DCIT 1(3), MUMBAI V. TATA MOTORS FINANCE LTD, MUMBAI

ITA 3476/MUM/2013

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 0381 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 4 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-09-2018
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: E
• Assessment Year: 2008-2009
• Appeal Filed On: 03-05-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: F V IRANI
• Assessee Lawyers: RAJESH KUMAR MISHRA
• Keywords: Earning of tax free income; Revenue expenditure
• Section: 43B; 143(3); 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL E , BENCH MUMBAI BEFORE SHRI R.C.SHARMA, AM & SHRI AMARJIT SINGH , JM ITA NO. 3476 / MUM/20 13 ( ASSESSMENT YEAR : 2008 - 09 ) ITA NO.4353/MUM/2013 ( ASSESSMENT YEAR :2007 - 08 ) ITA NO.1226/MUM/2016 ( ASSESSMENT YEAR :2 011 - 12 ) DCIT 1(3) R.NO.540, 5 TH FLOOR AAYAKAR BHAVAN M.K.ROAD, MUMBAI 400 020 VS. M/S. TATA MOTOR FINANCE LTD., 3 RD FLOOR, NANAVATI MAHALAYA, 18, HOMI MODY STREET, MUMBAI 400 001 PAN/GIR NO. AACCT4644A APPELLANT ) .. RESPONDENT ) ITA NO.3119/MUM/2013 ( ASSESSMENT YEAR :2008 - 09 ) ITA NO.4860/MUM/2013 ( ASSESSMENT YEAR :2007 - 08 ) M/S. TATA MOTOR FINANCE LTD., 3 RD FLOOR, NANAVATI MAHALAYA, 18, HOMI MODY STREET, MUMBAI 400 001 VS. ADDL. CIT 1(3) / DCIT 1(3) MUMBAI 400 020 PAN/GI R NO. AACCT4644A APPELLANT ) .. RESPONDENT ) REVENUE BY SHRI RAJESH KUMAR MISHRA REVENUE BY SHRI F.V.IRANI DATE OF HEARING 07/09 /201 8 DATE OF PRONOUNCEMENT 19 / 09 /201 8 / O R D E R PER R.C.SHARMA (A.M) : ITA NO. 3476/MUM/2013 AND OTHER APPEALS M/S. TATA MOTORS FINANCE LTD., 2 THESE ARE THE CROSS APPEALS FILED BY ASSESSEE AND REVENUE AGAINST THE ORDER OF CIT(A) - 2, MUMBAI DATED 01/02/2003 FOR THE A.Y.2007 - 08, 2008 - 09 & 2011 - 12 IN THE MATTER OF ORDER PASSED U/S.143(3) OF THE IT ACT. 2. TH E FOLLOWING GROUNDS HAVE BEEN TAKEN BY THE REVENUE: - A.Y.2008 - 09: - 1 . 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (A) HAS ERRED IN DIRECTING THE AO TO ALLOW THE ENTIRE DMA COMMISSION OF RS. 1,10,9 0 ,73,765/ - AS A DEDUCTION IN THE YEAR UNDER CONSIDERATION WITHOUT APPRECIATING THAT THE ASSESSEE HAS ITSELF AMORTIZED THE SAID EXPENDITURE IN ITS ACCOUNTS ON A MATCHING PRINCIPLE I.E. REVENUE IS RECOGNIZED AND EXPENSES ARE CLAIMED ON A MATCHING PRINCIPLE.' 1.1 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (A) ERRED IN DIRECTING THE AO TO ALLOW THE ENTIRE DMA COMMISSION AS A DEDUCTION AGAINST THE INCOME OF THE YEAR WITHOUT APPRECIATING THE RATIO OF THE DECISION OF THE APEX COURT IN THE CASE OF MADRAS INDUSTRIAL INVESTMENT CORPORATION [225 ITR 802] IN WHICH IT WAS HELD THAT ONLY PROPORTIONATE EXPENDITURE VIS - A - VIS REVENUE ON A MATCHING PRINCIPLE SHOULD BE ALLOWED, SINCE ALLOWING THE ENTIRE EXPENDITURE IN ONE YEAR WOULD GIVE A DISTORTED PICTURE OF THE PR OFITS OF A PARTICULAR YEAR.' 2. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (A) ERRED IN DELETING THE PROPORTIONATE DISALLOWANCE OF RS. 36,84,248/ - ON ACCOUNT OF EXPENSES ON ISSUE OF NCDS WITHOUT APPRECIATING THAT THIS ISS UE STANDS SQUARELY DECIDED IN FAVOUR OF THE REVENUE BY THE HON'BLE APEX COURT IN MADRAS INDUSTRIAL INVESTMENT CORPORATION [225 ITR 802].' 2.1 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (A) ERRED IN DELETING THE PROPORTIO NATE DISALLOWANCE OF RS. 36,84,248/ - ON ACCOUNT OF EXPENSES ON ISSUE OF NCDS BY RELYING ON THE DECISION OF THE RAJASTHAN HIGH COURT IN THE CASE OF UDAIPUR VS. SECURE METERS LTD. 321 ITR 611 WITHOUT APPRECIATING THAT IN THE CASE CITED SUPRA, THE ISSUE INVOL VED WAS WHETHER EXPENDITURE INCURRED IN ISSUING DEBENTURES IS ALLOWABLE AS REVENUE EXPENDITURE AND HENCE THE FACTS OF THE SAID CASE ARE CLEARLY DISTINGUISHABLE FROM THE FACTS OF THE PRESENT CASE. ITA NO. 3476/MUM/2013 AND OTHER APPEALS M/S. TATA MOTORS FINANCE LTD., 3 A.Y. 2007 - 08 1. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (A) HAS ERRED IN DIRECTING THE AO TO ALLOW THE ENTIRE DMA COMMISSION OF RS. 52,89,43,740/ - AS A DEDUCTION IN THE YEAR UNDER CONSIDERATION 'WITHOUT APPRECIATING THAT THE ASSESSEE HAS ITSELF AMORTIZED THE SAID EXPENDITURE I N ITS ACCOUNTS ON A MATCHING PRINCIPLE - I.E REVENUE IS RECOGNIZED AND EXPENSES ARE CLAIMED ON A MATCHING PRINCIPLE.' 1.1 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (A)'ERRED IN DIRECTING THE AO TO ALLOW THE ENTIRE DMA COMMI SSION AS A DEDUCTION AGAINST THE INCOME OF THE YEAR WITHOUT APPRECIATING THE RATIO OF - THE DECISION OF THE APEX COURT IN THE CASE OF MADRAS INDUSTRIAL INVESTMENT CORPORATION [225 ITR 802] IN WHICH IT WAS HELD THAT ONLY PROPORTIONATE EXPENDITURE VIS - A - VIS RE VENUE ON A MATCHING PRINCIPLE SHOULD BE ALLOWED, SINCE ALLOWING THE ENTIRE EXPENDITURE IN ONE YEAR WOULD GIVE A DISTORTED PICTURE OF THE PROFITS OF A PARTICULAR YEAR.' A.Y.2011 - 12 'I. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) ER RED IN APPRECIATING THE FACT THAT ALLOWING THE ENTIRE EXPENDITURE IN ONE YEAR MAY GIVE A DISTORTED PICTURE OF THE ACCOUNTS OF THE PARTICULAR YEAR, WHERE THE EXPENSES CAN BE SPREAD OVER THE YEARS AS HELD BY HON'BLE SUPREME COURT IN THE CASE OF MADRAS INDUST RIAL CORPORATION (225 ITR 802). 2. ON THE FACTS AND IN CIRCUMSTANCES OF T HE CASE AND IN LAW, THE LD. CIT( A) ERRED IN ALLOWING THE CLAIM OF THE ASSESSEE THAT ON BOOKING OF CONTRACTS FOR FINANCING OF VEHICLES PURCHASE, DMA COMMISSION INCURRED DURING THE YEAR BE ALLOWED IN ENTIRETY IN COMPUTING TOTAL INCOME OF THE ASSESSEE, AND THEREBY OVERRULING THE ASSESSING OFFICER WHO HELD THAT THE ASSESSEE WOULD BE ENTITLED ONLY TO THE LOWER AMOUNT ACTUALLY DEBITED BY IN ITS P&L ACCOUNT IN ACCORDANCE WITH ITS ACCOUNTING P OLICY OF DEFERRING THE DMA COMMISSION INCURRED, IN ITS BOOKS OVER THE PERIOD OF THE CONTRACT.' 