Automotive Wiring SYStems Pvt. Ltd., Pune V. The DCIT, Pune

ITA 1616/PUN/2008

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 3051 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 11 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-12-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2000-2001
• Appeal Filed On: 23-12-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HARESHWAR SHARMA
• Keywords: Opportunity of being heard; Capital expenditure
• Section: 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI SHAILENDRAKUMAR YADAV AND SHRI D. KARUNAKARA RAO ITA NO. 1616/PN/08 (ASSTT. YEAR 2000-01) AUTOMOTIVE WIRING SYSTEMS PVT. LTD. 4, MILE POST. NAGAR ROAD, PUNE 411 014 PAN NO. AABCA0456G .... APPELLANT VS. THE DY. CIT, CIRCLE 1(1), PUNE . RESPONDENT APPELLANT BY : SHRI KANCHAN KAUSHAL RESPONDENT BY : SHRI HARESHWAR SHARMA ORDER PER D. KARUNAKARA RAO AM THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF THE CIT(A)-I, PUNE DATED 05-09-2008 FOR THE A.Y 2000-01 AND THE GRO UNDS RAISED ARE AS UNDER:- GROUND 1: DISALLOWANCE OF TECHNICAL SUPPORT COST 1.1 ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS)-I, PUNE {CIT- A} ERRED IN UPHOLDING THE ASSESSING OFFICER (AO)S ACTION OF NOT ALLOWING THE PAYMENT OF RS. 17,228,306 MADE AS TECHNICAL SUPPORT COST AS REVENUE OR AS CAPITAL EXPENDITURE; THEREBY DISALLOW ING AND ADDING BACK SUCH EXPENDITURE TO THE TOTAL INCOME OF THE AP PELLANT. 1.2 ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) FAILED TO APPRECIATE THE FACTS OF THE CASE; SPECIFICALLY: THE LEARNED AO ERRED IN HOLDING THAT THE PAYMENT OF RS. 17,228,306 ON ACCOUNT OF SUPPORT COST PAID TO TYCO ELECTRONICS CORPORATION LIMITED (FORMERLY AMP INDIA LIMITED) WA S CAPITAL IN NATURE; THE LEARNED AO HAS FAILED TO APPRECIATE THE SUBMISS IONS AND CLARIFICATIONS PROVIDED BY THE APPELLANT IN SUPPORT OF ITS CLAIM THAT SUCH EXPENDITURE WAS REVENUE IN NATURE AND WAS DEDU CTIBLE UNDER SECTION 37 OF THE INCOME TAX ACT, 1961 (THE ACT); ITA NO. 1616/PN/08 A.Y 2000-01 PAGE 2 OF 3 THE LEARNED AO ERRED IN HOLDING THAT THE GENUINENES S OF THE AGREEMENT UNDER CONSIDERATION IS ITSELF DOUBTFUL; A ND THE LEARNED AO ERRED IN HOLDING THAT THE SERVICES R ENDERED BY TYCO AND LISTED BY THE APPELLANT ARE NORMAL SERVICES AND NOTHING OVER AND ABOVE THE FUNCTIONS PERFORMED BY A HOLDING COMP ANY OR TO BE EXECUTED BY ITS DIRECTORS. 