ACIT, CHENNAI V. Faively Transport India Ltd., Hosur

ITA 1924/CHNY/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 3990 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 10 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-07-2017
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 18-05-2017
• Assessment Year: 2001-2002
• Appeal Filed On: 31-08-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: N GOPI KRISHNA

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI ... , , # BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBER ./ I.T.A. NO. 1924/MDS/2015 / ASSESSMENT YEAR : 2001-02 THE ASSISTANT COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE 2(1), ROOM NO. 511, 5 TH FLOOR, WANAPARTHY BLOCK, 121, M.G. ROAD. VS. M/S. FAIVELY TRANSPORT INDIA LTD., NO. 39, HARITA, HOSUR 635 109. [PAN: AAGCS 8525B] ( / APPELLANT) ( / RESPONDENT) % & / APPELLANT BY : SHRI N. GOPIKRISHNA, JCIT )*% & / RESPONDENT BY : SHRI VIKRAM VIJAYARAGHAVAN, ADVOCATE & /DATE OF HEARING : 18.05.2017 & /DATE OF PRONOUNCEMENT : 26.07.2017 /O R D E R PER S. JAYARAMAN, ACCOUNTANT MEMBER: THE REVENUE FILED THIS APPEAL AGAINST THE ORDER O F THE COMMISSIONER OF INCOME TAX (APPEALS)-6, CHENNAI IN ITA NO. 127/C IT(A)-6/2008-09 DATED 02.03.2015. :-2-: I.T.A. N0. 1924/MDS/2015 2. THE ASSESSEE DEBITED RS. 53,23,000/- IN ITS P&L A/CIT(A), BY WAY OF PROVISIONS FOR WARRANTY. IN THE ASSESSMENT MADE FO R ASSESSMENT YEAR 2001-02, THE AO OBSERVED THAT THE PROVISIONS FOR WARRANTY CR EATED WERE NOT BASED ON ANY SCIENTIFIC REASONS AND IT IS ONLY AN UNASCERTAINED LIABILITY. RELYING ON THE DECISIONS OF THE JURISDICTIONAL HIGH COURT IN THE C ASE OF CIT VS ROTARK CONTROLS INDIA LTD., 293 ITR 311 (MAD), THE AO DISALLOWED TH IS CLAIM. AGGRIEVED, THE ASSESSEE FILED AN APPEAL. RELYING ON THE SUPREME C OURT DECISION IN ROTARK CONTROLS INDIA LTD, VS CIT, 314 ITR 62 (SC), THE CI T(A) ALLOWED THE APPEAL. AGGRIEVED, THE REVENUE FILED THIS APPEAL PLEADING T HAT THE APEX COURT HELD THAT ONLY PROVISIONS FOR WARRANTY ARRIVED ON A SCIENTIFI C BASIS IS ALLOWABLE AND NOT ANY LUMP SUM PROVISION (UNCERTAIN LIABILITY). THE CIT( A) OUGHT TO HAVE APPRECIATED THAT THE PROVISIONS IS NOT MADE SCIENTIFICALLY. IN ORDER TO APPLY THE DECISION OF THE HONBLE SUPREME COURT, THE ASSESSEE SHOULD HAVE SATISFIED THE IMPORTANT ASPECTS OBSERVED BY THE HONBLE SUPREME COURT VIZ., (I) PROVISIONING WHICH RELATES TO PRESENT OBLIGATI ON (II) IT ARISES OUT OF OBLIGATING EVENTS (III) IT INVOLVES OUTFLOW OF RESOURCES AND LASTLY (IV) IT INVOLVES RELIABLE ESTIMATION OF OBLIGATION AND THE CIT(A) ERRED IN GIVING A SWEEPING RELIEF TO THE ASSESSEE ETC., 3. THE AR BROUGHT TO OUR NOTICE, THE DECISION OF TH E JURISDICTIONAL HIGH COURT IN ITS CASE IN TCA NO. 1339/2007 DATED 13.07.2015, WHEREIN, THE HONBLE HIGH COURT SET ASIDE THE ORDER OF THIS TRIBUNAL AND REMI TTED THE MATTER TO THE AO TO :-3-: I.T.A. N0. 1924/MDS/2015 PASS APPROPRIATE ORDERS IN THE LIGHT OF THE DECISIO N OF SUPREME COURT IN ROTORK INDIA (P) LTD., REFERRED SUPRA. 4. WE HEARD THE RIVAL CONTENTIONS. FOLLOWING THE H ONBLE HIGH COURTS DECISION, SUPRA, THIS MATTER IS REMITTED BACK TO TH E AO TO PASS APPROPRIATE ORDERS IN THE LIGHT OF THE DECISION OF THE SUPREME COURT I N ROTORK CONTROL INDIA PVT. LTD. TO THAT EXTENT, THE APPEAL IS ALLOWED IN FAVOUR OF THE REVENUE. 5. IN THE RESULT, THE REVENUES APPEAL IS TREATED A S ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED ON WEDNESDAY, THE 26 TH DAY OF JULY, 2017 AT CHENNAI. SD/- ( . . . ) (N.R.S. GANESAN) ! ' /JUDICIAL MEMBER SD/- ( ) (S. JAYARAMAN) ' /ACCOUNTANT MEMBER /CHENNAI, 0 /DATED: 26 TH JULY, 2017 JPV & )12 32 /COPY TO: 1. %/ APPELLANT 2. )*% /RESPONDENT 3. 4 ( )/CIT(A) 4. 4 /CIT 5. 2 ) /DR 6. 7 /GF