Whirlpool of India Ltd., Gurgaon V. ACIT, LTU circle-2, New Delhi

ITA 9191/DEL/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 8607 (ITAT-DELHI)
• Duration Of Justice: 1 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-01-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: I2
• Assessment Year: 2015-2016
• Appeal Filed On: 28-11-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Transfer pricing; International transaction; Additional evidence; Set aside; FORM 26AS
• Section: 37; 10; 143(3); 92B; 37(1); 201; 144C; 92CA; 20

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: I-2 NEW DELHI BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER & SHRI K.NARASIMHA CHARY, JUDICIAL MEMBER ITA NO. 9191/DEL/2019 ASSESSMENT YEAR: 2015-16 WHIRLPOOL OF INDIA LTD., PLOT NO. 40, SECTOR-44, GURGAON. PAN :AAACW 1336L VS ACIT, LTU CIRCLE-2, NEW DELHI APPELLANT RESPONDENT ASSESSEE BY: SH. NEERAJ JAIN, ADVOCATE SH. RAMITKATIYAL, ADVOCATE REVENUE BY : SH. SUNIL KUMAR, CIT/DR ORDER PER K. NARASIMHA CHARY, JM AGGRIEVED BY THE ORDER DATED 25/10/2019 PASSED UND ER SECTION 143(3) READ WITH SECTION 144C (13) OF THE INCOME TA X ACT, 1961 (FOR SHORT THE ACT), FOR THE ASSESSMENT YEAR 2015-16 PURSUAN T TO THE DIRECTIONS GIVEN ON 25/9/2019 BY THE LD. DISPUTE RESOLUTION PA NEL (DRP)-1, NEW DELHI (LD. DRP), M/S WHIRLPOOL OF INDIA LTD (ASS ESSEE) FILED THIS APPEAL. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A SUBSIDIARY OF WHIRLPOOL CORPORATION (WC), USA AND HAS BEEN ENGAGE D IN THE DATE OF HEARING: 09.01.2020 DATE OF PRONOUNCEMENT: 20.01.2020 2 PRODUCTION, SALES AND DISTRIBUTION OF WHIRLPOOL BRA ND OF HOME APPLIANCES WHICH INCLUDES WASHING MACHINES, REFRIGERATORS, MIC ROWAVE OVENS AND AIR-CONDITIONERS IN INDIA.ASSESSEE IS ALSO ENGAGED IN THE BUSINESS OF MANUFACTURING AS WELL AS PURCHASE AND THE RESALE OF THESE PRODUCTS BESIDES IN THE RELEVANT FINANCIAL YEAR UNDERTAKING CONTRACT R&D ACTIVITIES, GIS SERVICES AND IPO SERVICES FOR THE WHIRLPOOL GRO UP. FOR THE ASSESSMENT YEAR 2015-16 THEY HAVE FILED THEIR RETURN OF INCOME ON 26/11/2015 DECLARING A TOTAL INCOME OF RS.2,60,80,35,500/-UNDE R THE NORMAL PROVISIONS OF THE ACT AND AN INCOME OF RS. 3,02,57, 76, 948/-UNDER SECTION 115 JB OF THE ACT. 3. DURING THE ASSESSMENT PROCEEDINGS, LEARNED ASSES SING OFFICER NOTICED THAT DURING THE FINANCIAL YEAR 2014-15 THE ASSESSEE HAD ENTERED INTO INTERNATIONAL TRANSACTION WITH ITS ASSOCIATED ENTERPRISES (AES) AND THE VALUE OF SUCH TRANSACTIONS EXCEED MORE THAN 15 