3. THE FOLLOWING GROUNDS HAVE BEEN TAKEN BY ASSESSEE A.Y.2008 - 09 THE APPELLANT BEING AGGRIEVED BY THE ORDER PASSED BY LEARNED COMMISSIONER OF INCOME TAX (APPEAL S) - 2 (HEREINAFTER REFERRED TO AS ITA NO. 3476/MUM/2013 AND OTHER APPEALS M/S. TATA MOTORS FINANCE LTD., 4 THE 'LEARNED CIT(A)') HAS PREFERRED THIS APPEAL ON THE FOLLOWING GROUND, WHICH ARE WITHOUT PREJUDICE TO EACH OTHER: 1. DISALLOWANCE OF EXPENDITURE U/S.14A THE LEARNED CIT (A) HAS ERRED IN LAW AND IN FACTS IN CON FIRMING THE DISALLOWANCE U/S. 14A OF THE INCOME TAX ACT, 1961 ('THE ACT') READ WITH RULE 8D OF THE INCOME TAX RULES, 1962 ('THE RULES') THE LEARNED CIT(A) OUGHT TO HAVE APPRECIATED THAT THERE IS NO NEXUS OF EXPENSES INCURRED WITH THE EXEMPT INCOME. THE L EARNED ASSESSING OFFICER HAS ERRED IN DISREGARDING THE . . DECISION OF THE BOMBAY HIGH COURT IN THE CASE OF GODREJ & BOYCE MFG. CO. LIMITED, MANDATING HIM TO ESTABLISH THE FACT THAT EXPENDITURE HAS BEEN INCURRED. FURTHER THE LEARNED ASSESSING OFFICER HAS A LSO DISREGARDED THE DECISION IN THE CASE OF RELIANCE UTILITIES AND POWER LTD, WHEREIN THE BOMBAY HIGH COURT HAD OBSERVED THAT 'IF THERE BE INTEREST FREE FUNDS AVAILABLE TO AN ASSESSEE SUFFICIENT TO MEET ITS INVESTMENTS AND AT THE SAME TIME THE ASSESSEE HAD RAISED A LOAN, IT CAN BE PRESUMED THAT THE INVESTMENTS WERE FROM THE INTEREST FREE FUNDS AVAILABLE', THE APPELLANT CRAVES LEAVE TO ADD, TO ALTER, DELETE OR SUBSTITUTE ALL OR ANY OF THE AFORESAID GROUNDS OF APPEAL. A.Y.2007 - 08 THE APPELLANT BEING AGGRIE VED BY THE ORDER PASSED BY LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - 4 (HEREINAFTER REFERRED TO AS THE 'LEARNED CIT(A)') HAS PREFERRED THIS APPEAL ON THE FOLLOWING GROUND, WHICH ARE WITHOUT PREJUDICE TO EACH OTHER: 1. DISALLOWANCE OF PROVISION FOR LEAVE ENCASHMENT OF RS.28,81,000/ - UNDER PROVISIONS OF SECTION 43B OF THE INCOME TAX ACT THE CIT (A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE DISALLOWANCE MADE BY THE AO IN RESPECT OF PROVISION FOR LEAVE ENCASHMENT UNDER SECTION 43B OF THE ACT. 2. DISALLOWANCE OF POST RETIREMENT BENEFIT OF RS 24,48,000/ - SCHEME UNDER PROVISIONS OF SECTION 43B(B) OF THE INCOME TAX ACT THE CIT (A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE DISALLOWANCE MADE BY THE AO IN RESPECT OF POST RETIREMENT BENEFIT SCHEME UNDER SECTION 43B (B) OF THE ACT. IN CLAIMING THE SAID DEDUCTION, WE HAVE RELIED UPON THE DECISION OF HONOURABLE DELHI HIGH COURT IN THE CASE OF CIT VS RANBAXY LABORATORIES LTD. 334 ITR 341 (DEL.) 3. DISALLOWANCE OF EXPENSES OF RS. 14,98,5947 - UNDER PR OVISIONS OF