DCIT 2(2), MUMBAI V. TRACTOR ENGINEERS LTD, MUMBAI

ITA 1048/MUM/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 2492 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 8 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-10-2016
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: E
• Assessment Year: 2009-2010
• Appeal Filed On: 14-02-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: USHA GOPALAN
• Section: 143(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL E B ENCH, MUMBAI BEFORE SHRI RAJENDRA, ACCOUNTANT MEMBER AND SHRI C.N. PRASAD, JUDICIAL MEMBER / I .TA NOS. 1048 & 5438/MUM/2014 ( / ASSESSMENT YEARS: 2009-10 & 2010-11 THE ACIT - 2(2), AAYAKAR BHAVAN, MUMBAI-400 020 / VS. M/S. TRACTOR ENGINEERS LTD., NOW L&T CUTTING TOOLS LTD., L&T HOUSE, N.M. MARG, BALLARD ESTATE, MUMBAI- 400 001 ./ ./ PAN/GIR NO. AAACT 4499B ( / APPELLANT ) .. ( / RESPONDENT ) / DEPARTMENT BY: SHRI SANJEEV KASHYAP / ASSESSEE BY: MS. USHA GOPALAN / DATE OF HEARING :27.07.2016 ! / DATE OF PRONOUNCEMENT :25.10.2016 / O R D E R PER C.N. PRASAD, JM: THESE TWO APPEALS ARE FILED BY THE REVENUE AGAINST DIFFERENT ORDERS OF THE LD. CIT(A)-6, MUMBAI PERTAINING TO AS SESSMENT YEARS 2009-10 & 2010-11. SINCE ISSUE IN BOTH THESE APPEA LS IS COMMON, THEY WERE HEARD TOGETHER AND DISPOSED OF BY THIS CO MMON ORDER FOR THE SAKE OF CONVENIENCE. ITA NOS. 1048 & 5438/M/2014 2 2. THE ONLY ISSUE IN BOTH THESE APPEALS IS THAT THE LD. CIT(A) ERRED IN DELETING THE DISALLOWANCE MADE BY THE ASSESSING OFFICER ON ACCOUNT OF RESEARCH AND DEVELOPMENT EXPENSES. 3. BRIEFLY STATED THE FACTS ARE THAT THE ASSESSEE I S ENGAGED IN THE BUSINESS OF MANUFACTURE AND SALE OF UNDER CARRIAGE PARTS FILED ITS RETURN OF INCOME ON 29.9.2009 AND 29.9.2010 DECLARI NG LOSS OF RS. 24,77,19,621/- AND RS. 81,47,506/- FOR THE ASSESSM ENT YEARS 2009- 10 AND 2010-11 RESPECTIVELY. THE ASSESSMENTS WERE COMPLETED U/S. 143(3) AND WHILE COMPLETING THE ASSESSMENTS, THE AS SESSING OFFICER DISALLOWED R&D EXPENSES OF RS. 69,17,917/- AND RS. 44,33,000/- CLAIMED BY THE ASSESSEE IN THE ASSESSMENT YEARS 200 9-10 AND 2010- 11 OBSERVING THAT THERE IS NO EVIDENCE ON RECORD TO SHOW THAT THE R&D ACTIVITIES WERE CARRIED OUT BY THE ASSESSEE AND NO MATERIAL ADDUCED BY THE ASSESSEE IN RESPECT OF R&D EXPENSES. 4. ON APPEAL, THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND THE EVIDENCES FURNISHED THEREIN AL LOWED THE CLAIM OF THE ASSESSEE. THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITS THAT ASSESSEE HAS NOT FURNISHED ANY DETAILS IN RESPECT O F THE EXPENDITURE CLAIMED BY THE ASSESSEE TOWARDS R&D EXPENSES. THUS , THE ASSESSING OFFICER HAS RIGHTLY DISALLOWED THE CLAIM OF THE ASS ESSEE. HE STRONGLY PLACED RELIANCE ON THE ORDERS OF THE ASSESSING OFFI CER IN DISALLOWING THE R&D EXPENSES. 