CRORES. LEARNED ASSESSING OFFICER, THEREFORE, REFERRED THE DETERMIN ATION OF THE ARMS- LENGTH PRICE OF THE INTERNATIONAL TRANSACTION TO TH E LD. TRANSFER PRICING OFFICER (LD. TPO) UNDER SECTION 92CA OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT). LD. TPO, BY ORDER DATED 31/10/201 8 OBSERVED THAT THE ASSESSING OFFICER SHALL ENHANCE THE INCOME OF THE A SSESSEE BY RS.1,17,99,480/-ON SUBSTANTIVE BASIS, AND THE PROTE CTIVE ADJUSTMENT OF RS.67,81,91,285/-WAS PUT ON HOLD AWAITING JUDGEMENT OF THE HONBLE SUPREME COURT.LEARNED ASSESSING OFFICER, ACCORDINGL Y, PASSED THE DRAFT ASSESSMENT ORDER DATED 27/12/2018 PROPOSING THE TRA NSFER PRICING ADJUSTMENTS AND ALSO CERTAIN OTHER ADDITIONS. 4. AGGRIEVED BY PROPOSED ADDITIONS, ASSESSEE FILED OBJECTIONS BEFORE THE LD. DRP AND THE LD. DRP BY ORDER DATED 25/9/201 9 ISSUED DIRECTIONS 3 TO THE LEARNED ASSESSING OFFICER DISPOSING OF THE O BJECTIONS. FINALLY LEARNED ASSESSING OFFICER CONCLUDED THE ASSESSMENT AT RS. 3,30,52,15,022/-BY ORDER DATED 25/10/2019 BY MAKING TRANSFER PRICING ADJUSTMENT TO THE TUNE OF RS. 1,17,75,930/-AND ALSO RS.67,81,91,285/- TOWARDS DISALLOWANCE OF AMP EXPENSES. LEARNED ASSES SING OFFICER FURTHER MADE ADDITIONS ON ACCOUNT OF EXCESS CLAIM O F R&D EXPENSES UNDER SECTION 35(2AB) OF THE ACT TO THE TUNE OF RS. 16,42,000/-, UNDISCLOSED INCOME AS PER 26AS TO THE TUNE OF RS. 5 ,14,537/-, PURCHASE AND SALE OF VEHICLES TO THE TUNE OF RS.15,37,130/-, INSURANCE PREMIUM PAYMENT TO THE TUNE OF RS. 18,640/-AND DAUGHTER MAR RIAGE FUND TO THE TUNE OF RS. 35 LACS. 5. ASSESSEE IS THEREFORE BEFORE US IN THIS APPEAL C HALLENGING THE ADDITIONS. NOW WE SHALL PROCEED TO DEAL WITH THE GR IEVANCE OF THE ASSESSEE IN RESPECT OF EACH ADDITION. 6. IN RESPECT OF THE TRANSFER PRICING ADJUSTMENT OF RS. 1,17,75,930/-, CASE OF THE ASSESSEE HAS BEEN THAT THE LD. TPO DID NOT DISPUTE THE BENCHMARKING ANALYSIS IN RESPECT OF THE INTERNATION AL TRANSACTION UNDERTAKEN BY THE ASSESSEE AND ACCEPTED THOSE TO BE AT ARMS LENGTH PRICE. LD. TPO, HOWEVER, UNDERTOOK BENCHMARKING ANA LYSIS OF THE ADVERTISEMENT, MARKETING AND SALES PROMOTION (AMP) EXPENSES INCURRED BY THE ASSESSEE FOR THE PRODUCTS HAVING THE BRAND N AME WHIRLPOOL. ACCORDING TO THE ASSESSEE THE AMP EXPENSES WERE INC URRED BY IT ON ITS OWN DISCRETION WITHOUT ANY REFERENCE TO THE OVERSEA S ASSOCIATED ENTERPRISES (AES) AND ALL SUCH EXPENSES WERE INCU RRED FOR ITS OWN BUSINESS IN ORDER TO CATTLE TO THE LOCAL MARKET NEE DS. ON THIS GROUND ASSESSEE COMPLAINS THAT THERE IS NO MATERIAL WHATSO EVER ON RECORD TO 4 SUPPORT THE CONCLUSION OF THE LD. TPO THAT THE TRAN SACTION OF INCURRING THE AMP EXPENSES AMOUNTS TO INTERNATIONAL TRANSACTI ON IN TERMS OF SECTION 92B OF THE ACT AND THEREFORE, SUCH ADJUSTME NT IS NOT TENABLE. 