REVENUE AND THE SAME IS DISMISSED . 16 . WE SEE NO REASONS TO TAKE ANY OTHER VIEW OF THE MATTER THAN THE VIEW SO TAKEN BY THE COORDINATE BENCH . RESPECTFULLY FOLLOWING THE SAME, WE APPROVE THE CONCLUSION ARRIVED AT BY THE LEARNED CIT ( A ) AND DECLINE TO INTERFERE IN THE MATTER . 17 . G ROUND NO 4 IS THUS DISMISSED . 18 . IN THE FIFTH GROUND OF APPEAL, THE APPELLANT HAS RAISED THE FOLLOWING GRIEVANCE : - WHETHER THE LD . CIT ( APPEALS )- XIV AHMEDABAD IS RIGHT IN LAW AND ON FACTS IN DELET ING THE ADDITION OF COMMISSION EXPENSES OF RS . 4,09,468 /-. 19 . LEARNED REPRESENTATIVES FAIRLY AGREE THAT THE ISSUE IS NOW COVERED, IN FAVOUR OF THE ASSESSEE, BY COORDINATE BENCH DECISION DATED 12 . 12 . 2018 IN ASSESSEE S OWN CASE FOR THE IMMEDIATELY PRECEDING ASSESSMENT YEAR I . E . AY 2009 - 10, WHEREIN THE COORDINATE BENCH HAS INTER ALIA OBSERVED AS FOLLOWS :- 13 . DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT ASSESSEE HAS CLAIMED EXPENSES ON ACCOUNT OF COMMISSION PAID TO OTHER AT RS . 7,65,007 /- APART FROM COMMISSION PAID TO SELLING AGENT M / S . ATE ENTERPRISES LTD . AT RS . 2,22,16,970 /-. HOWEVER, IN CASE OF COMMISSION PAID TO OTHERS, THE ASSESSEE HAS NEITHER SUBMITTED COPY OF AGREEMENT NOR SUBMITTED ANY PROOF OF SERVICES AS CITED BY THE ASSESSING OFFICER, THEREFORE, THE ASSESSIN G OFFICER HAS DISALLOWED THE ASSESSEE S CLAIM OF PAYMENT OF COMMISSION TO OTHER AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE . AGGRIEVED ASSESSEE HAS FILED APPEAL BEFORE THE LD . CIT ( A ). THE LD . CIT ( A ) HAS ALLOWED THE APPEAL OF THE ASSESSEE . 14 . WE HAVE HE ARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD CAREFULLY . IT IS NOTICED THAT ASSESSEE HAS SUBMITTED DETAILS OF COMMISSION PAID TO VARIOUS DEALERS AS OVERRIDING COMMISSION IN ACCORDANCE WITH THE SALES PROMOTION . IT IS ALSO NOTICED THAT ASSESSE E HAS PAID COMMISSION TO VARIOUS DEALERS FOR EXTRA EFFORTS IN PROCURING ORDERS FROM CUSTOMERS AFTER VERIFICATION AND APPROVED BY THE MARKETING MANAGER OF THE ASSESSEE COMPANY . IT IS NOTICED THE ASSESSING OFFICER HAS NOT MADE ANY INQUIRIES U / S 133 ( 6 )/ 131 OF THE ACT TO DISPROVE THE GENUINENESS OF THE EXPENDITURE CLAIMED BY THE ASSESSEE IN THE FORM OF OVERRIDING COMMISSION PAID TO THE VARIOUS DEALERS FOR THE EXTRA EFFORTS MADE IN PROCURING THE ORDERS FROM THE CUSTOMERS . THEREFORE WE DON'T FIND ERROR IN THE D ECISION OF LEARNED CIT ( A ) , THEREFORE THE GROUND OF APPEAL OF THE REVENUE IS DISMISSED . M/S SPX FLOW TECHNOLOGY (INDIA) PVT. LTD. ITA NO. 3085/AHD/2014 PAGE 8 OF 9 20 . WE SEE NO REASONS TO TAKE ANY OTHER VIEW OF THE MATTER THAN THE VIEW SO TAKEN BY THE COORDINATE BENCH . RESPECTFULLY FOLLOWING THE SAME, WE APPROVE THE CONCLUSION ARRIVED AT BY THE LEARNED CIT ( A ) AND DECLINE TO INTERFERE IN THE MATTER . 21 . GROUND NO 5 IS THUS DISMISSED . 22 . IN THE SIXTH GROUND OF APPEAL, THE APPELLANT HAS RAISED THE FOLLOWING GRIEVANCE : - WHETHER THE LD . CIT ( APPEALS )- XIV AHMEDABAD IS RIGHT IN LAW AND ON FACTS IN DELET ING THE DISALLOWANCE OFU / S . 40 ( A )( IA ) OF THE ACT, OF RS . 14,04,017 /- 23 . LEARNED REPRESENTATIVES FAIRLY AGREE THAT THE ISSUE IS NOW COVERED, IN FAVOUR OF THE ASSESSEE, BY COORDINATE BENCH DECISION DATED 12 . 12 . 