Aptive Components India P.Ltd (Formerly Known as M/s Delphi Automotive Systems Pvt. Ltd.), New Delhi V. DCIT Circle-3(1), New Delhi

ITA 1129/DEL/2020

• Counselvise Citation: [2023] 102 COUNSELVISE.COM (IT) 0622 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 7 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-10-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 23-07-2023
• Assessment Year: 2005-2006
• Appeal Filed On: 19-03-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: NISHTHA KAURA
• Keywords: Bad and doubtful debts
• Section: 271(1)(c); 143(3); 234B; 250; 139(1)

Judgement Text

Page 1 of 9 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘A’: NEW DELHI BEFORE, SHRI M. BALAGANESH, ACCOUNTANT MEMBER AND SHRI ANUBHAV SHARMA, JUDICIAL MEMBER ITA No.1129/Del/2020 (ASSESSMENT YEAR 2005-06) M/s Aptive Components India Private Limited (Formerly known as M/s Delphi Automotive System Private Limited) PAN-AAACD 0226E Vs. Dy.CIT Circle-3(1) New Delhi (Appellant) (Respondent) Assessee by Sh. Gagan Kumar, Advocate & Ms. Nishtha Kaura, Advocate Department by Sh. Kanv Bali, Sr. DR Date of Hearing 24/07/2023 Date of Pronouncement 20/10/2023 ORDER PER M. BALAGANESH AM: This appeal of the Assessee arises out of the order of the Learned Commissioner of Income Tax (Appeals)-1, New Delhi [hereinafter referred to as ‘Ld. CIT(A)’] in Appeal No.10476/2018- 19 dated 31/01/2020 against the order passed by Deputy Commissioner of Income Tax, Circle-3(1), New Delhi (hereinafter ITA No.1129/Del/2020 Aptive Components India Pvt. Ltd. vs. DCIT Page 2 of 9 referred to as the ‘Ld. AO’) u/s 143(3)/253 of the Income Tax Act (hereinafter referred to as ‘the Act’) on 24/12/2018 for the Assessment Year 2004-05. 2. The assessee has raised the following grounds of appeal:- “1. That the order under section 250 of the Act dated 31" January 2020 passed by the Commissioner of Income Tax (Appeals) 1 ["Ld. CIT(A)") is erroneous and bad in law. 2. That in law and under the facts and circumstances of the case, the Ld. CIT (A) has grossly erred in confirming the order under section 143(3)/254 of the Act dated 24th December 2018 passed by the Deputy Commissioner of Income Tax. Circle -3(1), New Delhi ("Ld. AO"). 3. That in law and under the facts and circumstances of the case, the Ld. AO/Ld. CIT (A) has grossly erred in confirming the disallowance of deduction of Rs. 94,14,147/- on account of advance written off. 4. That in law and under the facts and circumstances of the case, the Ld. AO/Ld. CIT (A) has grossly erred in not giving the consequential benefit of deduction of Rs. 2,94,25.184/- claimed under section 10A of the Act. 5. That in law and under the facts and circumstances of the case, the Ld. AO/Ld. CIT (A) has grossly erred in not giving the benefit of brought forward losses. 6. That in law and under the facts and circumstances of the case, the Ld. AO has grossly erred in charging interest under section 234A and 234B of the Act. 7. That in law and under the facts and circumstances of the case, the Ld. AO has grossly erred in initiating penalty proceedings under section 271(1Xc) of the Act. 8. The Appellant craves for leave to add, amend, vary, omit or substitute any of the aforesaid grounds of appeal at any time before or at the time of hearing of the appeal. 9. That all the grounds are without prejudice to each other.” ITA No.1129/Del/2020 Aptive Components India Pvt. Ltd. vs. DCIT Page 3 of 9 3. The Ground Nos.1,2,8 and 9 raised by the assessee are general in nature and does not require any specific adjudication. 4. Ground No.3 raised by the assessee is challenging the disallowance of deduction of Rs.94,14,147/- on account of advances written off. 5. We have heard the rival submissions and perused the materials available on record. The return of income for AY 2005-06 was filed by the assessee on 31/10/2005. The assessee company is a subsidiary of M/s Delphi Automotive Systmes (Holding) Inc. USA. The assessee company was engaged in the business of manufacture and sale of automotive components, viz. drive shafts (Constant velocity joint), integrated wiring harnesses, catalytic converters, heating, cooling and ventilating systems and suspension systems. This is second round of proceedings before this Tribunal. In the first round, the AO passed order u/s 143(3) of the Act, wherein advances written off by the assessee amounting to Rs.94,14,147/- was disallowed, among other additions. The Ld. CIT(A) deleted the said deletion on account of advances written off. 6. Aggrieved, the Revenue preferred an appeal before this Tribunal. The tribunal in ITA No.6718/Del/2014 dated 31/10/2016 ITA No.1129/Del/2020 Aptive Components India Pvt. Ltd. vs. DCIT Page 4 of 9 restored the issue to the file of the Ld. AO to verify the claim of such write off by giving a factual finding whether it is bad debts written off or advances written off; if it is bad debts written off , whether the conditions prescribed u/s 36(1)(vii) r.w. section 36(2) of the Act had been fulfilled by the assessee; whether the advances written off pertain to trade advance or the advance against capital goods and how they are allowable to the assessee on write off. All these facts were directed to be examined by the Ld. AO. 7. In the second round of proceedings, the