7. LD. AR SUBMITTED THAT THE FACTS RELATING TO THES E INTERNATIONAL TRANSACTIONSARE IDENTICAL ALL THROUGH THE YEARS AND FOR THE ASSESSMENT YEAR 2008-09 THIS ISSUE WAS DEALT WITH BY THE HONB LE JURISDICTIONAL HIGH COURT AND BY WAY OF THE DECISION REPORTED IN 381 IT R 154, HONBLE HIGH COURT HELD THAT THERE DOES NOT EXIST ANY ARRANGEMEN T OR UNDERTAKING BETWEEN THE ASSESSEE AND THE ASSOCIATED ENTERPRISES IN CONNECTION WITH INCURRING OF THE AMP EXPENSES. HE FURTHER SUBMITTED THAT SUCH ADDITION OF THE HONBLE HIGH COURT IS FOLLOWED BY THE TRIBUN AL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEARS 2009-10 TO 2014-15 AN D FACTS BEING SIMILAR THE ISSUE REMAINS COVERED BY THESE DECISIONS. 8. LD. DR DOES NOT CONTROVERT ANY OF THE SUBMISSION S MADE ON BEHALF OF THE ASSESSEE NOR DOES HE BRING TO OUR NOTICE ANY CHANGE OF FACTS AND CIRCUMSTANCES OF THE CASE TO SAY THAT THIS CONSISTE NT VIEW TAKEN BY THE HONBLE HIGH COURT AND THE TRIBUNAL IS NOT APPLICAB LE TO THE FACTS OF THE PRESENT YEAR. IN VIEW OF THIS SETTLED VIEW TAKEN IN ASSESSEES OWN CASE RIGHT FROM 2008-09 TO 2014-15, FACTS BEING IDENTICA L, WHILE RESPECTFULLY FOLLOWING THE SAME WE HOLD THAT THE TRANSFER PRICIN G ADJUSTMENT CANNOT BE SUSTAINED AND HAS TO BE DELETED WE ACCORDINGLY A LLOW GROUNDS NO. 3 TO 3.21. 9. COMING TO GROUND NO. 4 TO 4.4, IT RELATES TO THE ALTERNATIVE DISALLOWANCE ON ACCOUNT OF EXPENSES INCURRED FOR AM P TO THE TUNE OF RS.67,81,91,285/-. CASE OF THE ASSESSEE IS THAT FOR PROMOTION OF THE SALES OF PRODUCTS PRODUCED/TRADED AND MARKETED IN INDIA, THE ASSESSEE HAD 5 INCURRED SUCH AN EXPENDITURE; THAT THE SAID EXPENDI TURE WAS INCURRED AT THE LOCAL LEVEL TO ENSURE THE AVAILABILITY AND VISI BILITY OF THE PRODUCTS; AND THAT SUCH EXPENSES WERE INCURRED FOR SALES PROMOTIO N AND ENCOURAGEMENT IN INDIA ONLY AND THAT TOO IN RESPECT OF PRODUCTS IN WHICH THE ASSESSEE WAS DEALING IN INDIA. 10. LD. TPO, HOWEVER, HELD THAT SUCH EXPENSES WERE INCURRED FOR THE PURPOSE OF PROMOTING THE BRAND OF THE ASSOCIATED EN TERPRISES (AES) AND, THEREFORE, CANNOT BE REGARDED AS HAVING BEEN I NCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF THE BUSINESS OF ASSE SSEE ALONE. 