2018 IN ASSESSEE S OWN CASE FOR THE IMMEDIATELY PRECEDING ASSESSMENT YEAR I . E . AY 2009 - 10, WHEREIN THE COORDINATE BENCH HAS INTER ALIA OBSERVED AS FOLLOWS :- 18 . DURING ASSESSMENT THE ASSESSING OFFICER OBSERVED THAT ASSESSEE HAS MADE PAYMENT OF RS . 12,68,118 /- TO M / S . SPX PROCESS EQUIPMENT NL BV AND IN FORM NO . 3CEB THE ASSESSEE HAS SHOWN THE DETAILS OF INTERNATIONAL TRANSACTION WITH THE ABOVE NAMED ASSOCIATED ENTERPRISE . ON QUERY, THE ASSESSEE EXPLAINED THAT THESE PAYMENTS WERE MADE FOR REPAIRING CHARGES / SCRAPING OF GOODS WHICH WAS SOLD TO THE SAID NON - RESIDENTS . HOWEVER THE ASSESSING OFFICER WAS OF THE OPINION THAT ASSESSEE HAS MADE AFORESAID PAYMENT TO THE NON - RESIDENT FOR CARRYING OUT THE SOME WORK AND THE ASSESSEE HAS NOT TAKEN ANY PERMISSION U / S . 195 / 197 OF THE ACT FOR REMITTING THE SAID AMOUNT WITHOUT DEDUCTING TDS . THEREFORE, THE ASSESSING OFFICER HELD THAT THE ASSESSEE HAS VIOLATED THE PROVISION OF SECTION 195 OF THE ACT BY NOT DEDUCTING TDS ON THE ABOVE REFERRED PAYMENT OF RS . 1268118 /- MADE TO THE ABOVE NAMED ASSOC IATED CONCERN OF THE ASSESSEE . THEREFORE, THE SAID SUM OF RS . 1268118 /- WAS DISALLOWED U / S . 40 ( A )( IA ) AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE . IN THE APPEAL, THE LD . CIT ( A ) HAS DELETED THE ADDITION STATING THAT NO ELEMENT OF INCOME WAS INVOLVED IN TH IS EXPENDITURE . 19 . WE HAVE HEARD THE RIVAL CONTENTIONS ON THIS ISSUE AND PERUSED THE MATERIAL ON RECORD CAREFULLY . THE ASSESSEE HAS MADE PAYMENT TO NON - RESIDENT FOR TWO PURPOSES ( I ) RS . 2,89,025 /- TOWARDS CHARGES FOR REPAIRS CARRIED OUT BY SUCH COMPANIES OUTSIDE INDIA ( II ) RS . 9,79,093 /- TOWARDS CLAIM FOR GOODS REJECTED AND SCRAPPED BY SUCH COMPANIES DUE TO INFERIOR QUALITY / MANUFACTURING DEFECTS . IT IS OBSERVED THAT ASSESSEE HAS ACTUALLY EXPORTED GO ODS BUT THERE WERE CERTAIN MANUFACTURING DEFECT IN SUCH GOODS , THEREFORE, THESE GOODS WERE REQUIRED TO BE REPAIRED IN SOME CASES AND IN SOME CASES THE SAME WERE TO BE SCRAPPED . IN THE LIGHT OF THE ABOVE FACTS AND CIRCUMSTANCES IT CLEARLY DEMONSTRATED THAT THE ASSESSEE HAS MADE PAYMENT AS REIMBURSEMENT TO ITS CONCERNED CUSTOMER, THEREFORE, WE CONSIDER THAT NO PART OF AMOUNT PAID TO SUCH PARTIES WAS CHARGEABLE TO TAX IN INDIA IN THEIR HAND, THEREFORE, WE ARE INCLINED WITH THE FINDINGS OF M/S SPX FLOW TECHNOLOGY (INDIA) PVT. LTD. ITA NO. 3085/AHD/2014 PAGE 9 OF 9 LD . CIT ( A ) OF DELETI NG THE IMPUGNED ADDITIONS . ACCORDINGLY, THE APPEAL OF THE REVENUE IS DISMISSED . 24 . WE SEE NO REASONS TO TAKE ANY OTHER VIEW OF THE MATTER THAN THE VIEW SO TAKEN BY THE COORDINATE BENCH . RESPECTFULLY FOLLOWING THE SAME, WE APPROVE THE CONCLUSION ARRIVED AT BY THE LEARNED CIT ( A ) AND DECLINE TO INTERFERE IN THE MATTER . 25 . GROUND NO 6 IS THUS DISMISSED . 26 . GROUND NOS 7 TO 8 ARE GENERAL IN NATURE AND DO NOT CALL FOR ANY SPECIFIC ADJUDICATION . 27 . IN THE RESULT, THE APPEAL IS DISMISSED I N THE TERMS INDICATED ABOVE . ORDER PRONOUNCED UNDER RULE 34(4) OF THE INCOME TAX (APPELLATE TRIBUNAL) RULES, 1962, BY PLACING THE DETAILS ON THE NOTICE BOARD. SD/ - SD/ - JUSTICE P . P BHATT PRAMOD KUM AR ( PRESIDENT ) ( VICE PRESIDENT ) AHMEDABAD, DATED TH E 12 TH DAY OF MARCH , 2020 COPIES TO : ( 1 ) THE APPELLANT ( 2 ) THE RESPONDENT ( 3 ) CIT ( 4 ) CIT ( A ) ( 5 ) DR ( 6 ) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD