Deputy Commissioner of Income-tax, V. M/s. Tata Autocomp GY Batteries Ltd., Pune

ITA 1128/PUN/2016

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 8073 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 1 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-07-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 26-06-2019
• Assessment Year: 2009-2010
• Appeal Filed On: 26-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VISHWAS MUNDHE
• Section: 143(3)

Judgement Text

] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI ANIL CHATURVEDI, AM AND SHRI PARTHA SARATHI CHAUDHURY, JM . / ITA NO.1128/PUN/2016 / ASSESSMENT YEAR : 2009-10 THE DY. COMMISSIONER OF INCOME TAX, CIRCLE 7, PUNE. . / APPELLANT V/S M/S. TATA AUTOCOMP GY BATTERIES LTD., TACO HOUSE, DAMLE PATH, OFF. LAW COLLEGE ROAD, ERANDWANE, PUNE 411004. PAN : AACCT3396H. . / RESPONDENT ASSESSEE BY : SHRI KETAN VED. REVENUE BY : SHRI VISHWAS MUNDHE. / ORDER PER ANIL CHATURVEDI, AM : 1. THIS APPEAL FILED BY THE REVENUE IS EMANATING OUT OF THE OR DER OF COMMISSIONER OF INCOME TAX (A), PUNE 5, PUNE DATED 26.02 .2016 FOR THE ASSESSMENT YEAR 2009-10. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON R ECORD ARE AS UNDER :- ASSESSEE IS A COMPANY STATED TO BE ENGAGED IN THE BUS INESS OF MANUFACTURING OF BATTERIES. ASSESSEE ELECTRONICALLY FILED ITS RETURN OF / DATE OF HEARING : 26.06.2019 / DATE OF PRONOUNCEMENT: 12.07.2019 2 INCOME FOR A.Y. 2009-10 ON 24.09.2010 DECLARING LOSS OF RS.35,44,84,222/-. THE CASE WAS SELECTED FOR SCRUTINY AN D THEREAFTER ASSESSMENT WAS FRAMED U/S 143(3) OF THE ACT VIDE ORDER 1 8.03.2013 AND THE TOTAL LOSS WAS DETERMINED AT RS.32,61,62,800/-. AGGRIE VED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE LD.CIT(A), WHO VIDE ORDER DATED26.02.2016 (IN APPEAL NO.PN/CIT(A)-5/ASST.CIT-7, PUNE/1 53/2013- 14) GRANTED SUBSTANTIAL RELIEF TO THE ASSESSEE. AGGRIEVED BY THE ORDER OF LD.CIT(A), REVENUE IS NOW IN APPEAL BEFORE US AND HAS RAISE D THE FOLLOWING EFFECTIVE GROUND : WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE HONBLE CIT(APPEAL) WAS JUSTIFIED IN DELETING THE A DDITION MADE ON ACCOUNT OF DISALLOWANCE OF ADMINISTRATIVE SUPPORT SERVICES CLAIMED U/S 40A(2)(B) OF THE ACT. 3. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, AO NOTIC ED THAT ASSESSEE HAD PAID ADMINISTRATIVE SERVICE CHARGES OF RS.2,83 ,21,427/- TO ITS HOLDING COMPANY I.E., TATA AUTOCOMP SYSTEMS LTD (TACO), ONE OF THE JOINT VENTURE PARTNERS HAVING 50% SHARES AND SIMILAR AMO UNT WAS PAID AS ROYALTY TO OTHER HOLDING COMPANY I.E., GS YUASA INTERNA TIONAL LIMITED, JAPAN. AO NOTED THAT THE AMOUNT PAID TOWARDS THE ADM INISTRATIVE SERVICE CHARGES OF RS.2,83,21,427/- WAS FROM PARTIES COVERED BY SEC.40A(2)(B) OF THE ACT. THE ASSESSEE WAS ASKED TO JUSTIFY THE SAME IN RELATION TO THE REASONABLENESS AND NATURE OF SERVICES. ASSESSEE INTER -ALIA SUBMITTED THAT THE AMOUNT WAS PAID PURSUANT TO THE ADMINISTRATIVE SUPPORT SERVICE AGREEMENT ENTERED BETWEEN ASSESSEE AND TACO. AO ON PERUSING THE AGREEMENT NOTED THAT TACO WAS PROVIDING SERVICES AT THE START-UP PHASE AND OPERATING PHASE. HE NOTED THAT THE SERVICES MENTIONED IN OPERATING PHASE WERE GENERAL IN NATURE AND REQUIRES N O SPECIALIZED SERVICES REQUIRING HIGH TECHNICAL AND PROFESSIONAL KNOWLEDGE . AO ALSO 3 NOTED THAT THE FEE PAYABLE BY THE ASSESSEE WAS FIXED AS A PERCENTAGE TO THE TOTAL TURNOVER OF THE ASSESSEE. AO WAS OF THE VIEW THAT IT WAS DIFFICULT TO UNDERSTAND AS TO HOW A PRICE FOR THE SERVICES RENDE RED CAN BE FIXED ON THE BASIS OF SALES WITHOUT KNOWING THE EXPENDITURE NOR K NOWING THE VOLUME OF TURNOVER. AO ALSO NOTED THAT ASSESSEE HAD INC URRED EXPENSES TOWARDS RECRUITMENT OF NEW EMPLOYEES, TRAVELLING EXPENSES, REIMBURSEMENT ETC. AND IT HAD PAID SEPARATELY FOR THE SERVICES TAKEN UP BY THE TACO. AO THEREFORE CONCLUDED THAT ASSESSEE HAD NOT RECEIVED ANY ADMINISTRATIVE EXPENSES FROM TACO DURING THE ASSESSMENT YEAR AND FURTHER CONCLUDED THAT ASSESSEE HAS NOT SUBSTANTIATED THE SERVICES AVAILED. HE THEREFORE HELD THAT IN THE ABSENCE OF ANY JUS TIFICATION FOR THE AMOUNT PAID, THE CLAIM OF EXPENSES PAID TO TACO AT RS. 2,83,21,427/- WAS NOT ALLOWABLE U/S 40A(2)(B) OF THE ACT AND ACCORDINGLY HE DISALLOWED RS.2,83,21,427/-. AGGRIEVED BY THE ORDER OF AO, ASSESSEE C ARRIED THE MATTER BEFORE LD.CIT(A) WHO NOTED THAT THE FACTS OF THE ASSESSEES CASE WERE IDENTICAL TO THE FACTS OF TATA JOHNSON CONTROL AUTOM OTIVE LTD., AND IN THAT CASE PUNE BENCH OF THE TRIBUNAL (IN ITA NO.1450/PN /2011 FOR A.Y. 2006-07 ORDER DATED 09.12.2015) HAD DECIDED THE ISSU E IN FAVOUR OF THE ASSESSEE. LD.CIT(A) HAS RE-PRODUCED THE FINDINGS OF IT AT IN PAGE 27 TO 33 OF HER ORDER WHICH FOR THE SAKE OF BREVITY NOT RE PRODUCED BY US. SHE THEREAFTER BY FOLLOWING THE ORDER IN THE CASE OF TA TA JOHNSON AUTOMOTIVE LTD., (SUPRA), THE DECISION OF HONBLE BOMBAY H IGH COURT IN THE CASE OF CIT VS. INDO SAUDI SERVICES (TRAVEL) (P.) LTD., A ND OTHER DECISIONS CITED IN THE ORDER HAS DECIDED THE ISSUE IN FAV OUR OF THE ASSESSEE. AGGRIEVED BY THE ORDER OF LD.CIT(A), REVENUE IS NOW IN APPE AL BEFORE US. 4 4. BEFORE US, LD. D.R. REITERATED THE SUBMISSIONS MADE BEFO RE AO AND LD.CIT(A). LD.A.R. ON THE OTHER HAND REITERATED THE SUB MISSIONS MADE BEFORE AO AND LD.CIT(A) AND FURTHER SUBMITTED THAT LD.CIT(A ) HAD DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BY FOLLOWING THE DECIS ION OF PUNE BENCH OF TRIBUNAL IN THE CASE OF TATA JOHNSON AUTOMOTIVE LTD., (SUPRA) AND SUBMITTED THAT AGAINST THE AFORESAID ORDER OF THE TR IBUNAL, REVENUE HAD PREFERRED APPEAL BEFORE THE HONBLE BOMBAY HIGH COUR T AND THAT THE HONBLE BOMBAY HIGH COURT HAD DISMISSED THE APPEAL OF R EVENUE. HE THUS SUPPORTED THE ORDER OF LD.CIT(A). 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ISSUE IN THE PRESENT GROUND IS WITH RESPECT TO DISALLOWANCE OF EXPENSES PAID TO TACO U/S 40A(2)(B) OF THE ACT. WE FIND THA T LD.CIT(A) AFTER RELYING ON THE DECISION IN THE CASE OF ASSESSEES SISTER CONCERN I.E., TATA JOHNSON AUTOMOTIVE LTD., (SUPRA) AND OTHER DECISIONS REFERRED TO IN HER ORDER, DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. BEFORE US, REVENUE HAS NOT POINTED OUT ANY DISTINGUISHING FEATURE IN THE FACTS OF THE CASE IN THE YEAR UNDER CONSIDERATION AND IN THE CASE OF ASSESSEES SISTER CONCERN I.E., TATA JOHNSON AUTOMOTIVE LTD., (SUPRA) NOR HA S POINTED OUT ANY FALLACY IN THE FINDINGS OF LD.CIT(A). FURTHER THE TRIBUNAL S DECISION IN THE CASE OF TATA JOHNSON AUTOMOTIVE LTD., (SUPRA) HAS BEEN UPHELD BY HONBLE BOMBAY HIGH COURT. IN VIEW OF THE AFORESAID FACTS , WE FOLLOWING THE ORDER OF THE CO-ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF ASSESSEES SISTER CONCERN I.E., TATA JOHNSON AUTOMOTIVE LTD., (SUPRA) AND FOR SIMILAR REASONS DISMISS THE GROUND OF REVENUE. THUS, THE GROUND OF THE REVENUE IS DISMISSED. 5 6. IN THE RESULT, THE APPEAL OF REVENUE IS DISMISSED. ORDER PRONOUNCED ON THE 12 TH DAY OF JULY, 2019. SD/- SD/- ( PARTHA SARATHI CHAUDHURY ) ( ANIL CHATURVEDI ) ! / JUDICIAL MEMBER '! / ACCOUNTANT MEMBER PUNE; DATED : 12 TH JULY, 2019. YAMINI #$%&'('% / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. 4. 5 6. CIT(A)-5, PUNE. PR.CIT, PUNE-4, PUNE. '#$ %%&',) &', / DR, ITAT, A PUNE; $,-./ GUARD FILE. / BY ORDER // TRUE COPY // /01%2&3 / SR. PRIVATE SECRETARY ) &' , / ITAT, PUNE.