11. IT IS THE SUBMISSION ON BEHALF OF THE ASSESSEE BY THE LD. AR THAT THIS ISSUE HAS ALSO BEEN SQUARELY COVERED BY THE DE CISION REPORTED IN 381 ITR 154 OF THE HONBLE JURISDICTIONAL HIGH COURT IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2008-09. HE SUBMITTED THAT THE HONBLE HIGH COURT DELETED THE SIMILAR EDITION AND FOLLOWING THE SAME THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEARS 2009-1 0 TO 2014-15 DELETED THE ADDITION. LD. DR ADMITS THIS FACTUAL PO SITION. 12. WE HAVE GONE THROUGH THE ORDER OF THE HONBLE H IGH COURT WHEREIN IT WAS HELD THAT MERELY BECAUSE THERE IS AN INCIDENTAL BENEFIT TO WHIRLPOOL USA, IT CANNOT BE SAID THAT THE AMP EXPEN SES INCURRED BY THE ASSESSEE WERE FOR PROMOTING THE BRAND OF WHIRLPOOL USA. IT WAS FURTHER HELD THAT THE FACT THAT SOMEBODY OTHER THAN THE ASS ESSEE IS ALSO BENEFITED BY THE EXPENDITURE, SHOULD NOT COME IN TH E WAY OF AN EXPENDITURE BEING ALLOWED BY WAY OF DEDUCTION UNDER SECTION 10 (2) (XV) OF THE INCOME TAX ACT, 1922 AND THEREFORE THE HONB LE HIGH COURT HELD THE ISSUE IN FAVOUR OF THE ASSESSEE. WE ALSO FIND F ROM THE ORDERS IN 6 ASSESSEES OWN CASE FOR ASSESSMENT YEARS 2009-10 TO 2014-15 THAT THE TRIBUNAL FOLLOWED THE ABOVE DECISION OF THE HONBLE HIGH COURT. 13. WHILE RESPECTFULLY FOLLOWING THE ABOVE CONSISTE NT VIEW TAKEN BY THE HONBLE HIGH COURT AND THE TRIBUNAL IN ASSESSEE S OWN CASE FOR THE ASSESSMENT YEAR 2008-09 TO 2014-15 WE HOLD THE ISSU E IN FAVOUR OF THE ASSESSEE. GROUNDS NO. 4 TO 4.4 ARE ALLOWED. 14. GROUNDS NO. 5 TO 7 RELATE TO THE DISALLOWANCE O F R&D EXPENSES AMOUNTING TO RS. 8,21,000/-, ADDITION OF RS. 5,14,5 37/-ON THE BASIS OF FORM 26AS AND DISALLOWANCE OF RS. 15,37,130/-ON THE BASIS OF AN AIR INFORMATION. DURING THE YEAR ASSESSEE INCURRED R&D EXPENSES TO THE TUNE OF RS. 23,75,20,985/- AND CLAIMED 200% DEDUCTION AM OUNTING TO RS.47,50,41,970/-UNDER SECTION 35(2AB) OF THE ACT. EXPENSES TO THE TUNE OF RS.8,21,000/-WAS NOT APPROVED BY THE DEPARTMENT OF SCIENCE AND INDUSTRIAL RESEARCH (DSIR) AND THEREFORE THE ASSESS ING OFFICER DISALLOWED RS. 16,42,000/-WHICH CONSTITUTES 200% OF THE DISAPP ROVED EXPENSES OF RS. 8,21,000/-. ACCORDING TO THE ASSESSEE, EVEN IF THE R&D EXPENDITURE UNDER SECTION 35(2AB) OF THE ACT AT 200% IS NOT ACC EPTED, STILL THE SAME IS ALLOWABLE UNDER SECTION 37(1) OF THE ACT TO THE TUN E OF ACTUAL EXPENDITURE OF RS. 8,21, 000/-. 