Yutaka Autoparts India Pvt. Ltd., New Delhi V. DCIT, New Delhi

ITA 1120/DEL/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 6529 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 9 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-12-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I2
• Next Hearing Date: 03-10-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 27-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T M SHIVAKUMAR
• Assessee Lawyers: GAURAV GARG
• Keywords: Depreciation; Onus to prove
• Section: 143(3)

Judgement Text

1 ITA NO. 1120/DEL/2014 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: I-2 NEW DELHI BEFORE SHRI S.V. MEHROTRA, ACCOUNTANT MEMBER AND SMT SUCHITRA KAMBLE , JUDICIAL MEMBER ITA NO. 112 0/DEL/2014 (ASSESSMENT YE AR-2009-10) YUTAKA AUTO PARTS INDIA PVT. LTD. 304-305, LOTUS CHAMBER, 2079/38, NALWA STREET, KAROL BAGH NEW DELHI AAACY2991H (APPELLANT) VS DCIT CIRCLE-18(1), C. R. BUILDING NEW DELHI (RESPONDENT) APPELLANT BY SH. GAURAV GARG, CA RESPONDENT BY SH. T. M. SHIVAKUMAR, CIT(DR) ORDER PER SUCHITRA KAMBLE, JM THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE OR DER U/S 143(3) READ WITH SECTION 144C(4) DATED 26/12/2013 P ASSED BY THE ASSESSING OFFICER FOR ASSESSMENT YEAR 2009-10. 2. THE ASSESSEE IS A SUBSIDIARY OF JAPAN PARENT COM PANY YUTAKA GIKEN COMPANY LTD. AND INCORPORATED IN MARCH 2007. ASSESSMENT YEAR 2009-10 WAS PRACTICALLY FIRST YEAR OF OPERATIO N OF THE ASSESSEE DATE OF HEARING 03.10.2016 DATE OF PRONOUNCEMENT 09.12.2016 2 ITA NO. 1120/DEL/2014 COMPANY. THE ACTUAL CAPACITY WAS UTILIZED TO THE E XTENT OF 35.70% ONLY FOR THE ACTUAL PRODUCTION. THUS, THE CAPACITY WAS NOT FULLY UTILIZED BY THE ASSESSEE. THEREFORE, THE ASSESSEE SUBMITTED THE SUMMARY OF FINANCIALS AND DETAILS OF CAPACITY UTILI ZATION. THE SAME IS AS UNDER:- SUMMARY OF FINANCIALS (AMOUNT IN RS.) FOR FINANCIAL YEAR ENDING 31 ST MARCH 2 009 31 ST MARCH 2008 INCOME NET SALES 384,409,500 OTHER INCOME 1,765,583 8,984,107 INCREASE/DECREASE IN STOCK 16,134,709 402,309,792 8,984,107 EXPENDITURE MATERIAL CONSUMED 336,637,308 EMPLOYEE REMUNERATION 12,987,528 MANUFACTURING, ADMIN & OTHER 34,524,075 FINANCIAL CHARGES 35,423,483 DEPRECIATION 26,676,877 744,677 TOTAL 446,249,271 744,67 PROFIT/(LOSS) BEFORE INCOME TAX (43,939,480) 8,239,430 3 ITA NO. 1120/DEL/2014 4. DETAILS OF CAPACITY UTILIZATION:- S. NO. COMPANY CAPACITY ACTUAL PRODUCTION % ASSESSEE 7,56,000 2,69,863 35.70 COMPARABLE COMPANIES 1. JAI BHARAT EXHAUST SYSTEMS LTD. 8,000 38,800 100% 2. INZI CONTROLS 1,53,20,00 0 1,14,17,545 74.53% 3. JNS INSTRUMENT 74,25,000 64,89,185 87.40% 4. MUBEA SUSPENSIO N LTD. (NOW KNOWN AS TC SPRINGS LTD) 15,00,000 11,46,862 76.46% THE TPO REJECTED THE CONTENTIONS OF THE ASSESSEE BY OBSERVING THAT ON THE UTILIZATION OF MAN POWER/MACHINERY, THE FACT THAT WHETHER THERE WAS ASSURED VOLUMES AND THE DECISION AS TO WH O BEARS THE COST OF IDLE CAPACITY ETC. WERE NOT STATED BY ASSES SEE. IN THE ABSENCE OF SUCH DETAILS AND DATA, THE QUESTION OF GRANTING ADJUSTMENT ON THE GROUND OF IDLE UTILIZATION OF CAPACITY DOES NOT ARISE. THE ASSESSEE WAS REQUIRED TO SUPPORT ITS CLAIM FOR ANY ADJUSTMENT WITH ROBUST DATA AND FULL DETAILS AND EVIDENCES SO AS TO ENABLE THE TPO TO EXAMINE THE CLAIM. THE BURDEN WAS ON THE ASSESSE E WHEN IT 4 ITA NO. 1120/DEL/2014 MADE A CLAIM AND IN THIS CASE, IT DID NOT DISCHARGE THE BURDEN OF PROOF. THE ADJUSTMENT HAS TO BE MADE IN THE HANDS T HE COMPARABLES, HOWEVER NO RELIABLE DATA OF THE COMPAR ABLES IS AVAILABLE. THE SAID OBSERVATIONS WERE ACCEPTED BY T HE DRP AS WELL. 3. THE LD. AR SUBMITTED THAT ALL DETAILS WERE SUBMI TTED TO THE TPO & DRP THEY SHOULD HAVE ALLOWED CAPACITY UTILIZA TION AS PER THE GUIDELINES LAID DOWN. IN DELHI ITAT ORDER IN CASE OF DCIT VS. CLASS INDIA PVT. LTD. (ITA NO. 1783/DEL/2011 DATED 12.08. 2015) IT WAS HELD THAT THE COMPUTATION OF CAPACITY UTILIZATION H AS TO BE INCONSONANCE AND THE COMPARABLES HAS TO BE LOOKED I NTO IN THE RESPECTIVE ASPECT. 4. THE LD. DR SUBMITTED THAT THERE IS ONLY PERCENTA GE-WISE DATA GIVEN AND IF IN CASE THERE IS SOMETHING MORE INFORM ATION REQUIRED THAT WAS MISSING IN RESPECTIVE CAPACITY UTILIZATION BEFORE THE TPO/AO. 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED ALL T HE DOCUMENTS IT IS PERTINENT TO NOTE THAT ACTUAL CAPACITY AND TH E UTILIZATION OF THAT CAPACITY IN THE LESSER FORM HAS TO BE LOOKED INTO. THIS ISSUE WAS CONSIDERED BY THE DELHI TRIBUNAL IN CASE OF CLASS I NDIA PVT. LTD. WHEREIN IT IS HELD THAT THE COMPUTATION OF CAPACITY UTILIZATION HAS TO BE INCONSONANCE AND THE COMPARABLES HAS TO BE LOOKE D INTO IN THE 5 ITA NO. 1120/DEL/2014 RESPECTIVE ASPECT. THUS IN PRESENT CASE AS WELL TH E CAPACITY UTILIZATION HAS TO BE LOOKED INTO WHILE SELECTING T HE COMPARABLES. THEREFORE, THIS NEEDS TO BE LOOKED INTO BY THE ASSE SSING OFFICER/TPO. UNDER THESE CIRCUMSTANCES, WE ARE OF THE CONSIDERED OPINION THAT IF THE IMPUGNED ORDER IS SET ASIDE AND THE MATTER IS RESTORED TO THE FILE OF THE ASSESSING OFFICER/TPO I T WILL BE APPROPRIATE. WE ORDER ACCORDINGLY. NEEDLESS TO SAY , THE ASSESSEE WILL BE ALLOWED A REASONABLE OPPORTUNITY OF HEARING IN SUCH FRESH ASSESSMENT PROCEEDINGS. 6. IN THE RESULT, APPEAL IS PARTLY ALLOWED FOR STAT ISTICAL PURPOSE. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 09TH OF DECEMBER, 2016. SD/- SD/- (S.V. MEHROTRA) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 09/12/2016 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR 6 ITA NO. 1120/DEL/2014 ITAT NEW DELHI DATE 1. DRAFT DICTATED ON 04.10 2016 PS 2. DRAFT PLACED BEFORE AUTHOR 05.10.2016 PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 10.2016 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS .0912.2016 PS/PS 6. KEPT FOR PRONOUNCEMENT ON PS 7. FILE SENT TO THE BENCH CLERK 09.12.2016 PS 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER.