ACIT, New Delhi V. M/s Lurgi India Co. Pvt. Ltd., New Delhi

ITA 3619/DEL/2011

• Counselvise Citation: 361920114 RSA 2011
• Duration Of Justice: 1 year(s) 1 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-08-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 30-07-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 21-07-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DK MISHR A
• Assessee Lawyers: S K AGGARWAL; AMISHA SINGHAL
• Section: 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES: D NEW DELHI BEFORE SHRI AD JAIN, JUDICIAL MEMBER AND SHRI J.SUDHAKAR REDDY, ACCOUNTANT MEMBER ITA NOS: 812 & 3619/DEL/2011 ASSESSMENT YEAR : - 2004-05 & 2007-08 THE DY.CIT, CIRCLE 4(1) VS. M/S LURGI INDIA CO. P.LTD. NEW DELHI A 24/10, MOHAN CO-OPERATIVE AREA MATHURA ROAD, NEW DELHI PAN: AAACL 4255D (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI DK MISHRA, CIT, D. R. RESPONDENT BY : SHRI SK AGGARWAL, C.A. & MS.AMISHA SINGHAL, ADV. O R D E R PER J.SUDHAKAR REDDY, ACCOUNTANT MEMBER BOTH THESE APPEALS ARE FILED BY THE REVENUE AND ARE DIRECTED AGAINST SEPARATE BUT IDENTICAL ORDERS OF THE LD.CIT (A) DATED 15.12.2010 PERTAINING TO THE AYS 2004-05 AND DT. 20.5.2011 FOR ASSESSMENT YEAR 2007-08. AS THE ISSUES ARISING IN BOTH THE APPEALS ARE COMMON FOR THE SAKE OF CONVENIENCE, THEY ARE HEARD TOGETHER AND DI SPOSED OFF BY WAY OF THIS COMMON ORDER. THE EFFECTIVE GROUND OF APPEAL FOR BOTH THESE AYS IS GROUND NO.2 WHICH READS AS FOLLOWS. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD.CIT(A) HAS ERRED IN DELETING THE ADDITI ON OF RS.1,12,53,000/- MADE BY THE ASSESSING OFFICER ON A CCOUNT OF WARRANTY AND OTHER EXPENSES. ITA NO S. 812 & 3619/DEL/2011 PA GE 2 OF 4 ASSESSMENT YEAR 2004-05 & 2007-08 LURGI INDIA CO.PVT.LTD., NEW DELHI 2. WE HAVE HEARD SHRI DK MISHRA, CIT, D.R. ON BEHALF OF THE REVENUE AND SHRI SHRI SK AGGARWAL, C.A. THE LD.COUN SEL FOR THE ASSESSEE. ON A CAREFUL CONSIDERATION OF THE FACTS AND CIRCUMSTANCES AND ON PERUSAL OF THE MATERIAL ON RECORD, WE HOLD AS F OLLOWS:- 3. THE LD.CIT(A) AT PARA 4 AND 5 PAGES 2 AND 3 OF H IS ORDER HELD AS FOLLOWS. 4. GROUND OF APPEAL NO.3: RELATES TO THE GRIEVANC E OF THE APPELLANT AGAINST THE ACTION OF THE ASSESSING OFFIC ER IN MAKING AN ADDITION OF RS.1,12,53,000/- ON ACCOUNT OF WARRA NTY AND OTHER EXPENSES. IT WAS SUBMITTED ON BEHALF OF THE APPELLANT THAT, THE IDENTICAL ADDITION WAS MADE IN ASSESSMENT YEAR 2000-01 AND THE APPEAL AGAINST THE SAME WAS DECIDED IN FAVO UR OF THE APPELLANT COMPANY VIDE ORDER OF COMMISSIONER OF INC OME TAX (APPEALS)-VII, NEW DELHI VIDE HER ORDER DT. 18.7.20 03 IN APPEAL NO.47/2002-03. THE DEPARTMENT HAD PREFERRED AN APP EAL AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (AP PEALS)-VII, NEW DELHI BEFORE HONBLE ITAT, DELHI WHO VIDE THEIR ORDER DT. 24.8.2007 DISMISSED THE APPEAL OF THE DEPARTMENT, T HEREBY CONFIRMING THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-VII, NEW DELHI. THE LD.A.R. PLACED BEFORE ME THE COPY O F THE AFORE MENTIONED ORDER OF THE TRIBUNAL AND, THEREFORE PRAY ED THAT, THE ADDITION MADE FOR THE INSTANT ASSESSMENT YEAR MAY B E DELETED IN THE LIGHT OF THE ORDER OF THE HONBLE TRIBUNAL FOR THE ASSESSMENT YEAR 2000-2001. IT IS ALSO NOTICED ON PERUSAL OF T HE ASSESSMENT ORDER THAT THE ASSESSING OFFICER HAS MADE THE ABOVE ADDITION ON THE GROUND THAT THE ORDER OF THE HONBLE ITAT FOR A SSESSMENT YEAR 2000-2001 HAS NOT BEEN ACCEPTED BY THE DEPT. A ND APPEAL AHS BEEN FIELD BEFORE THE HONBLE DELHI HIGH COURT WHERE THE MATTER IS STILL PENDING. 