ADDL CIT 10(3), MUMBAI V. COLGATE PALMOLIVE (I) LTD, MUMBAI

ITA 1855/MUM/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 78861 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 2 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-05-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: J
• Next Hearing Date: 08-05-2014
• Assessment Year: 2004-2005
• Appeal Filed On: 07-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R K SAHU
• Assessee Lawyers: ARVIND SONDE

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'J' BENCH, MUMBAI BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI SANJAY ARORA, ACCOUNTANT MEMBER ITA NO. 1855/MUM/2011 (ASSESSMENT YEAR: 2004-05) A C I T - 10(3) M/S. COLGATE PALMOLIVE (INDIA) LTD . ROOM NO. 451, 4TH FLOOR AAYAKAR BHAVAN, M.K. ROAD MUMBAI 400020 VS. COLGATE RESEARCH CENTRE MAIN STREET, POWAI MUMBAI 400076 PAN - AAACC4309B APPELLANT RESPONDENT APPELLANT BY: SHRI R.K. SAHU RESPONDENT BY: SHRI ARVIND SONDE DATE OF HEARING: 08.052014 DATE OF PRONOUNCEMENT: 08.05.2014 O R D E R PER D. MANMOHAN, V.P. THIS APPEAL IS FILED AT THE INSTANCE OF THE REVENUE AND IT PERTAINS TO A.Y. 2004-05. 2. THE FOLLOWING GROUNDS WERE URGED BEFORE US: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) OUGHT TO HAVE UPHELD THE ACTION OF THE A SSESSING OFFICER IN TAXING THE REMISSION/CESSATION OF SALES TAX LIABILITY OF RS.32,59,000/- UNDER SECTION 41(1) OF THE INCOME TA X ACT, 1961. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) ERRED IN HOLDING THAT THE DIFFERENTIAL A MOUNT OF RS.32,59,000/- REPRESENTING THE ACTUAL LOAN AMOUNT AND THE PRESENT VALUE OF THE FUTURE LIABILITY PAID BY THE A SSESSEE IS ON CAPITAL ACCOUNT AND NOT TAXABLE U/S 41(1) OR ANY OT HER PROVISION OF THE INCOME TAX ACT, 1961. 3. AT THE TIME OF HEARING THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT IDENTICAL ISSUE HAS COME UP BEFORE THE ITAT C BENCH, MUMBAI IN ITA NO. 1855/MUM/2011 M/S. COLGATE PALMOLIVE (INDIA) LTD. 2 ASSESSEES OWN CASE FOR A.Y. 2003-04 (ITA NO. 5485/ MUM/2009 DATED 25 TH OCTOBER, 2011) WHEREIN THE BENCH, FOLLOWING THE DEC ISION OF THE ITAT SPECIAL BENCH, MUMBAI IN THE CASE OF SULZER INDIA LTD. VS. DCIT 134 TTJ 385, ACCEPTED THE PLEA OF THE ASSESSEE. IT MAY ALSO BE N OTED THAT EVEN THE LEARNED CIT(A) FOLLOWED THE DECISION OF THE ITAT IN THE CAS E OF SULZER INDIA LTD. AND DECIDED IN FAVOUR OF THE ASSESSEE BY OBSERVING AS U NDER: - 1.6 I HAVE PERUSED THE FACTS OF THE CASE. THE SPEC IAL BENCH OF MUMBAI TRIBUNAL IN THE CASE OF SULZER INDIA LTD. VS . JT. CIT RANGE 8(3) (APPEAL NO. I.T.A. NO. 2994/MUM/2007) DA TED NOVEMBER 10, 2010 HAD HELD THAT PAYMENT OF NET PRES ENT VALUE OF THE FUTURE LIABILITY CANNOT BE CLASSIFIED AS REM ISSION OR CESSATION OF THE LIABILITY SO AS TO ATTRACT PROVISI ONS OF SECTION 41(1)(A) OF THE INCOME TAX ACT, 1961. 1.7 THE ASSESSEES CASE IS SQUARELY COVERED BY THE ABOVE REFERRED DECISION OF SPECIAL BENCH OF THE MUMBAI TRIBUNAL AN D THE FACTS OF THE ABOVE CASE ARE PARI MATERIAL TO THE APPELLAN TS CASE. THUS, RELYING UPON THE PRINCIPLES LAID DOWN BY THE JURISD ICTIONAL TRIBUNAL IN THE ABOVE REFERRED CASE, I HOLD THAT TH E DIFFERENTIAL AMOUNT OF ` 32,59,000/- REPRESENTING THE ACTUAL LOAN AMOUNT AND THE PRESENT VALUE OF THE FUTURE LIABILITY PAID BY THE COMPANY IS ON CAPITAL ACCOUNT AND NOT TAXABLE UNDER SECTION 41(1) OR ANY OTHER PROVISION OF THE IT ACT. ACCORDINGLY, THE AO S ACTION STANDS REVERSED. 4. NO CONTRARY VIEW WAS BROUGHT TO OUR NOTICE BY THE R EVENUE WHILE CHALLENGING THE ORDER PASSED BY THE CIT(A). HAVING REGARD TO THE CIRCUMSTANCES OF THE CASE, WE ARE OF THE VIEW THAT THE ORDER PASSED BY THE CIT(A) DOES NOT CALL FOR ANY INTERVENTION. 5. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS D ISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 8 TH MAY, 2014. SD/- SD/- (SANJAY ARORA) (D. MANMOHAN) ACCOUNTANT MEMBER VICE PRESIDENT MUMBAI, DATED: 8 TH MAY, 2014 ITA NO. 1855/MUM/2011 M/S. COLGATE PALMOLIVE (INDIA) LTD. 3 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 15, MUMBAI 4. THE CIT 10, MUMBAI CITY 5. THE DR, J BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.