DY COMMISSIONER OF INCOME TAX CIRCLE-7 , PUNE V. MUBEA AUTOMOTIVE COMPONENTS INDIA PRIVATE LIMITED, PUNE

ITA 694/PUN/2024

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The case involves Mubea Automotive Components India Pvt. Ltd., which filed its return of income for the assessment year 2017-18, declaring a total income of Rs.26,70,92,280/-. The return was selected for scrutiny, leading to various issues being examined, including international transactions and deductions claimed under 'Any other amount allowable as deduction'. The Assessing Officer made an addition of Rs.5,95,66,948/- to the total income due to insufficient justification for the deductions claimed. The CIT(A) / NFAC later deleted this addition, leading to the Revenue's appeal to the Tribunal. The Tribunal found the CIT(A)'s order cryptic and restored part of the matter for fresh adjudication while upholding the decision on specific amounts already discussed by the CIT(A).

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 471216 (ITAT-PUNE)
• Duration Of Justice: 6 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-10-2024
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 24-09-2024
• Assessment Year: 2017-2018
• Appeal Filed On: 05-04-2024
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAMNATH P MURKUNDE
• Assessee Lawyers: RAJENDRA AGIWAL
• Keywords: Opportunity of being heard; Transfer pricing; International transaction; Corroborative evidences; TDS
• Section: 142(1); 143(2)