Ld. AO gave sufficient opportunities of hearing as directed by the Tribunal to the assessee. The Authorized Representative of the assessee and the employee of the assessee attended the proceedings and submitted that documents in respect of advances written off to the tune of Rs.94,14,147/- are not available. The Ld. AO observed that assessee had merely submitted the break up of write off of advances without providing any details for the same and without indicating the nature of advance paid. Accordingly, the Ld. AO concluded that the advances written off were pertaining to capital advances and cannot be allowed as trading loss and cannot be given any ITA No.1129/Del/2020 Aptive Components India Pvt. Ltd. vs. DCIT Page 5 of 9 deduction as trading loss to the assessee. The assessee before the Ld. CIT(A) in its written submissions stated that advances were given in the form of security deposits to Maruti Udyog Ltd. and other Original Equipment Manufacturers (OEM) in the normal trade of business and since these advances were written off by the assessee, the same would become a trading loss to the tune of Rs.90,35,812/- and allowable as deduction. It was also submitted that advance predominantly pertains to steering division and the same has been sold to M/s Rhodes India Automative Private Limited vide Business Transfer Agreement dated 6 th October, 2009. The Ld. CIT(A) upheld the action of the Ld. AO on the ground that no evidences were produced by the assessee to justify the claim of allowability of advances written off. 8. Before us, the Ld. AR stated that the said advances that were subject matter of write off pertained to unit which was liable for deduction u/s 10A of the Act. Accordingly, he prayed for setting aside of this issue to the file of Ld. AO to verify the fact whether this advance pertain to section 10A unit or not. If it is found on verification by the Ld. AO that the advance pertained to section 10A unit, then the write off the same would only go to enhance the claim ITA No.1129/Del/2020 Aptive Components India Pvt. Ltd. vs. DCIT Page 6 of 9 of deduction u/s 10A of the Act as it would increase the business profit of the eligible unit. 9. Per contra, the Ld. DR vehemently argued that as this is very old matter, the issue should not be restored to the file of the Ld. AO once again. He reiterated the findings of the lower authorities that no details per se were furnished by the assessee in the second round of the proceedings as mandated by this Tribunal. 10. We find that the assessee had not came forward to furnish any evidences to prove that the advances pertain to the section 10A eligible unit except making a bald statement before us for the first time. In fact this plea was never taken by the assessee before the lower authorities in two rounds of proceedings. Hence, we deem it fit not to entertain this claim of the assessee. Since, the disallowance has been made by the lower authorities for want of details furnished by the assessee, we do not deem it fit to interfere in the order passed by the Ld. CIT(A) confirming the disallowance. Accordingly, the ground No.3 raised by the assessee is dismissed. 11. No arguments were advanced by the Ld. AR before us at the time of hearing with regard to Ground No.4. Hence, the same is hereby dismissed as not pressed. ITA No.1129/Del/2020 Aptive Components India Pvt. Ltd. vs. DCIT Page 7 of 9 12. Ground No.5 raised by the assessee is seeking the benefit of set off brought forward losses. This being a mathematical computation, we deem it fit to restore the issue to the file of the Ld. AO to decide the allowability of brought forward loss of the assessee and if on verification it is found that assessee is eligible for set off of the loss with current year’s income, the same is to be allowed to the assessee and the balance loss, if any, should be allowed to be carried forward to subsequent years. In our considered opinion, this need not emanate from the second round of proceedings before us. It is only consequential to the determination of income by the Ld. AO. Accordingly, the ground No.5 raised by the assessee is allowed for statistical purposes. 13. Ground No.6 raised by the assessee is challenging the chargeability of interest u/s 234A and the 234B of the Act. The Ld. AO is directed to verify the due date prescribed for filing of return u/s 139(1) of the Act for AY 2004-05 and compare the same with the date of filing of the return by the assessee and, accordingly, decide the chargeability of interest u/s 234A of the Act in accordance with law. The chargeability of interest u/s 234B of the ITA No.1129/Del/2020 Aptive Components India Pvt. Ltd. vs. DCIT Page 8 of 9 Act is consequential in nature and does not require any specific adjudication. 14. Ground No.7 raised by the assessee is challenging the initiation of penalty proceedings u/s 271(1)(c) of the Act which would be premature for adjudication at this stage and hence dismissed. 15. In the result, the appeal of the assessee is partly allowed for statistical purposes. Order pronounced in the open court on 20 th October, 2023. Sd/- Sd/-/-/- (ANUBHAV SHARMA) (M. BALAGANESH) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 20/10/2023 Pk/sps Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI