Assistant Commissioner of Income-tax, Circle - 9, Pune V. M/s. Mahle Behr India Pvt. Ltd., Pune

ITA 2159/PUN/2017

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 0098 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-09-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2005-2006
• Appeal Filed On: 14-09-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RELATE TO ASSESSMENT YEARS
• Assessee Lawyers: THIS CONSOLIDATED
• Keywords: Capital receipt; Revenue expenditure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER . / ITA NOS.2159 & 2161/PUN/2017 / ASSESSMENT YEARS : 2005-06 & 2007-08 ACIT, CIRCLE-9, PUNE VS. M/S. MAHLE BEHR INDIA PVT. LTD., GAT NO.626/1/2 AND 622/1/0, MILESTONE, PUNE-NASHIK HIGHWAY, VILLAGE KURULI, TAL. KHED, PUNE 410 501 PAN : AABCB2186L (APPELLANT) (RESPONDENT) / ORDER PER R.S.SYAL, VP : THESE TWO APPEALS BY THE REVENUE RELATE TO THE ASSESSME NT YEARS 2005-06 & 2007-08. SINCE A COMMON ISSUE HAS BEE N RAISED IN THESE APPEALS, WE ARE, THEREFORE, PROCEEDING TO DISPOSE TH EM OFF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. A.Y. 2005-06 : 2. THE FIRST ISSUED RAISED IN THIS APPEAL IS AGAINST THE DELETION OF ADDITION OF RS.1,42,62,575/- BY TREATING PRODUCT DEVELOPMENT APPELLANT BY MS. NANDITA KANCHAN RESPONDENT BY SHRI R.D. ONKAR DATE OF HEARING 20-09-2019 DATE OF PRONOUNCEMENT 20-09-2019 ITA NOS.2159 & 2161/PUN/2017 MAHLE BEHR INDIA LTD., 2 EXPENSES AS REVENUE EXPENDITURE. THE ASSESSING OFFICER TREATED SUCH EXPENDITURE AS CAPITAL IN NATURE. THE LD. CIT(A) DECID ED THIS ISSUE IN THE ASSESSEES FAVOUR, AGAINST WHICH THE REVENUE HAS APPROACHED THE TRIBUNAL. 3. HAVING HEARD BOTH THE SIDES AND GONE THROUGH THE RELEV ANT MATERIAL ON RECORD, IT IS SEEN THAT SIMILAR ISSUE CAME UP FOR CONSIDERATION BEFORE THE TRIBUNAL IN THE ASSESSEES OWN CAS E FOR THE A.Y. 2002-03. A COPY OF SUCH ORDER DATED 21-04-2017 IN ITA NO.566/PUN/2013 HAS BEEN PLACED ON RECORD. RELEVANT DISCU SSION HAS BEEN MADE IN PARA NO.10 BY WHICH THE ISSUE HAS BEEN DETERMINED IN THE ASSESSEES FAVOUR. THE LD. DR FAIRLY AD MITTED THE POSITION. RESPECTFULLY FOLLOWING THE PRECEDENT, WE UPHOLD THE IMPUGNED ORDER ON THIS SCORE. 4. THE ONLY OTHER GROUND WHICH SURVIVES IS AGAINST THE ALLOW ING OF RELIEF OF PROFIT ON PRE-PAYMENT OF SALES TAX DEFERRAL A MOUNT OF RS.8,68,37,227/-. 5. THE ASSESSEE TREATED DIFFERENCE BETWEEN THE NET PRESE NT VALUE AND FUTURE LIABILITY ON PAYMENT OF CONVERTED AMOUNT TOWARDS DEFERRED SALES TAX LIABILITY AS A CAPITAL RECEIPT. THE ASSESSIN G OFFICER TOOK IT AS A REVENUE RECEIPT. THE LD. CIT(A) DELE TED THE ITA NOS.2159 & 2161/PUN/2017 MAHLE BEHR INDIA LTD., 3 ADDITION BY RELYING ON AN ORDER PASSED BY THE SPECIAL BENCH OF THE TRIBUNAL IN SULZER INDIA LTD. 47 DTR 329 HOLDING THAT THE DIFFERENCE BETWEEN THE PAYMENT OF NPV AND THE FUTURE LIABILITY ON ACCOUNT O F DEFERRED SALES TAX LIABILITY, CREDITED BY THE ASSESSEE UNDER THE CAPITAL RESERVE ACCOUNT IN ITS BOOKS OF ACCOUNT, IS A CAPITAL RECE IPT AND CANNOT BE TERMED AS REMISSION/CESSATION OF LIABILITY IN TERMS OF S . 41(1) OF THE ACT. 6. HAVING HEARD BOTH THE SIDES AND GONE THROUGH THE RELEV ANT MATERIAL ON RECORD, IT IS SEEN THAT NOT ONLY THE SPECIAL BENCH O F THE TRIBUNAL IN SULZER INDIA LTD. (SUPRA) BUT THE HONBLE BOMBAY HIGH COURT HAS ALSO DECIDED SIMILAR ISSUE IN ASSESSEES FAVOU R. A COPY OF THE JUDGMENT DATED 25-01-2016 OF THE HONBLE BOMBAY HIGH C OURT IN CIT VS. BEHR INDIA LTD. (INCOME TAX APPEAL NO.2271/20 13) HAS BEEN PLACED ON RECORD IN WHICH SIMILAR ISSUE HAS BEEN DEC IDED IN ASSESSEES FAVOUR. IN VIEW OF THE CONSISTENT VIEW ON THIS ISSUE TAKEN BY THE HIGHER FORUMS IN ASSESSEES FAVOUR, WE ARE OF TH E OPINION THAT THE IMPUGNED ORDER DOES NOT NEED ANY INTERFERENCE. A.Y. 2007-08 : 7. THE ONLY ISSUE RAISED IN THIS APPEAL IS AGAINST TREATING OF PRODUCT DEVELOPMENT EXPENSES AS REVENUE EXPENDITURE. ITA NOS.2159 & 2161/PUN/2017 MAHLE BEHR INDIA LTD., 4 8. BOTH THE SIDES AGREE THAT THE FACTS AND CIRCUMSTANCES OF THIS GROUND ARE SIMILAR TO GROUND NO.1 FOR THE A.Y. 2005-06 WHEREIN THE ISSUE WAS DECIDED AGAINST THE REVENUE. FOLLOWING THE SAME, WE DISMISS THIS GROUND OF THE APPEAL. 9. IN THE RESULT, BOTH THE APPEALS ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH SEPTEMBER, 2019. SD/- SD/- (S.S. VISWANETHRA RAVI) (R.S.SY AL) JUDICIAL MEMBER VICE P RESIDENT PUNE; DATED : 20 TH SEPTEMBER, 2019 / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. THE CIT(A)-6, PUNE 4. 5. 6. THE PR. CIT(A)-5, PUNE , , B / DR B, ITAT, PUNE; / GUARD FILE. / BY ORDER, // TRUE COPY // SENIOR P RIVATE SECRETARY , / ITAT, PUNE ITA NOS.2159 & 2161/PUN/2017 MAHLE BEHR INDIA LTD., 5 DATE 1. DRAFT DICTATED ON 20-09-2019 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 20-09-2019 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS 7. DATE OF UPLOADING ORDER SR.PS 8. FILE SENT TO THE BENCH CLERK SR.PS 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK 10. DATE ON WHICH FILE GOES TO THE A.R. 11. DATE OF DISPATCH OF ORDER. *