15. HE FURTHER SUBMITTED THAT FOR THE ASSESSMENT YE AR 2014-15, WHILE ADJUDICATING UPON SIMILAR ISSUE, LD. DRP DIRECTED T HE ASSESSING OFFICER TO ALLOW THE R&D EXPENDITURE NOT ELIGIBLE FOR WEIGHTED DEDUCTION UNDER SECTION 35(2AB) OF THE ACT, AS DEDUCTION UNDER SECT ION 37 OF THE ACT. WE DO NOT FIND ANYTHING ILLEGAL OR IRREGULAR IN SUCH A COURSE ADOPTED BY THE LD. DRP FOR THE ASSESSMENT YEAR 2014-15 AND WE DEEM IT JUST AND PROPER TO EXTEND A SIMILAR TREATMENT TO THE CASE OF THE AS SESSEE FOR THIS YEAR 7 ALSO. WE THEREFORE DIRECT THE ASSESSING OFFICER TO ALLOW THE DEDUCTION OF RS. 8,21,000/-UNDER SECTION 37 (1) OF THE ACT OF TH E ACT. 16. IN RESPECT OF THE ADDITION ON THE BASIS OF FORM 26AS, ACCORDING TO THE ASSESSEE THE SAME WAS ADDED ON THE BASIS OF THE DIFFERENCE IN INCOME RECORDED BY THE ASSESSEE IN THE BOOKS OF ACC OUNTS VIS-A-VIS FORM 26AS. ASSESSEE SUBMITTED THAT AT THE TIME IT WAS IN THE PROCESS OF RECONCILIATION OF THE DIFFERENCES BETWEEN THE INCOM E RECORDED IN THE BOOKS OF ACCOUNTS VIS A VIS FORM 26 AS. HE FURTHER SUBMITTED THAT IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEARS 2010-1 1 TO 2014-15, THE MATTER WAS REMITTED TO THE FILE OF THE ASSESSING OF FICER FOR RECONCILIATION OF THE DIFFERENCES AND NOW THE ASSESSEE IS READY WI TH THE RECONCILIATION STATEMENT TO PRODUCE BEFORE THE ASSESSING OFFICER I F A SIMILAR DIRECTION IS GIVEN. 17. WE HAVE GONE THROUGH THE RECORD IN THE LIGHT OF THE SUBMISSIONS MADE ON EITHER SIDE AND FROM THE ORDERS OF THE TRIB UNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2010-11 TO 2014-15 WE FIND THAT ON THE ASSESSEE REPORTING TO HAVE POSSESSING ALL THE RELEV ANT INFORMATION TO RECONCILE THE DIFFERENCE BETWEEN THE INCOME RECORDE D IN THE BOOKS OF ACCOUNTS VIS A VIS FORM 26AS, THE TRIBUNAL TOOK A V IEW TO DIRECT THE ASSESSING OFFICER TO TALLY THE DATA BASE OF REVENUE IN THE LIGHT OF DETAILS TO BE FILED BY THE ASSESSEE. IN CONSONANCE WITH THE VIEW TAKEN BY THE TRIBUNAL FOR THE EARLIER ASSESSMENT YEARS ON THIS I SSUE, WE SET ASIDE THE ISSUE TO THE FILE OF THE ASSESSING OFFICER FOR A SI MILAR EXERCISE AND THE ASSESSEE IS DIRECTED TO PRODUCE THE RELEVANT DOCUME NTS BEFORE THE ASSESSING OFFICER. GROUND NO. 6 IS THEREFORE, ALLOW ED FOR STATISTICAL PURPOSE. 8 18. COMING TO GROUND NO. 7 WHICH IS IN RESPECT OF D ISALLOWANCE OF RS.15,37,130/-ON THE BASIS OF AAIR INFORMATION, THE LEARNED ASSESSING OFFICER HELD THAT THE ASSESSEE HAS NOT BEEN ABLE TO PROVIDE THE SUPPORTING DOCUMENTS TO ESTABLISH THE GENUINENESS O F THE TRANSACTION AND THEREFORE THE SAID SUM IS LIABLE TO BE ADDED TO THE INCOME OF THE ASSESSEE. IT IS SUBMITTED ON BEHALF OF THE ASSESSEE THAT THE ASSESSEE HAD LOCATED THE RELEVANT