4.1. I HAVE CONSIDERED THE SUBMISSIONS MADE ON BEHA LF OF THE APPELLANT AND THE FACTS ON RECORD. I HAVE ALSO PERUSED THE ORDER OF THE TRIBUNAL REFERRED TO ABOVE. IT IS NOT ICED THAT THE TRIBUNAL CONFIRMED THE ORDER OF COMMISSIONER OF INC OME TAX (APPEALS)-VII, NEW DELHI WHO HAD DELETED THE IDENTI CAL ADDITION MADE IN THE APPELLANTS OWN CASE IN ASSESSMENT YEAR 2000- 2001, WITH THE FOLLOWING OBSERVATIONS MADE (REFER P ARA 8.2 OF THE TRIBUNALS ORDER). ITA NO S. 812 & 3619/DEL/2011 PA GE 3 OF 4 ASSESSMENT YEAR 2004-05 & 2007-08 LURGI INDIA CO.PVT.LTD., NEW DELHI 8.2. WE HAVE CONSIDERED THE FACTS OF THE CASE AND RIVAL SUBMISSIONS. WE ARE OF THE VIEW THAT IF ANY LIABIL ITY IS FASTENED ON THE ASSESSEE EVEN IN THE CASE OF A COMPELTED PRO JECT, THEN, SUCH LIABILITY ACCRUES OR ARISES ON THE DATE WHEN T HE PROJECT IS COMPETED. IT MAY BE DIFFICULT AT THAT POINT TO EXA CTLY WORK OUT THE LIABILITY. HOWEVER, IF IT CAN BE ESTIMATED ON A RE ASONABLE BASIS, SUCH ESTIMATE WILL BE ACCRUED LIABILITY AND NOT A C ONTINGENT OR EXPECTED LIABILITY. THE ASSESSEE HAD ESTIMATED ITS LIABILITY IN RESPECT OF TWO PROJECTS AT RS.13,24,724/- AGAINST W HICH THE EXPENDITURE OF RS.11,67,210/- WAS INCURRED WITHIN S IX MONTHS FROM THE END OF THE PY. IN THESE CIRCUMSTANCES, TH E ESTIMATION OF LIABILITY CAN BE TERMED AS REASONABLE. IT WAS ALSO THE CASE OF THE LD.COUNSEL THAT THE BALANCE AMOUNT HAS BEEN OFFERED FOR TAXATION AS PROVISION OF S.41(1) WILL BECOME APPLICABLE IN R ESPECT OF THE BALANCE AMOUNT. SUBJECT TO VERIFICATION OF THE OF FERING OF THE BALANCE AMOUNT FOR TAXATION, IT IS HELD THAT THE LI ABILITY WAS AN ACCRUED LIABILITY. IN CASE THE BALANCE AMOUNT HAS B EEN OFFERED FOR TAX, IT IS ALSO HELD THAT THE SAME REPRESENTED DEDU CTIBLE EXPENDITURE. HOWEVER, IF IT IS FOUND THAT THE BALA NCE AMOUNT HAS NOT BEEN OFFERED FOR TAX IN THE SUBSEQUENT YEAR, TH EN, THE ALLOWANCE SHALL BE RESTRICTED TO RS.11,67,210/- 8.3. IN THE RESULT, THIS GROUND IS ALSO DISMISSED, AS DI SCUSSED ABOVE. 5. GROUND OF APPEAL MP/2: RELATES TO THE LEGALITY AND VALIDITY OF ISSUING NOTICE UNDER SECTION 148 AND SUBSEQUENT PAS SING OF THE ASSESSMENT ORDER UNDER SECTION 147 READ WITH S.143( 3) OF THE INCOME TAX ACT, 1961, IS NOT BEING ADJUDICATED AS T HE APPEAL HAS ALREADY BEEN DECIDED ON MERITS OF THE CASE, ACCORD INGLY, THIS GROUND IS TREATED AS DISMISSED. 4. BOTH PARTIES AGREED THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE BY THE DECISION OF THIS BENCH OF THE TRIBUNAL CITED BY THE COMMISSIONER OF INCOME TAX (A PPEALS) WHOSE ORDER IS EXTRACTED ABOVE. IN VIEW OF THE SAME, WE DISMIS S BOTH THE APPEALS OF THE REVENUE. ITA NO S. 812 & 3619/DEL/2011 PA GE 4 OF 4 ASSESSMENT YEAR 2004-05 & 2007-08 LURGI INDIA CO.PVT.LTD., NEW DELHI 5. IN THE RESULT BOTH THE APPEALS OF THE REVENUE AR E DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 29TH AUGUST, 2012. SD/- SD/- (A.D. JAIN) (J.SUDHAKAR REDDY) JUDICIAL MEMBER ACCOUNTANT MEMBE R DATED: THE 29TH AUGUST, 2012 *MANGA COPY OF THE ORDER FORWARDED TO: 1. APPELLANT; 2.RESPONDENT; 3.CIT; 4.CIT (A); 5.DR; 6.GUARD FILE BY ORDER DY. REGISTRAR 1. DATE OF DICTATION: 06/8 2. DRAFT PLACED BEFORE THE AUTHOR ON: 27/8 3. DRAFT PROPOSED AND PLACED BEFORE SECOND MEMBER ON: 28/8 4. DRAFT DISCUSSED/APPROVED BY THE SECOND MEMBER ON:28 /8 5. APPROVED DRAFT CAME TO SR.P.S. ON:29/8 6. DATE OF PRONOUNCEMENT : 29/8 7. FILE SENT TO BENCH CLERK ON : 30/8 8. DATE ON WHICH FILE GIVEN TO HEAD CLERK ON: 9. DATE OF DISPATCHING THE ORDER ON :