Deputy Commissioner of Income-tax, V. M/s. Force Motors Ltd., Pune

ITA 2196/PUN/2016

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 5518 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 4 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-01-2019
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 29-11-2018
• Assessment Year: 2001-2002
• Appeal Filed On: 21-09-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: MUKESH PATEL
• Keywords: Opportunity of being heard
• Section: 43B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUNE BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SHRI VIKAS AWASTHY, JM . / ITA NO . 2196 /P U N/201 6 / ASSESSMENT YEAR : 20 01 - 02 DY. COMMISSIONER OF INCOME TAX, CIRCLE 9, PUNE ....... / APPELLANT / V/S. M/S. FORCE MOTORS LTD., (FORMERLY KNOWN AS BAJAJ TEMPO LTD.), MUMBAI PUNE ROAD, AKURDI, PUNE 411035 PAN : AAACB7066L / RESPONDENT ASSESSEE BY : S HRI MUKESH PATEL REVENUE BY : S HRI SUDHENDU DAS / DATE OF HEARING : 29 - 11 - 2018 / DATE OF PRONOUNCEMENT : 28 - 01 - 201 9 / ORDER PER VIKAS AWASTHY, JM : THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) - 9, PUNE DATED 30 - 06 - 2016 FOR THE ASSESSMENT YEAR 20 01 - 02. 2 ITA NO .2196/PUN/2016, A.Y. 2001 - 02 2. THE REVENUE HAS ASSAILED THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) BY RAISING FOLLOWING GROUNDS OF APPEAL : 1A) WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) IS JUSTIFIED IN DELETING THE DISALLOWANCE OF RS.6,21,500/ - BEING EXPENSES INCURRED BY THE ASSESSEE ON ACCOUNT OF TAXES AND DUTIES NOT PERTAINING TO THE YEAR UNDER CONSIDERATION WHEN THE ASSESSEE IS FOLLOWING MERCANTILE SYSTEM AND HAS NOT MADE THE PROVISION FOR THE EXPENSES & DEBITED IN P&L A/C? 1B) WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) IS JUSTIFIED IN NOT APPRECIATING THE PROVISIONS OF SECTION 43B OF THE I.T. ACT AND IN IGNORING THE CLEAR LANGUAGE OF THE SE CTION 43B, AS PER WHICH ANY EXPENDITURE HAS TO BE OTHERWISE ALLOWABLE BEFORE APPLYING THE PROVISIONS OF SECTION 43B? 2A) WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) WAS JUSTIFIED IN DELETING THE DISALLOWANCE OF PRIOR YEAR EX PENDITURE OF RS.1,52,98,935/ - PLACING RELIANCE ON THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF GOETZ INDIA LTD. WHEREIN THE SUPREME COURT HAS RESTRICTED THE POWER OF THE AO TO ADMIT THE ADDITIONAL CLAIMS WHICH ARE NOT REFLECTED IN THE RETURN OF INC OME? 2B) THE LD.CIT(A) ERRED IN DELETING THE DISALLOWANCE OF OF PRIOR YEAR EXPENDITURE OF RS.1,52,98,935/ - AS THE ASSESSEE IS FOLLOWING MERCANTILE SYSTEM AND HAS NOT MADE ANY PROVISION FOR THE EXPENSES & DEBITED IN P&L A/C? 3) WHETHER ON THE FACTS AND C IRCUMSTANCES OF THE CASE AND IN LAW, THE CLT(A) WAS JUSTIFIED IN DELETING THE DISALLOWANCE OF RS.4,95,495/ - MADE OUT OF EXPENDITURE ON FREE SERVICE TO CUSTOMERS PLACING RELIANCE ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF ROTORK CONTROLS (I) PVT. LTD . [314 ITR 62] WHEN SCIENTIFIC BASIS OF THE PROVISION OF WARRANTY IS NOT CONCLUSIVELY ESTABLISHED ? 