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH “A”, PUNE BEFORE SHRI R. K. PANDA, VICE PRESIDENT AND MS ASTHA CHANDRA, JUDICIAL MEMBER ITA No.694/PUN/2024 Assessment Year : 2017-18 DCIT, Circle-7, Pune Vs. Mubea Automotive Components India Pvt. Ltd. Survey No.1072, Post Pirangut, Tal. Mulshi, Pune – 412115 PAN: AAACT9025D (Appellant) (Respondent) Assessee by : Shri Rajendra Agiwal Department by : Shri Ramnath P Murkunde Date of hearing : 24-09-2024 Date of pronouncement : 25-10-2024 O R D E R PER R.K. PANDA, VP : This appeal filed by the Revenue is directed against the order dated 12.01.2024 of the CIT(A) / NFAC, Delhi relating to assessment year 2017-18. 2. Facts of the case in brief, are that the assessee is a company engaged in the business of manufacturing of car suspension related products as well as trading of automotive parts. It filed its return of income on 30.11.2017 declaring total income of Rs.26,70,92,280/- (before set off of brought forward losses). The case of the assessee was selected for scrutiny through CASS for the following reasons: S.No. Issues i. Claim of “Any other amount allowable as deduction” in Schedule BP ii. Deduction and deposit of TDS iii. Investments/advances/loans iv. Sales turnover/receipts v. Custom duty paid 2 ITA No.694/PUN/2024 vi. Foreign remittance vii. International transaction(s) viii. Investment in immovable property 3. Accordingly notices u/s 143(2) and 142(1) of the Income Tax Act, 1961 (hereinafter referred to as „the Act‟) were issued and served upon the assessee, in response to which the assessee filed the requisite details from time to time. The Assessing Officer referred the matter to the Transfer Pricing Officer (TPO) for determination of the arm's length price of the international transactions entered into by the assessee. However, the TPO did not propose any adjustment. 4. During the course of assessment proceedings the Assessing Officer observed from the return of income filed by the assessee that it has claimed the deduction for certain claim of “Any other amount allowable as deduction” of Rs.5,95,66,948/- in Schedule BP ITR. On being questioned by the Assessing Officer, the assessee only submitted the amount and nature-wise breakup of the deduction claimed. However, in absence of any explanation to justify the basis for such deduction supported by rational / legislature behind the deduction, the Assessing Officer made addition of Rs.5,95,66,948/- to the total income of the assessee. 5. Before the CIT(A) / NFAC, the assessee filed certain details based on which the Ld. CIT(A) / NFAC deleted the addition. 6. Aggrieved with such order of CIT(A) / NFAC, the Revenue is in appeal before the Tribunal by raising the following grounds: 3 ITA No.694/PUN/2024 1. Whether on the facts and in the circumstances of the case & in the law, the CIT (A) has erred in deleting the addition made by the AO amounting to Rs. 5,95,66,950/- without going into the merits of the case? 2. Whether on the facts and in the circumstances of the case & in the law, the CIT (A) has erred in deleting the addition amounting to Rs.5,95,66,950/- without giving adequate opportunity to the AO by remanding the matter under Rule 46A of the Income Tax Rules and without taking into consideration the fact that no submission to prove the basis of aforesaid claims could be made by the assessee during the entire course of assessment proceedings? 3. Whether on the facts and in the circumstances of the case & in the law, the CIT (A) is correct in holding that the assessee had sufficiently explained the expenses so made along with supporting evidences and audit report even when no discussion whatsoever has been made on the expenditure so claimed especially those pertaining to Rs.5,44,32,253/- claimed to be on account of foreign exchange fluctuations and Rs.33,91,600/- claimed to be on account of utilization of provision for contingency on account of price reduction amount paid to customers? 4. Whether on the facts and in the circumstances of the case & in the law, the CIT (A) is correct in holding that the AO has not pointed any specific reason for any specific disallowance in the assessment order even when it had been categorically held by the AO while passing the assessment order that the assessee had failed to explain/ justify the basis for such deductions supported by rational/ legislature behind the deductions claimed under \"any other amount allowable as deduction\" amounting to Rs. 5,95,66,950/-? 7. We have heard the rival arguments made by both the sides, perused the orders of the Assessing Officer and the Ld. CIT(A) / NFAC and the paper book filed on behalf of the assessee. A perusal of the order of the CIT(A) / NFAC shows that he has discussed the facts of the case and thereafter the order is silent regarding the finding portion. When the Bench pointed out this fact, both the sides agreed that the order of the CIT(A) / NFAC is cryptic one and needs to be restored to the file of the CIT(A) / NFAC for fresh adjudication of the issue. 8. The Ld. Counsel for the assessee however, submitted that the total amount of Rs.5,95,66,948/- includes an amount of Rs.9,40,000/- being the deduction of the 4 ITA No.694/PUN/2024 reversal of provision of rent equalization disallowed in earlier years and amalgamation expenses incurred amounting to Rs.8,03,095/- which the Ld. CIT(A)/ NFAC has discussed thoroughly and therefore, these two amounts out of the amount of Rs.5,95,66,948/- need not be sent back to the file of the CIT(A) / NFAC for his adjudication. 9. We find merit in the above argument of the Ld. Counsel for the assessee. Admittedly, the total amount of Rs.5,95,66,948/- includes an amount of Rs.9,40,000/- being the reversal of provision of rent equalization disallowed in earlier years which the Ld. CIT(A) / NFAC has thoroughly discussed the issue and has given his finding. The Ld. DR could not controvert the findings given by the Ld. CIT(A) / NFAC to the extent of Rs.9,40,000/-. Therefore, the said amount need not be restored back to the file of the CIT(A) / NFAC for fresh adjudication. 10. Similarly, the disallowance of amalgamation expenses amounting to Rs.8,03,095/- is a part of deduction claimed u/s 35DD of the Act being 1/5th of total merger related expenses of Rs.40,15,475/-, which the CIT(A) / NFAC has thoroughly discussed and given his finding. Therefore, to this extent also, we are of the considered opinion that this amount need not be restored back to the file of the CIT(A) / NFAC for adjudication. Thus, out of the total amount of Rs.5,95,66,948/-, the Ld. CIT(A) / NFAC has discussed the amount relating to Rs.9,40,000/- and Rs.8,03,095/-, both totaling to Rs.17,43,095/- and deleted the addition which is in accordance with law and therefore, we uphold his order to this extent. Therefore, the balance amount of Rs.5,78,23,853/- is restored to the file of 5 ITA No.694/PUN/2024 the CIT(A) / NFAC for his fresh adjudication. Needless to say the Ld. CIT(A) / NFAC shall give due opportunity of being heard to the assessee and decide the issue as per fact and law by passing a speaking order. The grounds raised by the Revenue are accordingly partly allowed for statistical purposes. 11. In the result, the appeal filed by the Revenue is partly allowed for statistical purposes. Order pronounced in the open Court on 25th October, 2024. Sd/- Sd/- (ASTHA CHANDRA) (R. K. PANDA) JUDICIAL MEMBER VICE PRESIDENT पुणे Pune; दिन ांक Dated : 25th October, 2024 GCVSR आदेश की प्रतितिति अग्रेतिि/Copy of the Order is forwarded to: 1. अपीलार्थी / The Appellant; 2. प्रत्यर्थी / The Respondent 3. 4. 5. The concerned Pr.CIT DR, ITAT, „A‟ Bench, Pune गार्ड फाईल / Guard file. आदेशानुसार/ BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अधिकरण ,पुणे / ITAT, Pune 6 ITA No.694/PUN/2024 S.No. Details Date Initials Designation 1 Draft dictated on Sr. PS/PS 2 Draft placed before author Sr. PS/PS 3 Draft proposed & placed before the Second Member JM/AM 4 Draft discussed/approved by Second Member AM/AM 5 Approved Draft comes to the Sr. PS/PS Sr. PS/PS 6 Kept for pronouncement on Sr. PS/PS 7 Date of uploading of Order Sr. PS/PS 8 File sent to Bench Clerk Sr. PS/PS 9 Date on which the file goes to the Head Clerk 10 Date on which file goes to the A.R. 11 Date of Dispatch of order "