SECTION 4Q(IA) OF THE INCOME TAX ACT DUE TO NON DEDUCTION OF TDS ITA NO. 3476/MUM/2013 AND OTHER APPEALS M/S. TATA MOTORS FINANCE LTD., 5 THE CIT (A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE DISALLOWANCE OF RS. 14,98,5947 - MADE BY THE AO IN RESPECT OF EXPENSES UNDER PROVISIONS OF SECTION 40(IA) OF THE ACT. TH E LEARNED CIT(A) OUGHT TO HAVE APPRECIATED THAT THESE PAYMENTS REPRESENTS THE 3 REIMBURSEMENT OF EXPENSES INCURRED, AND ARE NOT AN INCOME IN THE HANDS OF THE RECIPIENT. THIS VIEW HAS FURTHER BEEN CONFIRMED IN THE BELOW JUDGEMENTS CIT VS. FORTIS HEALTH CARE (2009) 181 TAXMANN 257 (DEL) HC JDIT VS. KRUPP UDHE GMBH (2010) 1 ITR 614 ITAT MUM MAHINDRA & MAHINDRAVS. DCIT (2009) 22 DTR 361 ITAT MUM (SB) CAIRN ENERGY INDIA PVT. LTD. VS. ACIT (2009 TIOL 220 ITAT - MAD) CIT VS. TATA ENGINEERING AND LOCOMOTIVE COMPANY LIMITED (2000 245 ITR 823 BOMBAY) DIT (IT) VS. KRUPP UDHE GMBH (2010 - TIOL - 214 - HC - MUM - IT) FURTHER THE PHOTOCOPY OF INVOICES CAN BE MADE AVAILABLE AS AND WHEN REQUIRED. THE APPELLANT CRAVES LEAVE TO ADD, TO ALTER, DELETE OR SUBSTI TUTE ALL OR ANY OF THE AFORESAID GROUNDS OF APPEAL. 4. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. 5. FACTS IN BRIEF ARE THAT T HE ASSESSEE IS A NON BANKING FINANCIAL COMPANY (NBFC] ENGAGED IN THE BUSINESS OF FINANCING THE VEHICLES. THE ASSESSEE E - FILED ITS RETURN OF INCOME FOR A.Y. 2008 - 09 ON 30.09.2008 DECLARING TOTAL INCOME OF RS. 56,96,93,100/ - . IN THE ASSESSMENT ORDER U/S 143(3) DATED 09.12,2010, THE ASSESSING OFFICER ADDED THE FOLLOWING AMOUNTS WITH THE RETURNED INCOME : I) EXCESS DE PRECIATION CLAIM DISALLOWED RS. 65,66,448/ - II) PROVISION FOR BHAVISHYA KALYAN YOJANA CONTRIBUTION RS. 3,26,000/ - III) PROVISION FOR LEAVE ENCASHMENT RS. 62,44,000/ - IV) DISALLOWANCE U/S. 14 OF THE I.T. ACT RS. 17,066,000/ - V) DISALLOWANCE OF NON - CONVERTIBLE DEBENTURE EXPENSES RS. 36,84,248/ - ITA NO. 3476/MUM/2013 AND OTHER APPEALS M/S. TATA MOTORS FINANCE LTD., 6 6. THE A.O. ALSO DISALLOWED THE CLAIM OF DMA COMMISSION OF RS. 110,90,73,76S/ - AND ALLOWED DMA COMMISSION OF RS. 91,66,45,456/ - DEBITE D IN THE BOOKS OF ACCOUNTS. 7. BY THE IMPUGNED ORDER, CIT(A) ALLOWED ASSESSEE S CLAIM OF DIRECT M ARKETING AGENTS C OMMISSION IN THE A.Y.2007 - 08, 2008 - 09 AND 2011 - 12, AGAINST WHICH REVENUE IS IN FURTHER APPEAL BEFORE US. 8. WE HAVE CONSIDERED RIVAL CONTENTI ONS AND FOUND THAT DIRECT MARKETING AGENTS COMMISSION WAS ALLOWED BY CIT(A) AFTER FOLLOWING THE DECISION OF DELHI HIGH COURT IN THE CASE OF CITI FINANCIAL CONSUMER FINANCE LTD., AND ITAT AHMEDABAD SPECIAL BENCH IN THE CASE OF ASHIMA SYNTEX 117 ITD 1. FROM THE RECORD WE FOUND THAT W HEN THE ASSESSEE FINALIZES A VEHICLE FINANCING PROPOSAL RECEIVED BY IT FROM A CUSTOMER THROUGH A DIRECT MARKETING AGENT (DMA), IT PROVIDES AND PAYS TO THE DMA, THE COMMISSION DUE TO HIM FOR INTRODUCING THE CUSTOMER TO THE ASSESSE E. FOR ACCOUNTING PURPOSES, THE ASSESSEE AMORTIZES SUCH COMMISSION OVER THE PERIOD OF THE FINANCING AGREEMENT. HOWEVER, FOR T AX PURPOSES, THE ENTIRE COMMISSION INCURRED AND PAID BY THE ASSESSEE IS CLAIMED BY IT IN THE YEAR IN WHICH THE FINANCING AGREEMENT IS SIGNED. 