M/s. John Deere India Pvt. Ltd., Pune V. ACIT, Circle 11(1), Pune

ITA 3/PUN/2013

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 6773 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 6 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-07-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2004-2005
• Appeal Filed On: 01-01-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MRS S PRAVEENA
• Section: 143(3); 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER ITA NOS.3 & 4/PN/2013 (A. YS. : 2004-05 & 2005-06) M/S JOHN DEERE INDIA PVT. LTD., TOWER IV, CYBERCITY, MAGARPATTA CITY, HADAPSAR, PUNE 411 028. PAN : AAACJ4233B . APPELLANT VS. ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE- 11(1), PUNE. . RESPONDENT ASSESSEE BY : MR. NIKHIL PATHAK DEPARTMENT BY : MRS. S. PRAVEENA DATE OF HEARING : 21-07-2014 DATE OF PRONOUNCEMENT : 25-07-2014 ORDER PER G. S. PANNU, AM THE TWO APPEALS RELATING TO THE SAME ASSESSEE INVOL VE A COMMON ISSUE THEREFORE, THEY HAVE BEEN CLUBBED AND HEARD T OGETHER AND A CONSOLIDATED ORDER IS BEING PASSED FOR THE SAKE OF CONVENIENCE AND BREVITY. 2. BOTH THE CAPTIONED APPEALS ARE DIRECTED AGAINST AN ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-I, PUNE DATED 12.10.2012 WHICH, IN TURN, HAS ARISEN FROM AN ORDER DATED 20.09.2011 PAS SED BY THE ASSESSING OFFICER U/S 143(3) R.W.S. 147 OF THE INCOME-TAX ACT , 1961 (IN SHORT THE ACT) PERTAINING TO THE ASSESSMENT YEARS 2004-05 AND 2005 -06. 3. IN BOTH THE APPEALS THE ONLY ISSUE RELATES TO DI SALLOWANCE OF DEDUCTION CLAIMED BY THE ASSESSEE U/S 35D OF THE ACT AMOUNTIN G TO RS.2,39,000/-. ITA NOS.3 & 4/PN/2013 A.YS. : 2004-05 & 2005-06 4. IN BRIEF, THE RELEVANT FACTS ARE THAT APPELLANT IS A COMPANY INCORPORATED UNDER THE PROVISIONS OF THE COMPANIES ACT, 1956 WHI CH IS, INTER-ALIA, ENGAGED IN THE BUSINESS OF PROVIDING TECHNICAL AND MANAGEME NT EXPERTISE IN IT AND IT ENABLED SERVICES. IN THE COURSE OF IMPUGNED ASSESS MENT PROCEEDINGS CARRIED OUT BY THE ASSESSING OFFICER IN TERMS OF SECTION 14 3(3) R.W.S. 147 OF THE ACT, IT WAS NOTED THAT ASSESSEE HAD CLAIMED DEDUCTION OF RS .2,39,000/- U/S 35D OF THE ACT ON ACCOUNT OF 1/5 TH OF EXPENSES INCURRED FOR STAMP DUTY AND REGISTRATION FEES PAID TO THE REGISTRAR OF COMPANIE S FOR INCREASE IN THE AUTHORIZED SHARE CAPITAL DURING THE FINANCIAL YEAR 2002-03 RELEVANT TO THE ASSESSMENT YEAR 2003-04. THE ASSESSING OFFICER HEL D THAT THE PAYMENT OF FEES/REGISTRATION CHARGES FOR THE PURPOSE OF INCREA SE IN THE AUTHORIZED SHARE CAPITAL OF A CORPORATE ENTITY IS NOT AN ALLOWABLE D EDUCTION U/S 35D OF THE ACT IN VIEW OF THE JUDGEMENT OF THE HONBLE DELHI HIGH COU RT IN THE CASE OF