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The Tax Publishers DCIT & Ors. v. Bayer Bioscience (P) Ltd. & Ors. [ITA Nos. 2685, 5388/M/2009, dt. 21-4-2016] : 2016 TaxPub(DT) 2203 (Mum-Trib) Sales return, discount claimed and allowability of expense arising out of subsequent year order. *Facts:* Assessee made provision after end of the season for discount on sale of seeds for INR 1.13 crores. This was disallowed by assessing officer holding it as provision, Commissioner (Appeals) allowed the same. Aggrieved department went in appeal. Assessee made a provision for sales return, which was disallowed by the assessing officer and Commissioner (Appeals), on further appeal assessee pleaded that since it was based on actual returns expected. Alternatively it should be allowed in the subsequent year. Assessees order for assessment year 2005-06 had a disallowance of licence payment to Mahyco Monsanto Biotech (India) Ltd. since the payment happened in assessment year 2004-05 the disallowance was made in assessment year 2005-06. However there was nothing in the return or in the claim made before the Commissioner (Appeals). This was not accepted by the Commissioner (Appeals) as either it should have formed in the return or a revised return which was not the case. In the mean time the Commissioner (Appeals) allowed the said expense in appeal of assessment year 2005-06. Held in favour of the assessee that the discount provision was allowable. Considering prudential accounting guidelines and ICAI standard on revenue recognition the sales return is an allowable deduction. Since the licence fee was allowed in the subsequent year appeal the plea to allow it in the earlier year became infructuous.

The Tax Publishers

DCIT & Ors. v. Bayer Bioscience (P) Ltd. & Ors. [ITA Nos. 2685, 5388/M/2009, dt. 21-4-2016] : 2016 TaxPub(DT) 2203 (Mum-Trib)

Sales return, discount claimed and allowability of expense arising out of subsequent year order.

Facts:

Assessee made provision after end of the season for discount on sale of seeds for INR 1.13 crores. This was disallowed by assessing officer holding it as provision, Commissioner (Appeals) allowed the same. Aggrieved department went in appeal.

Assessee made a provision for sales return, which was disallowed by the assessing officer and Commissioner (Appeals), on further appeal assessee pleaded that since it was based on actual returns expected. Alternatively it should be allowed in the subsequent year.

Assessees order for assessment year 2005-06 had a disallowance of licence payment to Mahyco Monsanto Biotech (India) Ltd. since the payment happened in assessment year 2004-05 the disallowance was made in assessment year 2005-06. However there was nothing in the return or in the claim made before the Commissioner (Appeals). This was not accepted by the Commissioner (Appeals) as either it should have formed in the return or a revised return which was not the case. In the mean time the Commissioner (Appeals) allowed the said expense in appeal of assessment year 2005-06.

Held in favour of the assessee that the discount provision was allowable.

Considering prudential accounting guidelines and ICAI standard on revenue recognition the sales return is an allowable deduction.

Since the licence fee was allowed in the subsequent year appeal the plea to allow it in the earlier year became infructuous.