Timex Group India Ltd. Vs ACIT (ITAT Delhi)
The Income Tax Appellate Tribunal, Delhi adjudicated cross appeals filed by the assessee and the Revenue against the order of the Commissioner of Income Tax (Appeals)-44, New Delhi dated 24.06.2019 for Assessment Year 2014–15. At the outset, both sides confirmed that all transfer pricing issues, including Advertisement, Marketing and Sales Promotion (AMP) expenditure, stood settled under an Advance Pricing Arrangement (APA). Accordingly, the assessee withdrew grounds relating to AMP, and the Revenue’s appeal—confined entirely to transfer pricing issues—was dismissed as infructuous.
The surviving issues in the assessee’s appeal related to three additions: (i) ad hoc disallowance of 50% of miscellaneous expenses amounting to ₹9,47,475; (ii) addition of ₹47,106 on account of alleged mismatch in sales turnover reported in the return of income and the tax audit report; and (iii) disallowance of ₹50,088 under Section 40(a)(i) of the Income Tax Act for alleged failure to deduct tax at source.
On the first issue, the Tribunal noted that the miscellaneous expenses primarily related to meetings, conferences, and the Annual General Meeting. The Assessing Officer had questioned the increase in such expenditure compared to the preceding year but had otherwise accepted the nature of the expenses. The assessee furnished bills, invoices, vouchers, and proof of payment to substantiate the claim. The Tribunal held that once supporting documents were produced, an ad hoc disallowance without identifying any defect was unwarranted. Consequently, the 50% disallowance was deleted.