9. DURING THE COURSE OF ASSESSMENT, T HE AO HAS ALLOWED ONLY THE AMORTIZED AMOUNT, ON THE GROUND THAT THE ASSESSEE, FOR THE PURPOSE OF ITS ACCOUNTS, HAS ADOPTED AMORTIZATION, AND THE AO HAS RELIED UPON THE SUPREME COURT DECISION IN THE CASE OF M ADRAS INDUS TRIAL INVESTMENT CORPORATION. WE FOUND THAT IN A SUBSEQUENT DECISION, HONBLE SUPREME COURT IN ITA NO. 3476/MUM/2013 AND OTHER APPEALS M/S. TATA MOTORS FINANCE LTD., 7 THE CASE OF TAPARIA TOOLS LTD., 372 ITR 605 AFTER CONSIDERING ITS DECISION IN THE CASE OF MADRAS INDUSTRIAL INVESTMENT CORPORATION [1997] 225 ITR 802 , H A S HELD THAT NOTWITHSTANDING THE ACCOUNTING TREATMENT FOLLOWED BY AN A SSESSEE, EXPENDITURE INCURRED DURING THE YEAR HAS TO BE ALLOWED IN FULL IRRESPECTIVE OF THE ACTION OF T HE ASSESSEE OF AMORTIZING IT . RESPECTFULLY FOLLOWING THE DECISION OF THE HONB LE SUPREME COURT IN CASE OF TAPARIA TOOLS LTD., (SUPRA), WHEREIN PROPOSITION LAID DOWN IN THE CASE OF MADRAS INDUSTRIAL INVESTMENT CORPORATION HAVE ALREADY BEEN CONSIDERED, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT(A) FOR ALLOWING DEDUCTION OF DIREC T MARKETING AGENTS COMMISSION PAID TO THE DIRECT MARKETING AGENT. AS THE FACTS AND CIRCUMSTANCES IN ALL THE THREE ASSESSMENT YEARS I.E., 2007 - 08, 2008 - 09 AND 2011 - 12 ARE SAME, FOLLOWING THE REASONING GIVEN HEREINABOVE, THE GROUND TAKEN BY THE REVENUE IS D ISMISSED. 10. IN THE A.Y.2008 - 09, REVENUE IS AGGRIEVED BY THE ACTION OF CIT(A) FOR ALLOWING OF NCD ISSUE EXPENSES. THE CIT(A) HAS ALLOWED ASSESSEES CLAIM BY RELYING ON THE DECISION OF RAJASTHAN HIGH COURT WHEREIN SLP FILED BY THE DEPARTMENT WAS DISMISSED BY THE HONBLE SUPREME COURT IN THE CASE OF UDAIPUR MILLA LTD., ITA NO. 8/2007 ORDER DATED 20/11/2008 (321 ITR 611). 11. WE HAVE CONSIDERED RIVAL CONTENTIONS AND FOUND THAT T HE A.O. NOTED THAT THE ABOVE NCD 'S ARE REDEEMABLE OVER A PERIOD OF 4 YEARS . HENCE , AS THE EXPENSE INVOLVE BENEFIT OF ENDURING NATURE SPREAD OVER A PERIOD OF 4 YEARS, THE ENTIRE EXPENSES IS NOT ALLOWABLE IN THE PRESENT A.Y. IN THIS CONNECTION, THE A.O. RELIED UPON THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF MADRAS INDUSTRI AL INVESTMENT CORPORATION LTD ., ITA NO. 3476/MUM/2013 AND OTHER APPEALS M/S. TATA MOTORS FINANCE LTD., 8 12. AS DISCUSSED ABOVE THIS ISSUE IS CONCLUDED IN FAVOR OF THE ASSESSEE BY THE DECISION OF THE SUPREME COURT IN THE CASE OF TAPARIA TOOLS LIMITED [2015] 372 ITR 605, WHERE, AFTER CONSIDERING ITS DECISION IN THE CASE OF MADR AS INDUSTRIAL INVESTMENT CORPORATION [1997] 2 25 ITR 802, THE SUPREME COURT HAS HELD THAT EXPENDITURE INCURRED DURING A PARTICULAR YEAR HAS TO BE ALLOWED IN FRILL IN THAT YEAR ITSELF. 