5. THE LD. COUNSEL FOR THE ASSESSEE SUBMITS THAT AL L THE DETAILS REGARDING R&D EXPENSES WERE FILED IN THE COURSE OF ASSESSMENT PROCEEDINGS BEFORE THE ASSESSING OFFICER. HE SUBMI TS THAT THE ITA NOS. 1048 & 5438/M/2014 3 COMPLETE DETAILS OF EXPENDITURE INCURRED TOWARDS R &D EXPENSES WERE FILED BEFORE THE ASSESSING OFFICER. HE FURTHE R SUBMITS THAT CERTIFICATE OF REGISTRATION OF DESIGN DATED 15.12.2 008 ISSUED BY GOVERNMENT OF INDIA IN RESPECT OF DESIGN SUBMITTED TO EVIDENCE THE ASSESSEES CLAIM REGARDING THE R&D ACTIVITIES CARRI ED ON BY THE ASSESSEE. IT IS FURTHER SUBMITTED THAT DETAILED NO TE AND NATURE OF ACTIVITIES CARRIED OUT ALONGWITH SUPPORTING VOUCHER S AND PAYMENTS INCURRED FOR R&D ARE SUBMITTED BEFORE THE ASSESSING OFFICER. THE LD. COUNSEL FOR THE ASSESSEE HOWEVER SUBMITS THAT THE A SSESSING OFFICER DISALLOWED THE CLAIM OF THE ASSESSEE MADE U/S. 35(1 ) TOWARDS R&D EXPENSES COMPLETELY IGNORING THE DETAILS AND EVIDEN CES FURNISHED BY THE ASSESSEE. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE AUTHORITIES BELOW. THE CLAIM OF THE ASSESSEE W AS BASICALLY DENIED BY THE ASSESSING OFFICER FOR WANT OF DOCUMENTARY EV IDENCES TO SHOW THAT THE ASSESSEE HAS INCURRED EXPENDITURE FOR R&D ACTIVITIES. THE LD. CIT(A) CONSIDERING THE SUBMISSIONS AND EVIDENCE S FURNISHED BEFORE HIM ALLOWED THE CLAIM OF THE ASSESSEE. THE REVENUE IN ITS APPEAL CHALLENGED THE ORDER OF THE LD. CIT(A) IN AL LOWING THE CLAIM OF THE ASSESSEE. IN THE GROUNDS OF APPEAL, THE REVENU E IS CHALLENGING THAT THE R&D EXPENSES WERE ALLOWED BY THE LD. CIT(A ) WITHOUT APPRECIATING THAT THE ASSESSEE FAILED TO FURNISH SU PPORTING DOCUMENTARY EVIDENCES TO ESTABLISH THAT THE R&D ACT IVITIES WERE CARRIED OUT BY IT DURING THE YEAR. 6.1. BEFORE US, IT WAS VEHEMENTLY SUBMITTED BY THE LD. COUNSEL FOR THE ASSESSEE THAT THE DETAILS WERE FURNISHED BEFORE THE ASSESSING ITA NOS. 1048 & 5438/M/2014 4 OFFICER. PAPER BOOK CONTAINING VOUCHERS, BILLS ETC WERE FILED AND SUBMITTED THAT THESE DETAILS WERE BEFORE THE ASSESS ING OFFICER. ON A PERUSAL OF THE PAPER BOOK WE COULD SEE THAT CERTAIN EXPENDITURE WERE INCURRED BY THE ASSESSEE TOWARDS DRAWINGS AND DESIG NS WHICH COULD BE IN THE COURSE OF R&D ACTIVITIES. HOWEVER, THERE IS NO EVIDENCE ON RECORD TO SUGGEST THAT THESE DETAILS WERE PRODUCED BEFORE THE ASSESSING OFFICER. THE PAPER BOOK FILED BEFORE US DO NOT SUGGEST THAT ALL THESE EVIDENCES WERE PLACED BEFORE THE ASSESSIN G OFFICER. THEREFORE, IN THE INTEREST OF JUSTICE, WE ARE OF TH E VIEW THAT THE ASSESSING OFFICER SHOULD EXAMINE THE ISSUE ONCE AGA IN WITH REFERENCE TO THE EVIDENCES FURNISHED BY THE ASSESSEE BEFORE T HE LD. CIT(A) AND BEFORE US IN RESPECT OF R&D EXPENSES IN THE FORM O F PAPER BOOK. . THUS, WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND RESTORE THE MATTER TO THE FILE OF THE ASSESSING OFFICER TO DECIDE THE ISSUE AFRESH IN ACCORDANCE WITH LAW WITH REFERENCE TO THE EVIDENCES FURNISHED BY THE ASSESSEE AFTER PROVIDING ADEQUATE OPPORTUNITY O F BEING HEARD TO THE ASSESSEE. 7. IN THE RESULT, BOTH THE APPEALS FILED BY THE REV ENUE ARE ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 25 TH OCTOBER, 2016. SD/- SD/- (RAJENDRA) (C.N. PRASAD ) / ACCOUNTANT MEMBER $ % /JUDICIAL MEMBER MUMBAI; ( DATED 25 TH OCTOBER, 2016 . % . ./ RJ , SR. PS ITA NOS. 1048 & 5438/M/2014 5 !'#$#! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ) ( ) / THE CIT(A)- 4. ) / CIT 5. *+ ,%%-. , -.! , / DR, ITAT, MUMBAI 6. , /01 / GUARD FILE. / BY ORDER, *% //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI