Ashok Leyland John Deere Construction Equipment Co. Pvt. Ltd., CHENNAI V. DCIT Corporate Circle 1(1), CHENNAI

ITA 2131/CHNY/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 2462 (ITAT-CHENNAI)
• Duration Of Justice: 7 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-03-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 13-07-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: HOMI RAJVANSH

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI . . . , !' .$%$&, ( ') BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER ./ ITA NO.2131/CHNY/2018 & +& / ASSESSMENT YEAR : 2013-14 M/S ASHOK LEYLAND JOHN DEERE CONSTRUCTION EQUIPMENT CO. PVT. LTD., AG-1, RAGAMALLIGE, NO.26, KUMARAN COLONY MAIN ROAD, VADAPALANI, CHENNAI - 600 026. PAN : AAHCA 8691 F V. THE DEPUTY COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE 1(1), CHENNAI - 600 034. (-./ APPELLANT) (/0-./ RESPONDENT) -. 1 2 / APPELLANT BY : NONE /0-. 1 2 / RESPONDENT BY : SHRI HOMI RAJVANSH, CIT 3 1 4( / DATE OF HEARING : 12.02.2019 56+ 1 4( / DATE OF PRONOUNCEMENT : 07.03.2019 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER : THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) -4, CHENNAI, D ATED 07.05.2018 AND PERTAINS TO ASSESSMENT YEAR 2013-14. 2 I.T.A. NO.2131/CHNY/18 2. THIS APPEAL OF THE ASSESSEE WAS POSTED ON 02.01. 2019. AT THE REQUEST OF THE LD.COUNSEL FOR THE ASSESSEE, IT WAS ADJOURNED TO 12.02.2019. THE LD.COUNSEL HAS TAKEN NOTE OF THE D ATE OF HEARING BY MAKING ENDORSEMENT ON THE FILE. WHEN THE APPEAL WA S TAKEN UP FOR HEARING ON 12.02.2019, NO ONE APPEARED FOR THE ASSE SSEE INSPITE OF THE FACT THAT THE LD.COUNSEL HAS TAKEN NOTE OF THE DATE OF HARING. THEREFORE, WE HEARD THE LD. DEPARTMENTAL REPRESENTATIVE AND PR OCEEDED TO DISPOSE THE APPEAL ON MERIT. 3. THE ONLY ISSUE ARISES FOR CONSIDERATION IS WITH REGARD TO DISALLOWANCE OF 12,18,62,854/-. 4. SHRI HOMI RAJVANSH, THE LD. DEPARTMENTAL REPRESE NTATIVE, SUBMITTED THAT THE ASSESSEE CLAIMED INCENTIVE TO DE ALERS TO THE EXTENT OF 5,10,91,256/-, MARKETING AND SALES PROMOTION EXPENS ES TO THE EXTENT OF 1,62,62,822/-, SALES COMMISSION EXPENSES TO THE EXT ENT OF 3,24,99,000/- AND PRODUCE IMPROVEMENT PROGRAMME TO THE EXTENT OF 2,20,09,776/-. THUS, THE TOTAL EXPENDITURE CLAIMED BY THE ASSESSEE COMES TO 12,18,62,854/-. ACCORDING TO THE LD. D.R., THE ASS ESSEE EXPLAINED BEFORE THE ASSESSING OFFICER THAT IT IS A PROVISION FOR WARRANTY EXPENSES. THE ASSESSING OFFICER FOUND THAT THERE I S A DIFFERENCE BETWEEN WARRANTY EXPENSES AND OTHER EXPENSES CLAIME D BY THE ASSESSEE. ACCORDING TO THE LD. D.R., A PROVISION I S A LIABILITY WHICH CAN BE MEASURED ONLY BY SCIENTIFIC METHOD OF ESTIMATION . ACCORDING TO THE 3 I.T.A. NO.2131/CHNY/18 LD. D.R., THE ASSESSEE MAY HAVE AN OBLIGATION AS A RESULT OF PAST EVENTS. HOWEVER, THE ASSESSEE HAS NOT ESTABLISHED THE OBLIG ATION ON THE BASIS OF PAST EVENTS, THEREFORE, ACCORDING TO THE LD. D.R., THE CONDITION REQUIRED FOR ALLOWING THE PROVISION IS NOT SATISFIED. MOREO VER, THE EXPENSES WERE NOT ESTIMATED ON THE BASIS OF SCIENTIFIC EVALUATION OF PAST EXPENDITURE. THE LD. D.R. FURTHER CLARIFIED THAT THE PROVISION C REATED BY THE ASSESSEE IS IN RESPECT OF FUTURE OBLIGATION AND NOT WITH REG ARD TO CURRENT LIABILITY. REFERRING TO THE ORDER OF THE CIT(APPEALS), THE LD. D.R. SUBMITTED THAT NO MATERIAL WAS PRODUCED BY THE ASSESSEE EITHER BEFORE THE ASSESSING OFFICER OR BEFORE THE CIT(APPEALS). EVEN BEFORE TH IS TRIBUNAL, THE ASSESSEE HAS NOT APPEARED EVEN THOUGH THE DATE OF H EARING WAS TAKEN NOTE OF. MOREOVER, ACCORDING TO THE LD. D.R., NO M ATERIAL IS PRODUCED BEFORE THIS TRIBUNAL ALSO. 5. WE HEARD THE LD. DEPARTMENTAL REPRESENTATIVE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE ASSESSI NG OFFICER FOUND THAT THE PROVISION WAS CREATED IN RESPECT OF FUTURE OBLI GATION AND NOT CURRENT LIABILITY. MOREOVER, NO MATERIAL IS AVAILABLE ON R ECORD TO INDICATE THAT THE PROVISION WAS ESTIMATED ON THE BASIS OF THE PAST EX PERIENCE BY WAY OF SCIENTIFIC REASONS. MOREOVER, NO MATERIAL IS AVAIL ABLE ON RECORD TO INDICATE THAT THE ASSESSEE INCURRED THE EXPENDITURE TO THE EXTENT OF ESTIMATION. THEREFORE, THIS TRIBUNAL DO NOT FIND A NY REASON TO INTERFERE 4 I.T.A. NO.2131/CHNY/18 WITH THE ORDER OF THE LOWER AUTHORITY AND ACCORDING LY THE SAME IS CONFIRMED. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE COURT ON 7 TH MARCH, 2019 AT CHENNAI. SD/- SD/- ( !'.$%$&) ( . . . ) (ABRAHAM P. GEORGE) (N.R.S. GANESAN ) ( / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 8 /DATED, THE 7 TH MARCH, 2019. KRI. 1 /49: ;:+4 /COPY TO: 1. -. /APPELLANT 2. /0-. /RESPONDENT 3. 3 <4 () /CIT(A)-4, CHENNAI-34 4. PRINCIPAL CIT, CHENNAI-1, CHENNAI 5. := /4 /DR 6. >& ? /GF.