13. RESPECTFULLY FOLLOWING THE PROPOSITION OF LAW LAID DOWN BY HONBLE S UPREME COURT IN THE CASE OF TAPARIA TOOLS LTD., WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT(A) FOR ALLOWING NCD ISSUE EXPENSES DURING THE A.Y.2008 - 09. 14. IN THE RESULT, GROUND NO.2 RAISED BY REVENUE IN ITS APPEAL FOR A.Y.2008 - 09 IS DISMISSED. 15. IN THE A.Y.2007 - 08, ASSESSEE IS AGGRIEVED FOR DISALLOWANCE OF PROVISION FOR LEAVE ENCASHMENT U/S.43B(F) OF THE INCOME TAX ACT, 1961. 16. WE HAVE CONSIDERED RIVAL CONTENTIONS AND FOUND THAT POST RETIREMENT BENEFIT SCHEME WAS TREATED BY THE AO IN THE NATURE OF A FUND CREATED FOR THE WELFARE OF THE EMPLOYEES AND, THEREFORE, IT IS COVERED U/S.43B(F), HENCE THE DISALLOWANCE OF PROVISION ON THIS ACCOUNT OF RS.24,48,000/ - WAS CONFIRMED BY THE CIT(A). 17. FROM THE ORDER OF THE LOWER AUTHORITIES, WE OBSERVE THAT THE CI T(A) HAS CONFIRMED THE DISALLOWANCE IN VIEW OF THE DECISION OF HONBLE SUPREME COURT WHEREIN SLP FILED BY THE DEPARTMENT WAS ACCEPTED AGAINST THE ORDER OF CALCUTTA HIGH COURT IN CASE OF EXCIDE INDUSTRIES LTD., 292 ITR 470. AS THE ISSUE IS PENDING BEFORE T HE HONBLE SUPREME COURT WITH REGARD TO ALLOWABILITY OF CLAIM OF PROVISION FOR LEAVE ENCASHMENT, WE DIRECT THE AO TO DECIDE THE ISSUE ONLY ITA NO. 3476/MUM/2013 AND OTHER APPEALS M/S. TATA MOTORS FINANCE LTD., 9 AFTER THE DECISION OF HONBLE SUPREME COURT ON THIS ISSUE. WE DIRECT ACCORDINGLY. 18. ASSESSEE IS ALSO AGGRIEVED FOR DISALLOWANCE OF PROVISION FOR POST RETIREMENT BENEFITS U/S.43B(B) OF THE ACT. IT WAS CONTENTION OF LEARNED AR THAT T HIS IS AN AMOUNT PROVIDED BY THE ASSESSEE, AFTER A SCIENTIFIC DE TERMINATION BASED ON AN ACTUARIAL VALUATION, TOWARDS IT'S CONTRACTUA L NON - S TATUTORY LIABILITY TO PROVIDE POST RETIREMENT BENEFITS TO IT'S EMPLOYEES. HE FURTHER CONTENDED THAT T HE PROVISIONS OF SECTION 43 B (B) OF THE ACT HAVE NO APPLICATION AS THIS HAS BEEN CLAIMED ONLY ON THE BASIS OF A SCIENTIFICALLY DETERMINED ACTUARIAL VALUATIO N AND NOT AS A CONTRIBUTION TO ANY FUND. 19. WE HAVE CONSIDERED RIVAL CONTENTIONS AND FOUND THAT ISSUE IS SQUARELY COVERED BY THE DECISION OF DELHI HIGH COURT IN THE CASE OF RANBAXY LABORATORIES LTD., WHEREIN HONBLE HIGH COURT HELD THAT THE PEN SION SCHE ME OF THE ASSESSEE DID NOT ENVISAGE ANY REGULAR CONTRIBUTION TO ANY FUND OR TRUST OR ANY OTHER ENTITY. THE PENSION SCHEME PROVIDED THAT PENSION WOULD BE PAID BY THE ASSESSEE TO ITS EMPLOYEE ON HIS OR HER ATTAINING THE RETIREMENT AGE OR RESIGNING AFTER HAVI NG RENDERED SERVICES FOR A SPECIFIED NUMBER OF YEARS. THUS, WHERE THE LIABILITY ON THIS ACCOUNT ACCRUED FROM YEAR TO YEAR, IT WAS PAYABLE ON RETIREMENT/RESIGNATION OF THE ELIGIBLE EMPLOYEES. IT COULD NOT BE DISALLOWED UNDER SECTION 43B . 