SUPPORTING DOCUMENTS AND WHEN A SIMILAR QUESTION HAD ARISEN IN THE EARLIER ASSESSMENT YEARS FROM 201 0-11 TO 2012-13, THE TRIBUNAL SET ASIDE THE MATTER TO THE FILE OF THE AS SESSING OFFICER FOR VERIFICATION OF INFORMATION/DOCUMENTS TO BE SUBMITT ED BY THE ASSESSEE AND TO TAKE A VIEW. THIS FACTUAL STATEMENT BY THE L D. AR IS NOT CONTROVERTED BY THE LD. DR. WE THEREFORE, TAKING A SIMILAR VIEW SET ASIDE THE ISSUE TO THE FILE OF THELEARNED ASSESSING OFFIC ER WITH A DIRECTION TO THE ASSESSEE TO PRODUCE THE RELEVANT INFORMATION/DOCUME NTS BEFORE THE ASSESSING OFFICER AND THE ASSESSING OFFICER TO VERI FY THE SAME AND DECIDE THE ISSUE AFRESH. GROUND NO. 7 IS, ACCORDINGLY, ALL OWED FOR STATISTICAL PURPOSE. 19. IN RESPECT OF GROUND NO. 8, IT IS THE SUBMISSIO N OF THE LD. AR THAT BASING ON THE INFORMATION CONTAINED IN THE AIR REPO RT, LEARNED ASSESSING OFFICER MADE THE ADDITION OF RS.18,640/-HOLDING THA T THE ASSESSEE WAS NOT ABLE TO PROVIDE THE SUPPORTING DOCUMENTS TO EST ABLISH THE GENUINENESS OF THE TRANSACTION. BEFORE US THE ASSES SEE FILED AN APPLICATION FOR ADMISSION OF ADDITIONAL EVIDENCE UN DER RULE 29 OF THE INCOME TAX (APPELLATE TRIBUNAL) RULES, 1963 ALONGWI TH CERTAIN DOCUMENTS IN SUPPORT OF THEIR CLAIM STATING THAT THERE WAS AN ERROR IN UPLOADING THE DATA RELATING TO THE PREMIUM PAID BY THE ASSESSEE A ND INSTEAD OF THE 9 ACTUAL PREMIUM PAID TO THE TUNE OF RS. 4, 61, 865/- AN AMOUNT OF RS.18,640/- WAS UPLOADED IN THE WEBSITE OF THE INCO ME TAX DEPARTMENT AS THE AMOUNT OF PREMIUM PAID BY THE ASSESSEE AND N OW THAT THEY HAVE OBTAINED A LETTER FROM BAJAJ ALIENS GENERAL INSURAN CE COMPANY LIMITED CLARIFYING THAT THE AMOUNT WAS CORRECTLY REPORTED B Y THEM TO THE INCOME TAX DEPARTMENT, BUT IT SEEMS THAT THERE IS A MISTAK E WHILE UPLOADING THE DATA BY INCOME TAX DEPARTMENT ON THEIR PORTAL AND H AVE WRONGLY CONSIDERED THE FIGURE OF RS. 18, 640/-INSTEAD OF RS . 4,61,865/-. 20. HAVING REGARD TO THE FACTS AND CIRCUMSTANCES IN VOLVED IN THIS MATTER IN THE LIGHT OF THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. TEXT HUNDRED INDIA PRIVATE L IMITEDREPORTED IN 39 CTR 263 WE ARE OF THE CONSIDERED OPINION THAT INASM UCH AS THE DOCUMENTS NOW SOUGHT TO BE PRODUCED BY THE ASSESSEE WOULD THROW SOME LIGHT ON THE ISSUE, WE ALLOW THIS APPLICATION UNDER RULE 29 OF THE INCOME TAX (APPELLATE TRIBUNAL) RULES, 1963 AND REC EIVE THE DOCUMENTS. SINCE THE VERIFICATION OF THESE DOCUMENTS COULD CON VENIENTLY BE DONE AT THE END OF THE ASSESSING OFFICER, WE SET ASIDE THE ISSUE TO THE FILE OF THE ASSESSING OFFICER TO CONSIDER THESE DOCUMENTS AND T O TAKE A VIEW AFRESH. THUS THE GROUND NO. 8 IS, ACCORDINGLY, ALLOWED FOR STATISTICAL PURPOSE. 