4) THE LD.CIT(A) ERRED IN ALLOWING THE PROVISION OF RS.1,01,51,654/ - FOR LEAVE ENCASHMENT FOR THE AY 2001 - 02 WHEN THE SAME WAS ALLOWED IN A.Y.200 3 - 04 BY THE AO AS THE ASSESSEE HAD PAID A SUM OF RS.1,03,91,058/ - DURING THE FY 2002 - 03 TOWARDS LIABILITY ACCRUING UP TO 31.03.2001. HENCE THIS WOULD RESULT IN DOUBLE DEDUCTION. 3 . SHRI MUKESH PATEL APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED AT THE OUTSET THAT THE ISSUES RAISED IN THE GROUNDS OF APPEAL BY THE REVENUE HAVE ALREADY BEEN ADJUDICATED BY THE TRIBUNAL IN SUBSEQUENT ASSESSMENT YEARS IN FAVOUR OF THE ASSESSEE. THE COMMISSIONER OF INCOME TAX (APPEALS) 3 ITA NO .2196/PUN/2016, A.Y. 2001 - 02 HAS ALLOWED THE ISSUES IN FAVOUR OF THE ASSESSEE BY FOLLOWING THE ORDER OF TRIBUNAL. THE LD. AR SUBMITTED THAT IN GROUND NO. 1 OF THE APPEAL , THE REVENUE HAS ASSAILED ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) IN DELETING THE DISALLOWANCE OF RS.6,21,500/ - BEING EXPEN DITURE INCURRED BY ASSESSEE ON ACCOUNT OF TAXES AND DUTIES NOT PERTAINING TO THE YEAR UNDER APPEAL. THE LD. AR SUBMITTED THAT SIMILAR ISSUE HAD COME UP BEFORE THE TRIBUNAL IN ASSESSMENT YEAR 2003 - 04 AND ASSESSMENT YEARS 2006 - 07 TO 2009 - 10. THE TRIBUNAL IN APPEA L BY THE ASSESSEE IN ITA NO. 1522/PN/2007 FOR ASSESSMENT YEAR 2003 - 04 DECIDED ON 21 - 01 - 2010 ALLOWED THE ASSESSEES CLAIM. FOLLOWING THE SAID ORDER , THE TRIBUNAL DISMISSED THIS GROUND IN APPEALS OF REVENUE IN ITA NOS. 1381 TO 1384/PN/2014 FOR ASSESSMENT YE ARS 2006 - 07 TO 2009 - 10 DECIDED ON 08 - 01 - 2016. THE LD. AR FURNISHED COPY OF ORDER OF TRIBUNAL DATED 08 - 01 - 2016 IN AFORESAID APPEALS. 3.1 THE LD. AR SUBMITTED THAT IN GROUND NO. 2 OF THE APPEAL , THE REVENUE HAS ASSAILED ORDER OF COMMISSIONER OF INCOME TA X (APPEALS) IN DELETING DISALLOWANCE OF PRIOR YEAR EXPENDITURE OF RS.1,52,98,935/ - . THIS ISSUE HAS ALSO BEEN CONSIDERED BY THE TRIBUNAL IN APPEALS BY THE REVENUE IN ITA NOS. 1412 & 1413/PUN/2016 FOR ASSESSMENT YEARS 2010 - 11 AND 2011 - 12, RESPECTIVELY DECID ED ON 18 - 07 - 2018. FACTS IN THE ASSESSMENT YEAR UNDER APPEAL ARE IDENTICAL. THE TRIBUNAL RESTORED THIS ISSUE BACK TO THE FILE OF ASSESSING OFFICER WITH A DIRECTION TO EXAMINE THE DETAILS FURNISHED BY THE ASSESSEE. 3.2 IN GROUND NO. 3 OF THE APPEAL THE REVENUE HAS ASSAILED THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) IN DELETING THE DISALLOWANCE OF RS.4,95,495/ - MADE ON ACCOUNT OF EXPENDITURE ON FREE SERVICE TO 4 ITA NO .2196/PUN/2016, A.Y. 2001 - 02 CUSTOMERS. THE LD. AR SUBMITTED THAT THIS ISSUE HAS BEEN DEALT WITH BY THE TRIBUNAL IN A PPEAL BY THE REVENUE FOR ASSESSMENT YEAR S 2006 - 07 TO 2009 - 10 (SUPRA). 