2. AT THE VERY OUTSET, LD. COUNSEL FOR THE ASSESSEE M ENTIONED THAT THERE IS A CONFUSION IN THE MINDS OF THE AUTHORITIES OF THE REV ENUE AS TO WHETHER THE DISALLOWANCES OF THE TECHNICAL SUPPORT COST HAS TO BE DONE FOR WANT OF CORRECT EVIDENCES OR FOR THE REASON THAT THE IMPUGNED EXPENDIT URE IS CAPITAL IN NATURE. REFERRING TO THE GROUNDS, LD. COUNSEL ARGUED STATING THAT ASSESSEE HAS SUBMITTED CERTAIN EVIDENCES TO ESTABLISH THE BONAFIDE OF RENDERING OF THE SERVICES BY THE JOINT VENTURE PARTNER FOR WHICH ASSESSEE MADE P AYMENT OF RS. 17,228,306/- . NOW ASSESSEE UNDERTAKES TO FILE NOT O NLY THE RELEVANT FACTS OF THE ACTUAL SERVICES BUT ALSO THE FURTHER EVIDENCES AS WANT ED BY THE A.O, WHICH THE ASSESSEE COULD NOT SUBMIT. IT IS ALSO NOTICED THAT LD. COUNSEL IS UNABLE TO FILE THE BIFURCATION OF EXPENDITURE CLAIMED FOR OPERATIONAL , LEGAL AND TECHNICAL SERVICES ETC. ON THE OTHER HAND, CIT DR FOR REVENUE W AS OF THE OPINION THAT ORDER OF THE CIT(A) MUST BE CONFIRMED. 3. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE. THE ISSUE IS QUESTION RELATES TO ALLOWABILITY OF CL AIM OF RS. 17,228,306/- TOWARDS THE TECHNICAL SUPPORT COST. THERE ARE NO BASIC DETAILS WITH REGARD TO BRAKE UP OF THE EXPENDITURE AND THE REASONS FOR PAYMENT OF THE SAM E TO THE JOINT VENTURE PARTNER AS WELL AS THE DETAILS OF THE SERVICES RENDERED TO THE ASSESSEE. THE ASSESSEE SUBMITTED SOME DETAILS, MORE OF THE SAME AS WANTED BY THE A.O COULD NOT BE FURNISHED DURING THE ASSESSMENT OR APPELLATE PRO CEEDINGS. WE HAVE ALSO FIND CERTAIN APPARENT MISTAKE THAT CREPT INTO THE ORDER OF THE CIT(A) WITH REGARD TO THE CLAIM OF LOSSES/PROFIT MAKING NATURE OF THE JO INT VENTURE PARTNERS AS WELL AS THE ASSESSEE. SUCH ERRONEOUS ASSUMPTIONS AT THE C IT(A) ALSO CONTRIBUTED TO FINAL DECISION IN THE IMPUGNED ORDER. THUS, THERE IS N EED FOR DELETION OF SUCH ERRONEOUS ASSUMPTIONS FOR JUDICIOUS DECISIONS OF THE C IT(A). 4. THUS, IN OUR OPINION ORDERS OF THE REVENUE ARE NOT MATURELY AND JUDICIOUSLY CONCLUDED. AS SUCH, IN OUR OPINION, THE CIT(A) HAS NOT PASSED A SPEAKING ORDER AS HE HAS NOT CONSIDERED THE ARGUMENTS A DVANCED BY THE ASSESSEE DURING THE APPELLANT PROCEEDINGS. THUS, WE A RE OF THE OPINION AS REQUESTED BY THE LD. COUNSEL FOR THE ASSESSEE THE MAT ER SHOULD BE REFERRED TO ITA NO. 1616/PN/08 A.Y 2000-01 PAGE 3 OF 3 THE FILES OF THE A.O FOR DE NOVO ASSESSMENT. THE ASSESSEE IS DIRECTED TO FURNISH ALL THE EVIDENCES TO SUPPORT HIS CLAIM. A.O IS ALSO DIRECTED TO GIVEN REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. ACCORDING LY, ALL THE GROUNDS RAISED BY THE ASSESSEE ARE SET ASIDE. 5. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE . ORDER PRONOUNCED ON 16 TH DECEMBER, 2010. SD/- SD/- (SHAILENDRAKUMAR YADAV) (D.KARUNAKAR A RAO) JUDICIAL MEMBER ACCOUNTANT MEMBE R PUNE DATED THE 16 TH DECEMBER, 2010 R COPY OF THE ORDER IS FORWARDED TO : 1. ASSESSEE 2. DCIT, CIRCLE 1(1), PUNE 3. CIT(A)-I, PUNE 4. CIT-I,PUNE 5. DR TAT A BENCH, PUNE BY ORDER ASSISTANT REGISTRAR I.T.A.T PUNE