CIT VS. HINDUSTAN INSECTICIDES LTD. (2001) 250 ITR 338 (DEL HI). AS PER THE ASSESSING OFFICER IN TERMS OF SECTION 35D(2)(C)(III) OF THE A CT, ONLY EXPENDITURE BY WAY OF FEE FOR REGISTERING A COMPANY UNDER THE COMPANIES A CT, 1956 QUALIFIES FOR AMORTIZATION IN TERMS OF SECTION 35D(1) OF THE ACT. SINCE, ASSESSEE HAD INCURRED EXPENDITURE BY WAY OF FEE FOR INCREASE IN ITS AUTHORIZED SHARE CAPITAL SUBSEQUENT TO ITS INCORPORATION/INITIAL REGISTRATIO N, SUCH EXPENDITURE WAS NOT COVERED FOR THE AMORTIZATION BENEFITS PRESCRIBED U/ S 35D OF THE ACT. ACCORDINGLY, THE AMOUNT WAS DISALLOWED. FOR IDENTI CAL REASONS, THE CIT(A) HAS ALSO SUSTAINED THE DISALLOWANCE. NOT BEING SAT ISFIED WITH THE ORDER OF THE CIT(A), ASSESSEE IS IN FURTHER APPEAL BEFORE US. 5. BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE IMPUGNED EXPENDITURE WAS AN ALLOWABLE ITEM OF EXPEN DITURE U/S 35D OF THE ACT BECAUSE THE FUNDS RECEIVED BY ENHANCING THE CAPITAL HAVE BEEN UTILIZED FOR MAKING INVESTMENT IN EQUITY SHARE OF A SUBSIDIARY C OMPANY. IT HAS ALSO BEEN POINTED OUT THAT THE INCREASED SHARE CAPITAL HAS BE EN ALLOTTED TO ITS PARENT ITA NOS.3 & 4/PN/2013 A.YS. : 2004-05 & 2005-06 COMPANY AND THAT THERE WAS NOT PUBLIC ISSUE OF SHAR ES, SO HOWEVER, THE EXPENDITURE HAS BEEN INCURRED FOR THE PURPOSES OF B USINESS. 6. HAVING CONSIDERED THE ARGUMENTS PUT-FORTH BY THE ASSESSEE, WE FIND NO REASONS TO INTERFERE WITH THE CONCLUSION DRAWN BY T HE INCOME-TAX AUTHORITIES. IT IS QUITE CLEAR THAT THE IMPUGNED EXPENDITURE DOES N OT QUALIFY TO BE AN EXPENDITURE WHICH IS ELIGIBLE FOR AMORTIZATION BENE FITS PRESCRIBED U/S 35D(1) OF THE ACT. SUB-SECTION 2 OF SECTION 35D SPECIFIES TH E EXPENDITURE WHICH ARE ELIGIBLE FOR THE BENEFITS OF SECTION 35D(1) OF THE ACT. IN VIEW OF THE CATEGORICAL CONCURRENT FINDINGS OF THE LOWER AUTHORITIES, WHICH ARE BASED ON THE JUDGEMENT OF THE HONBLE DELHI HIGH COURT IN THE CASE OF HIND USTAN INSECTICIDES LTD. (SUPRA), IT IS CLEAR THAT THE IMPUGNED EXPENDITURE IS NOT SPECIFIED IN SECTION 35D(2) OF THE ACT SO AS TO BE ELIGIBLE FOR THE BENE FITS U/S 35D(1) OF THE ACT. AS A CONSEQUENCE, WE AFFIRM THE ORDER OF THE CIT(A) ON THIS ASPECT, AND ASSESSEE FAILS. 7. IN THE RESULT, BOTH THE CAPTIONED APPEALS OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 25 TH JULY, 2014. SD/- SD/- (R.S. PADVEKAR) (G.S. PANNU) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE, DATED: 25 TH JULY, 2014. SUJEET COPY OF THE ORDER IS FORWARDED TO : - 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A)-I, PUNE; 4) THE CIT-I, PUNE; 5) THE DR B BENCH, I.T.A.T., PUNE; 6) GUARD FILE. BY ORDER //TRUE COPY// SR. PRIVATE SECRETARY I.T.A.T., PUNE