3.3 THE LD. AR FURTHER CONTENDED THAT IN GROUND NO. 4 THE REVENUE HAS ASSAILED THE ACTION OF COMMISSIONER OF INCOME TAX (APPEALS) IN ALLOWING THE PROVISION OF RS.1,01,51,654/ - FOR LEA VE ENCASHMENT. THE LD. AR SUBMITTED THAT RELIEF WAS GRANTED TO THE ASSESSEE IN ASSESSMENT YEAR 2003 - 04 . THE COMMISSIONER OF INCOME TAX (APPEALS) ALLOWED RELIEF TO THE ASSESSEE BY FOLLOWING THE DECISION OF HONBLE SUPREME COURT OF INDIA IN THE CASE OF BH ARAT EARTH MOVERS VS. COMMISSIONER OF INCOME TAX REPORTED AS 245 ITR 428. HOWEVER, THE ASSESSING OFFICER WHILE GIVING EFFECT TO THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) HAS NOT GIVEN THE RELIEF AS DIRECTED BY THE FIRST APPELLATE AUTHORITY SINCE T HE BENEFIT HAS ALREADY BEEN ALLOWED TO ASSESSEE IN ASSESSMENT YEAR 2003 - 04. 4. ON THE OTHER HAND SHRI SUDHENDU DAS REPRESENTING THE DEPARTMENT VEHEMENTLY DEFENDED THE ASSESSMENT ORDER. HOWEVER, THE LD. DR FAIRLY ADMITTED THAT THE ISSUES RAISED BY THE D EPARTMENT IN THE PRESENT APPEAL ARE SIMILAR TO THE ONE ADJUDICATED BY THE TRIBUNAL IN THE SUBSEQUENT ASSESSMENT YEARS IN ASSESSEES OWN CASE. THE LD. DR SUBMITTED THAT SINCE THE REVENUE HAS NOT ACCEPTED THE ORDER OF TRIBUNAL IN ASSESSEES CASE FOR SUBSEQU ENT ASSESSMENT YEARS AND HAS FILED APPEAL AGAINST THE SAID ORDER S BEFORE THE HONBLE HIGH COURT. 4.1 IN RESPECT OF GROUND NO. 4 RELATING TO PROVISION FOR LEAVE ENCASHMENT , THE LD. DR POINTED THAT THE ASSESSEE HAD PAID A SUM OF RS.1,03,91,058/ - DURING THE FINANCIAL YEAR 2002 - 03 TOWARDS LIABILITY ACCRUING UP TO 5 ITA NO .2196/PUN/2016, A.Y. 2001 - 02 31 - 03 - 2001. THE ASSESSING OFFICER DISALLOWED THE EXPENSES ON PAYMENT BASIS IN ASSESSMENT YEAR 2003 - 04. NOW, THE COMMISSIONER OF INCOME TAX (APPEALS) HAS AGAIN ALL OWED THE PROVISION FOR THE SAME EXPENSES FOR ASSESSMENT YEAR 2001 - 02 WHICH WOULD RESULT IN DOUBLE DEDUCTION. 5. W E HAVE HEARD THE SUBMISSIONS MADE BY REPRESENTATIVES OF RIVAL SIDES AND HAVE PERUSED THE ORDERS OF AUTHORITIES BELOW . WE HAVE ALSO CONSIDER ED THE DECISIONS OF CO - ORDINATE BENCH OF TRIBUNAL IN ASSESSEES OWN CASE FOR THE LATER ASSESSMENT YEAR ON WHICH THE LD. AR OF ASSESSEE HAS PLACED RELIANCE. 6. IN FIRST GROUND OF APPEAL , THE REVENUE HAS ASSAILED DELETING THE DISALLOWANCE OF RS.6,21,500/ - BEING EXPENDITURE INCURRED BY THE ASSESSEE ON ACCOUNT OF TAXES AND DUTIES NOT PERTAINING TO THE YEAR UNDER APPEAL. WE FIND THAT IDENTICAL GROUND OF APPEAL WAS RAISED BY THE REVENUE IN APPEAL FOR ASSESSMENT YEARS 2006 - 07 TO 2009 - 10 IN ITA NOS. 1381 TO 1384/PN/2014 (SUPRA). THE TRIBUNAL DISMISSED THE SAID GROUND OF APPEAL BY PLACING RELIANCE ON THE DECISION OF TRIBUNA L IN ITA NO. 1522/PN/2007 (SUPRA). THE CO - ORDINATE BENCH OF TRIBUNAL WHILE ADJUDICATING THIS ISSUE IN THE APPEAL OF ASSESSEE IN ITA NO. 1522/PN/2007 (SUPRA) PLACED RELIANCE ON THE DECISION RENDERED BY THE SPECIAL BENCH IN THE CASE OF DCIT VS. GLAXO SMITHK LINE CONSUMER HEALTHCARE LTD. REPORTED AS 107 ITD 343. IT IS NOT DISPUTED BY THE REVENUE THAT THE FACTS IN THE ASSESSMENT YEAR UNDER APPEAL ARE IDENTICAL TO ASSESSMENT YEARS 2006 - 07 TO 2009 - 10. NO CONTRARY DECISION HAS BEEN PLACED BEFORE US BY THE REVENU E . THUS, IN VIEW OF THE SIMILARITY OF FACTS AND THE DECISION OF SPECIAL BENCH WE FIND NO REASON TO TAKE A CONTRARY VIEW. ACCORDINGLY, GROUND NO. 1 RAISED IN THE APPEAL BY THE REVENUE IS DISMISSED. 6 ITA NO .2196/PUN/2016, A.Y. 2001 - 02 7. IN GROUND NO. 2 OF THE APPEAL , THE REVENUE HAS ASSAI LED DELETING THE DISALLOWANCE OF PRIOR YEAR EXPENDITURE RS.1,52,98,935/ - . THE LD. AR HAS POINTED THAT THIS ISSUE HAS BEEN CONSIDERED BY THE TRIBUNAL IN APPEALS BY THE REVENUE IN ITA NOS. 1412 & 1413/PUN/2016 FOR ASSESSMENT YEARS 2010 - 11 AND 2011 - 12, RESPE CTIVELY (SUPRA). WE FIND THAT THE CO - ORDINATE BENCH OF TRIBUNAL AFTER CONSIDERING THE FACTS RESTORED THIS ISSUE BACK TO THE FILE OF ASSESSING OFFICER BY OBSERVING AS UNDER : 17. AFTER HEARING BOTH THE SIDES ON THIS ISSUE OF ALLOWING PRIOR PERIOD EXPENSES ACCOUNTED IN THE SUBSEQUENT YEARS, WE FIND THE CIT(A) HAS RIGHTLY APPLIED THE RATIO LAID DOWN IN THE CASE OF CIT VS. PRUTHVI BROKERS AND SHAREHOLDERS PVT. LTD. 23 TAXMAN.COM 23 (BOM.). THEREFORE, CONSIDERING THE BINDING JUDGMENT OF THE HONBLE BOMBAY HIGH COURT, WE ARE OF THE VIEW THAT THIS ISSUE SHOULD BE REMANDED TO FILE OF AO. AO IS DIRECTED TO EXAMINE THE DETAILS FURNISHED BY THE ASSESSEE AT PAGE 4 OF THE PAPER BOOK REGARDING THE GENUINENESS OF EXPENDITURE AND THE REASONS FOR NOT RECEIVING THE BILLS IN TIME, AND NOT INCLUDING THE EXPENSES IN THE RETURNS OF INCOME FOR THE A.YRS. 2010 - 11 AND 2011 - 12, AS THE CASE MAY BE. NEEDLESS TO SAY, THE AO SHALL GRANT REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE IN ACCORDANCE WITH THE SET PRINCIPLES OF NATURA L JUSTICE. ACCORDINGLY, GROUND NO.1 RAISED BY THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. SINCE, THE ISSUE IN THE PRESENT APPEAL IS IDENTICAL , WE DEEM IT APPROPRIATE TO RESTORE THIS ISSUE BACK TO THE FILE OF ASSESSING OFFICER FOR FRESH ADJUDICATION IN LINE WITH THE DIRECTIONS OF TRIBUNAL IN ASSESSMENT YEARS 2010 - 11 AND 2011 - 12. ACCORDINGLY, GROUND NO. 2 OF THE APPEAL BY REVENUE IS ALLOWED FOR S TATISTICAL PURPOSE. 8. IN GROUND NO. 3 OF THE APPEAL , THE REVENUE HAS ASSAILED DELETING DISALLOWANCE OF RS.4,95,495/ - MADE ON ACCOUNT OF EXPENDITURE ON FREE SERVICE TO CUSTOMERS. IDENTICAL ISSUE HAS BEEN CONSIDERED BY THE CO - ORDINATE BENCH OF TRIBUNAL IN APPEAL OF REVENUE IN ITA NOS. 1381 TO 1384/PN/2014 (SUPRA). THE CO - ORDINATE BENCH AFTER CONSIDERING THE ORDER OF TRIBUNAL IN ASSESSEES OWN CASE IN ITA NO. 1483/PN/2007 , WHEREIN THE 7 ITA NO .2196/PUN/2016, A.Y. 2001 - 02 ISSUE WAS DECIDED IN FAVOUR OF THE ASSESSEE BY FURTHER PLACING RELIANC E ON THE JUDGMENT OF HONBLE SUPREME COURT OF INDIA IN THE CASE OF BHARAT EARTH MOVERS VS. COMMISSIONER OF INCOME TAX REPORTED AS 245 ITR 428 HAS ALLOWED THE CLAIM OF ASSESSEE. THERE IS NO CONTRARY MATERIAL BEFORE US TO TAKE A DIFFERENT VIEW. THUS, FOLLO WING THE DECISION OF CO - ORDINATE BENCH IN ASSESSEES OWN CASE , THE GROUND NO. 3 RAISED IN THE APPEAL BY THE REVENUE IS DISMISSED. 9. I N GROUND NO. 4 OF THE APPEAL, THE REVENUE HAS ASSAILED THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) IN ALLOWING THE PROVISION OF RS.1,01,51,654/ - FOR LEAVE ENCASHMENT. A PERUSAL OF IMPUGNED ORDER SHOWS THAT THE COMMISSIONER OF INCOME TAX (APPEALS) HAS ALLOWED THE CLAIM OF ASSESSEE BY FOLLOWING THE DECISION OF HONBLE SUPREME COURT OF INDIA IN THE CASE OF BHARAT EAR TH MOVERS VS. COMMISSIONER OF INCOME TAX (SUPRA). THE LD. AR FAIRLY ADMITTED THAT THE RELIEF HAS ALREADY BEEN GRANTED TO THE ASSESSEE IN ASSESSMENT YEAR 2003 - 04 AND WHILE GIVING EFFECT TO THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) , THE ASSESSING OF FICER HAS NOT GRANTED RELIEF TO THE ASSESSEE. THE LD. AR HAS ALSO FURNISHED THE COPY OF ORDER GIVING EFFECT TO THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) U/S. 250 DATED 06 - 02 - 2017. A PERUSAL OF SAME REVEALS THAT THE ASSESSING OFFICER HAS NOT GIVEN THE BENEFIT OF PROVISION FOR LEAVE ENCASHMENT IN THE ASSESSMENT YEAR 2001 - 02 AS THE RELIEF HAS ALREADY BEEN ALLOWED IN ASSESSMENT YEAR 2003 - 04. TH E COMMISSIONER OF INCOME TAX (APPEALS) IN THE IMPUGNED ORDER HAS ERRED IN GRANTING RELIEF TO THE ASSESSEE IN ASSESSMENT YEAR UNDER APPEAL WITHOUT ASCERTAINING THE FACT THAT THE RELIEF WITH RESPECT TO DEDUCTION OF RS.1,01,51,654/ - HAS ALREADY BEEN ALLOWED TO THE ASSESSEE IN ASSESSMENT YEAR 2003 - 04. ACCORDINGLY, THE FINDINGS OF 8 ITA NO .2196/PUN/2016, A.Y. 2001 - 02 COMMISSIONER OF INCOME TAX (APPEALS ) ON THIS ISSUE ARE REVERSED AND THE GROUND NO. 4 OF APPEAL BY THE REVENUE IS ALLOWED. 10. IN THE RESULT, THE APPEAL OF REVENUE IS PARTLY ALLOWED IN THE TERMS AFORESAID. ORDER PRONOUNCED ON MONDAY, THE 28 TH DAY OF JANUARY, 201 9 . SD/ - SD/ - ( R.S. SYAL ) (VIKAS AWASTHY) VICE PRESIDENT JUDICIAL MEMBER / PUNE; / DATED : 28 TH JANUARY, 2019 RK / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 9, PUNE 4. THE PR. COMMISSIONER OF INCOME TAX - 5, PUNE 5. , , , / DR, ITAT, B BENCH, PUNE. 6. / GUARD FILE. / / / / TRUE COPY// / BY ORDER, / PRIVATE SECRETARY, , / ITAT, PUNE