Deputy Commissioner of Income-tax, Circle - 14, Pune V. M/s. Kenersys India Pvt.Ltd, Pune

ITA 1348/PUN/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 6093 (ITAT-PUNE)
• Duration Of Justice: 11 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-08-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 05-08-2019
• Assessment Year: 2012-2013
• Appeal Filed On: 21-08-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: O A MAO
• Assessee Lawyers: MAKARAND
• Keywords: Principle of natural justice

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, PUNE BEFORE SHRI R.S.SYAL, VP AND SHRI PARTHA SARATHI CHAUDHURY , JM . / I TA NO. 1348 /PUN/20 18 / ASSESSMENT YEAR : 2012 - 13 THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE - 14, PUNE. ....... / APPELLANT / V/S. M/S. KENERSYS INDIA PRIVATE LIMITED. SURVEY NO.49, INDUSTRY HOUSE, MUNDHWA, PUNE - 411 036. PAN : AADCK2089H / RESPONDENT A SSESSEE BY : SHRI MAKARAND REVENUE BY : SHRI O.A. MAO, CIT / DATE OF HEARING : 05 .0 8 .2019 / DATE OF PRONOUNCEMENT : 05 .0 8 .2019 / ORDER PER PARTHA SARATHI CHAUDHU RY, JM : THIS APPEAL PREFERRED BY THE REVENUE EMANATES FROM THE ORDER OF THE LD. CIT(APPEALS) - 7, PUNE DATED 21.06.2018 FOR THE ASSESSMENT YEAR 2012 - 13 AS PER THE FOLLOWING GROUNDS OF APPEAL ON RECORD: 1. THE ORDER OF THE LD. CIT(A) IS CONTRARY TO LAW AND TO THE FACTS AND CIRCUMST ANCES OF THE CASE. 2 ITA NO. 1348 /PUN/20 18 A.Y. 2012 - 13 2. WHETHER ON FACTS AND IN CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS GROSSLY ERRED IN ALLOWING THAT THE DISALLOWANCE OF PROVISION FOR WARRANTY OF RS.2,25,49,347/ - MADE BY THE ASSESSING OFFICER. 3. THE ABOVE GROUND OF APPEAL MAY KINDLY B E ALLOWED TO BE AMENDED, ALTERED, MODIFIED ETC. IN THE INTEREST OF NATURAL JUSTICE . 2. THE CRUX OF THE GRIEVANCE IN THIS APPEAL BY THE REVENUE IS THE ALLOWA NCE BY THE LD. CIT(APPEALS) REGARDING THE PROVISION S FOR WARRANTY . 3. THE LD. CIT(APPEALS) ON THIS ISSUE HAS OBSERVED THAT THE ASSESSEE HAD E - FILED RETURN OF INCOME ON 29.11.2012 DECLARING TOTAL INCOME OF ( - ) RS.63,02,12,231/ - . DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTED THAT AN AMOUNT OF RS.2,25,49,347 / - INTO P & L ACCOUNT HAS BEEN PROVIDED FOR WARRANTY PROVISIONS. THAT ON IDENTICAL FACTS AND CIRCUMSTANCES , THE LD. CIT(APPEALS) OBSERVED THAT IN ASSESSEE S OWN CASE FOR ASSESSMENT YEAR 2010 - 11, THE ISSUE WAS DECIDED IN FAVOUR OF THE ASSESSEE. 4. THAT FURTHER, AT THE TIME OF HEARING, THE LD. AR OF THE ASSESSEE APPRAISED THE BENCH THAT FOR ASSESSMENT YEAR 2010 - 11 IN ITA NO.2200/PUN/2016 DECIDED ON 21.01.2019, THE T RIBUNAL HAS UPHELD THE ISSUE IN FAVOUR OF THE ASSESSEE. BOTH THE PARTIES AGREED THAT ON THE GIVEN F ACTS AND CIRCUMSTANCES, IT IS A COVERED MATTER. 5. WE HAVE PERUSED THE CASE RECORDS AND ANALYZED THE FACTS AND CIRCUMSTANCES IN THIS CASE. WE HAVE ALSO CONSIDE RED THE JUDICIAL PRONOUNCEMENT S PLACED BEFORE US. T HE LD. CIT(APPEALS) ON THE ISSUE HAS PROVIDED RELIEF TO THE ASSESSEE SINCE ON THE IDENTICAL ISSUE IN ASSESSEE S OWN CASE FOR ASSESSMENT YEAR 2010 - 11 WAS DECIDED IN FAVOUR OF THE ASSESSEE. WE FURTHER OBSERVE THAT THE TRIBUNAL IN ASSESSEE S OWN CASE IN ITA 3 ITA NO. 1348 /PUN/20 18 A.Y. 2012 - 13 NO.2200/PUN/2016 FOR ASSESSMENT YEAR 2010 - 11 ON THE SAME ISSUE HAS HELD AND OBSERVED AS UNDER: 6. ON CONSIDERING THE ABOVE FACTS, WE FOCUS ON THE DATA RELATING TO THE WARRANTY PROVISION. FOR THE SAKE OF COMPLETENESS, THE DATA RELATING TO THE FINANCIAL YEARS 2009 - 10 TO 2012 - 13 FURNISHED BY THE ASSESSEE IS EXTRACTED IN PARA 1.3 OF THE ORDER OF THE CIT(A), WHICH READS AS UNDER : - PARTICULARS FINANCIAL YEAR 2009 - 10 2010 - 11 2011 - 12 2012 - 13 OPENING BALANCE 7,500,000 7,500,000 19,593,249 42,142,596 ADDITION UTILISATION 15,888,819 41,305,567 (18,756,220) 103,707,585 (41,429,042) CLOSING BALANCE 7,500,000 19,593,24 42,142,596 10 4,421,139 7. FROM THE ABOVE TABULATED DATA, IT IS EVIDENT THAT IN THE FIRST TWO FINANCIAL YEARS 2009 - 10 AND 2010 - 11, THE PROVISION CREATED IS TO THE TUNE OF RS.1.96 CRORES (ROUNDED OFF) WHEREAS THE PROVISION IN FINANCIAL YEAR 2011 - 12 (I.E. AFTER THE END OF TWO YEARS OF WARRANTY) IS RS.1.8 CRORES (ROUNDED OFF). IN OUR VIEW, THE PROVISION CREATED AND UTILIZED IS VERY CLOSE. CONSIDERING THE SAME, WE ALSO PERUSED THE DISCUSSION GIVEN BY THE CIT(A) IN HIS ORDER. WE FIND THE CONTENTS OF PARA 5.7 AND 5.8 ARE RELEVANT TO EXTRACT AND THE SAME ARE EXTRACTED AS UNDER : - 5.7 THE APPELLANT HAS RELIED ON THE DECISION OF THE HONBLE DELHI HIGH COURT IN CASE OF CIT VS. ERICSSION COMMUNICATION P. LTD. (SUPRA). IT HAS BEEN OBSERVED THAT IT COULD BE THAT IN PARTICULAR Y EAR ACTUAL WARRANTY CLAIM MAY EXCEED THE PROVISIONS WHICH IS MADE. ASSESSEE WAS THEREFORE, ENTITLE DEDUCTION IN RESPECT OF PROVISIONS FOR WARRANTY CLAIMS. THE APPELLANT HAS RELIED ON KIRLOSKAR BORTHERS LTD. (SUPRA) WHEREIN PROVISION FOR WARRANTY WERE FUL LY ALLOWED. THE CRUX OF THESE JUDICIAL PRONOUNCEMENTS ARE THAT PROVISIONS FOR WARRANTY ARE FULL ALLOWABLE. THE ONLY THING IS THAT THE ESTIMATION OF THE PROVISIONS FOR WARRANTY SHOULD BE ON SCIENTIFIC BASIS. THE APPELLANT HAS CALCULATED PROVISIONS OF WAR RANTY ON THE BASIS OF WARRANTY PERIOD, ACTUAL EXPENDITURE ON WARRANTY. THE OBLIGATION OF WARRANTY STARTS AT THE POINT OF SALE ITSELF. 5.8 IN VIEW OF THE ABOVE PROVISIONS FOR WARRANTY OF RS.75,00,000/ - IS ALLOWABLE AND DISALLOWABLE MADE BY THE AO CANNOT BE UPHELD. ACCORDINGLY, GROUND NO.1 OF THE APPEAL IS ALLOWED. 8. CONSIDERING THE ABOVE REASONING GIVEN BY THE CIT(A), WE FIND THE ORDER OF THE CIT(A) IS FAIR AND REASONABLE ON THIS ISSUE AND IT DOES NOT CALL FOR ANY INTERFERENCE. THEREFORE, THE GROUNDS R AISED BY THE REVENUE IN ITS APPEAL ARE DISMISSED. 4 ITA NO. 1348 /PUN/20 18 A.Y. 2012 - 13 RESPECTFULLY, FOLLOWING THE AFORESAID DECISION OF THE CO - ORDINATE BENCH OF THE TRIBUNAL , PUNE AND CONSIDERING THAT THE FACTS AND CIRCUMSTANCES IN THIS YEAR ARE IDENTICAL AS PER T HE SUBMISSIONS OF BOTH THE PARTIES HEREIN AND AS ALSO AGREED BY THEM , THE RELIEF GRANTED TO THE ASSESSEE BY THE LD. CIT(APPEALS) IS HEREBY SUSTAINED. 6. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRO NOUNCED ON 05 TH DAY OF AUGUST , 201 9 . SD/ - SD/ - R.S.SYAL PARTHA SARATHI CHAUDHURY VICE PRESIDENT JUDICIAL MEMBER / PUNE; / DATED : 05 TH AUGUST , 2019 . SB / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT(APPEALS) - 7, PUNE. 4. THE CIT - 6, PUNE. 5 . , , , / DR, ITAT, C BENCH, PUNE. 6 . / GUARD FILE. // TRUE COPY // / BY ORDER, / PRIVATE SECRETARY , / ITAT, PUNE . 5 ITA NO. 1348 /PUN/20 18 A.Y. 2012 - 13 DATE 1 DRAFT DICTATED ON 05 .0 8 .2019 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 05 .0 8 .201 9 SR.PS/PS 3 DRAFT PROPOSED AND PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/JM 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