20. WE HAVE CONSIDE RED RIVAL CONTENTIONS AND ALSO GONE THROUGH THE DECISION OF DELHI HIGH COURT WHEREIN HONBLE DELHI HIGH COURT OBSERVED ITA NO. 3476/MUM/2013 AND OTHER APPEALS M/S. TATA MOTORS FINANCE LTD., 10 THAT THE PENSION SCHEME OF THE ASSESSEE DOES NOT ENVISAGE ANY REGULAR CONTRIBUTION TO ANY FUND OR TRUST OR ANY OTHER ENTITY. THE PENSION SCHEME PROVIDES THAT PENSION WOULD BE PAID BY THE ASSESSEE TO ITS EMPLOYEES ON THEIR ATTAINING THE RETIREMENT AGE OR RESIGNING AFTER HAVING RENDERED SERVICES FOR SPECIFIED YEARS. THUS, WHERE THE LIABILITY ON THIS ACCOUNT ACCRUES FROM YEAR TO YEAR, THE SAME IS PAYABLE ON RETIREMENT/ RESIGNATION OF THE ELIGIBLE EMPLOYEES. IN VIEW THEREOF, THE RATIO OF THE JUDG MENT OF THE SUPREME COURT IN METAL BOX COMPANY OF INDIA LTD. V. THEIR WORKMEN [1969] 73 ITR 53 (SC) AND BHARAT EARTH MOVERS V. CIT [2000] 245 ITR 428 ( SC) WOULD CLEARLY GET ATTRACTED . RESPECTFULLY FOLLOWING THE DECISION OF THE DELHI HIGH COURT, WE DO NOT FIND ANY MERIT FOR THE DISALLOWANCE SO MADE BY THE LOWER AUTHORITIES. 21. LAST GRIEVANCE OF ASSESSEE RELATES TO DISALLOWANCE OF RS.14,98,594/ - U/S. 40(A )(IA) OF THE ACT FOR NON - DEDUCTION OF TDS ON ACCOUNT OF REIMBURSEMENT OF ADVERTISEMENT AND TRAINING EXPENSES INCURRED BY THE ASSESSEES DEALERS. 22. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. THE FACTS OF THE CASE ARE THAT A.O. HAS DISALLOWED RS . 14,98,594 / - U/S. 40A(IA) HOLDING THAT ASSESSEE HAS NOT MADE ANY TDS ON THESE PAYMENTS. IT HAS BEEN DISPUTED BY THE ASSESSEE CLAIMING THAT THESE ARE REIMBURSEMENT EXPENSES . 23. BY THE IMPUGNED ORDER, CIT(A) CONF IRMED THE ACTION OF THE AO AFTER OBSERVING A S UNDER: - ITA NO. 3476/MUM/2013 AND OTHER APPEALS M/S. TATA MOTORS FINANCE LTD., 11 ASSESSEE HAS CLAIMED THAT PAYMENT OF RS.14,98,594/ - ARE IN THE NATURE OF REIMBURSEMENT OF EXPENSES, WHEREAS, NO TDS IS REQUIRED TO BE MADE IN CASE OF REIMBURSEMENT OF EXPENSES. BUT ASSESSEE HAS FILED NO EVIDENCE TO SHOW THAT THESE ARE MERE REIMB URSEMENT OF EXPENSES AND NO EVIDENCE HAS ALSO BEEN FILED THAT TDS WAS MADE BY THE PARTIES TO WHOM REIMBURSEMENT HAVE BEEN MADE, AT THE TIME OF PAYMENT BY THEM. THEREFORE, THE DISA LLOWANCE TO THE EXTENT OF RS.14 ,98,694/ - IS CONFIRMED. 24. IT WAS ARGUED BY LEARNED AR THAT THESE AMOUNTS ARC PURE REIMBURSEMENTS, THEY ARE NOT OF AN INCOME NATURE AT ALL. CONSEQUENTLY, THERE IS NO OBLIGATION TO DEDUCT TAX AT SOURCE AS SUCH OBLIGATION ARISES ONLY IN CASE OF PAYMENTS OF AN INCOME NATURE. ON THIS BASIS, THE DISALLO WANCE UNDER SECTION 40(A)(IA) OF THE ACT SHOULD BE DELETED. 25. WE HAVE CONSIDERED RIVAL CONTENTIONS. TDS IS REQUIRED TO BE DEDUCTED IN RESPECT OF ALLEGED EXPENDITURE INCURRED BY THE ASSESSEE . AO AS WELL AS CIT(A) HAS RECORDED A FINDING THAT ASSESSEE HAS FAILED TO SHOW THAT THESE ARE MERE REIMBURSEMENT OF EXPENSES AND NO EVIDENCE WAS FILED TO SHOW THAT TDS HAS BEEN DEDUCTED BY THE PARTIES TO WHOM REIMBURSEMENT HAS BEEN MADE AT THE TIME OF PAYMENT MADE BY THEM. THE FINDING SO RECORDED BY AO AND CIT(A) HAS NOT BEEN CONTROVERTED BY LEARNED AR BY BRINGING ANY MATERIAL ON RECORD. ACCORDINGLY, WE DO NOT FIND ANY REASON TO INTERFERE IN THE FINDINGS SO RECORDED BY LOWER AUTHORITIES. HENCE GROUND TAKEN BY ASSESSEE IS DISMISSED. 26. IN THE RESULT, APPEAL FOR A.Y.20 07 - 08 IS ALLOWED IN PART IN TERMS INDICATED HEREINABOVE. ITA NO. 3476/MUM/2013 AND OTHER APPEALS M/S. TATA MOTORS FINANCE LTD., 12 27. IN THE A.Y.2008 - 09 ASSESSEE IS AGGRIEVED BY THE ACTION OF THE AO FOR DISALLOWING ADMINISTRATIVE EXPENDITURE U/S.14A BY INVOKING RULE 8D(2)(1) OF THE IT RULES. IT WAS CONTENTION OF LEARNED AR THAT T HE ASSES SING OFFICER'S INVOCATION OF RULE 8D (2)(I) IS PATENTLY E RR ONEOUS. IF AT ALL ANY DISALLOWANCE IS CALLED FOR IT CAN BE MADE ONLY UNDER RULE 8D(2)(III) OF THE RULES, PROVIDED THAT THE CONDITIONS OF RULE 8D(2){III) OF T HE RULES ARE MET. 28. IN VIEW O F THE ABOVE, WE RESTORE THE MATTER BACK TO THE FILE OF THE AO WITH A DIRECTION TO COMPUTE DISALLOWANCE OF ADMINISTRATIVE EXPENSES IN TERMS OF 8D2(III). WE DIRECT ACCORDINGLY. 29. ASSESSEE HAS ALSO RAISED ADDITIONAL GROUND FOR CLAIM OF ADJUSTMENT ON ACCOUN T OF DELINQUENCY SUPPORT RECEIPTS. IT WAS CONTENTION OF LEARNED AR THAT T HIS GROUND ARISES ON ACCOUNT OF A REJECTION, BY THE ASS ESSING OFFICER, OF THE ASSESSEE'S CLAIM FOR SUCH RELIEF DURING THE ASSESSMENT PROCEEDINGS FOR AY 2013 - 14, WHICH WERE CONCLUDED O N 30 MARCH 2016. AS THE ASSESSEE'S CLAIM WAS REJECTED IN AY 2013 - 14, THE ASSESSEE HAS RAISED AN ADDITIONAL GROUND IN AY 2008 - 0 9, BECAUSE A PART OF THE ASSESSING OFFICER'S REJECTION OF THE CLAIM MADE BY THE ASSESSEE IN AY 2013 - 14 PERTAINS TO AY 2008 - 09. 30. WE DO NOT FIND ANY MERIT IN THE ABOVE CONTENTION OF LEARNED AR, HOWEVER, LEARNED AR IS FREE TO RAISE GROUND WHILE FILING AN APPEAL FOR THE A.Y.2013 - 14. WE DIRECT ACCORDINGLY. ITA NO. 3476/MUM/2013 AND OTHER APPEALS M/S. TATA MOTORS FINANCE LTD., 13 31. IN THE RESULT, APPEALS FILED BY ASSESSEE ARE ALLOWED IN PART IN TERMS INDICA TED HEREINABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 19 / 09 /201 8 SD/ - ( AMARJIT SINGH ) SD/ - (R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI; DATED / /201 8 KAR UNA SR. PS COPY OF THE ORDER FORWARDED TO : BY ORDER, ( ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//