21. GROUND NO. 9 RELATING THE DISALLOWANCE OF RS. 3 5 LACS BEING THE EXPENDITURE ON ACCOUNT OF THE EXPENDITURE AMOUNT PA ID TO THE EMPLOYEES OF THE ASSESSEE AT THE TIME OF MARRIAGE O F THEIR DAUGHTERS. IT IS THE SUBMISSION OF THE LD. AR THAT CONSIDERING THE L OCATION AND ELIGIBILITY OF THE EMPLOYEES, THE ASSESSEE HAS BEEN MAKING A PR OVISION IN THE BOOKS OF ACCOUNTS AND SUCH PROVISION IS OFFERED FOR TAXAT ION AT THE TIME OF FILING THE RETURN AND THE ACTUAL AMOUNT PAID DURING THE YE AR IS CLAIMED AS 10 EXPENDITURE. ACCORDING TO THE LD. AR IT HAS BEEN TH E PRACTICE OF THE ASSESSEE QUITE FOR A LONG TIME AND ALL THROUGH THES E YEARS NO DISALLOWANCE WAS MADE BY THE LEARNED ASSESSING OFFI CER. LEARNED ASSESSING OFFICER, HOWEVER, DISALLOWED THE EXPENDIT URE CLAIMED BY THE ASSESSEE ON THE BASIS THAT THE ASSESSEE IS NOT A CO MPANY REGISTERED UNDER SECTION 25 OF THE COMPANIES ACT SO AS TO CARR Y OUT WELFARE ACTIVITIES AND THE EXPENDITURE INCURRED IN MARRIAGE OF THE EMPLOYEES DAUGHTERS IS NOT WHOLLY AND EXCLUSIVELY FOR THE PUR POSE OF BUSINESS OF THE ASSESSEE. 22. BASING ON THE DECISION OF THE HONBLE APEX COUR T IN THE CASE OF SHAHZADANAND& SONS VS. CIT 108 ITR 358, LD. AR SUBM ITTED THAT THE EX GRATIA COMPENSATION PAID TO AN EMPLOYEE IS AN ALLOW ABLE EXPENDITURE. HE FURTHER SUBMITTED THAT UNDER SECTION 37(1) OF THE A CT, DEDUCTION IS ADMISSIBLE FOR EXPENDITURE INCURRED WHOLLY AND EXCL USIVELY FOR THE PURPOSE OF BUSINESS AND SUCH EXPENDITURE IS JUSTIFI ED BY BUSINESS CONSIDERATION AND INCURRED OUT OF COMMERCIAL EXPEDI ENCY IS ALLOWABLE DEDUCTION. HE DREW OUR ATTENTION TO DETAILS OF THIS EXPENDITURE INCORPORATED AT PAGE NOS. 485 TO 490 OF THE PAPERBO OK IN RESPECT OF THE BENEFICIARIES OF THIS EXPENSE. 23. INSOFAR AS THE ALLIANCE OF THIS EXPENSE IN THE EARLIER YEARS IS CONCERNED, IT IS THE SUBMISSION OF THE LD. DR THAT NO SUCH MATERIAL IS AVAILABLE WITH HIM RIGHT NOW AND HE FURTHER SUBMITT ED THAT, BE THAT AS IT MAY, THE DETAILS FURNISHED BY THE ASSESSEE ARE TO B E VERIFIED WITH REFERENCE TO THE EXPENDITURE SO INCURRED BY THE ASS ESSEE IN THE EARLIER ASSESSMENT YEARS. HE THEREFORE PRAYS THAT THE MATTE R MAY BE REMITTED TO 11 THE FILE OF THE LEARNED ASSESSING OFFICER FOR VERIF ICATION OF ALL THESE DETAILS. 24. CONSIDERING THE REQUEST OF THE REVENUE WE DEEM IT JUST AND NECESSARY THAT THE ALLOWANCE OF THIS EXPENDITURE IN THE EARLIER YEARS NEEDS VERIFICATION VIS A VIS THE DETAILS FURNISHED BY THE ASSESSEE. WE THEREFORE SET ASIDE THE ISSUE TO THE FILE OF THE LE ARNED ASSESSING OFFICER TO CARRY OUT SUCH AN EXERCISE OF VERIFICATION. GROUND NO. 9 IS ACCORDINGLY ALLOWED FOR STATISTICAL PURPOSE. 25. LASTLY COMING TO THE GROUND NO. 10 CHALLENGING THE DISALLOWANCE OF THE CLAIM OF THE ASSESSEE TOWARDS FOREIGN TAX CREDI T, IT COULD BE SEEN FROM THE RECORD THAT THE ASSESSEE HAD CLAIMED FOREIGN TA X CREDIT OF RS.98,13,926/-IN RESPECT OF TAXES WITHHELD BY WHIRL POOL SA AND WHIRLPOOL POLSKA SP ZOO. ACCORDING TO THE LD. AR THE ASSESSEE HAD FURNISHED A STATEMENT OF RECONCILIATION IN RESPECT OF THE TAX D EDUCTED BY THE FOREIGN GROUP ENTITIES AND THE CREDIT CLAIMED IN THE TAX RE TURN; THAT THE LEARNED ASSESSING OFFICER REQUIRED THE ASSESSEE TO FURNISH THE CERTIFICATE IN RESPECT OF TAX WITHHELD BY THE FOREIGN GROUP ENTITI ES; THAT SINCE THE ASSESSEE WAS IN THE PROCESS OF OBTAINING THE CERTIF ICATE FROM THE ASSOCIATED ENTERPRISES, THE SAME COULD NOT BE FURNI SHED BEFORE THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT P ROCEEDINGS; AND THAT THE LEARNED ASSESSING OFFICER DISALLOWED THE CLAIM OF THE ASSESSEE TOWARDS FOREIGN TAX CREDIT IN THE ABSENCE OF SUCH A CERTIFICATE. ASSESSEE SUBMITS THAT NOW THEY ARE READY TO FURNISH SUCH CER TIFICATE BEFORE THE ASSESSING OFFICER. 26. LD. AR FURTHER BROUGHT TO OUR NOTICE THAT THE T RIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2013-14 IN ITA NO. 8272/DEL/2018 SET 12 ASIDE THE MATTER TO THE FILE OF THE LEARNED ASSESSI NG OFFICER FOR ALLOWING THE TAX CREDIT ON VERIFICATION OF CERTIFICATES TO B E SUBMITTED BY THE ASSESSEE. SINCE THIS SUBMISSION OF THE ASSESSEE IS NOT CONTROVERTED BY THE REVENUE WE ARE OF THE CONSIDERED OPINION THAT A SIM ILAR COURSE COULD BE TAKEN FOR THIS ASSESSMENT YEAR ALSO. WE ACCORDINGLY SET ASIDE THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO THE ASSESSEE TO PRODUCE THE REQUISITE CERTIFICATE BEFORE THE LEARNE D ASSESSING OFFICER, ON WHICH THE LEARNED ASSESSING OFFICER WILL TAKE A FRE SH VIEW AFTER VERIFICATION. GROUND NO. 10 IS, THEREFORE, ALLOWED FOR STATISTICAL PURPOSE. 27. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D IN PART FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH JANUARY, 2020. SD/- SD/- (R.K. PANDA) (K. NARASIMHA CHAR Y) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 20/01/2020 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI