DCIT (LTU), New Delhi V. M/s. Caparo Maruti Ltd., New Delhi

ITA 369/DEL/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 86896 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 1 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-03-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 16-02-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 21-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GAGAN SOOD
• Assessee Lawyers: VED JAIN CA MRS RANU JAIN
• Keywords: Revised return
• Section: 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH B , NEW DELHI) BEFORE SHRI G. C. GUPTA, HONBLE VICE PRESIDENT AND SHRI T.S. KAPOOR, ACCOUNTANT MEMBER I.T.A. NO.369 & 370 /DEL/2013 ASSESSMENT YEAR : 2008-09 & 2009-10 DCIT, (LTU), VS. M/S. CAPARO MARUTI LTD., NEW DELHI 101-104, 1 ST FLOOR, NAURANG HOUSE, 21, K G MARG, NEW DELHI-110 001 GIR / PAN:AAACC6423G (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI GAGAN SOOD, SR. DR RESPONDENT BY : SHRI VED JAIN, CA MRS. RANU JAIN, ADV. ORDER PER T.S. KAPOOR, AM: THESE ARE TWO APPEALS FILED BY REVENUE AGAINST SEP ARATE ORDERS OF LD. CIT(A) BOTH DATED 16.10.2012. BOTH THESE APPEALS W ERE HEARD TOGETHER AND THEREFORE, FOR THE SAKE OF CONVENIENCE, A COMMON AN D CONSOLIDATED ORDER IS BEING PASSED. THE GROUNDS OF APPEAL TAKEN BY REVEN UE IN BOTH THESE YEARS ARE REPRODUCED BELOW: I) I.T.A. NO. 369/DEL/2013 (ASSESSMENT YEAR 2008-09: ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.2,6 6,16,709/- HOLDING THAT IT WAS AN ASCERTAINED LIABILITY AND NOT CONTIN GENT LIABILITY. II) I.T.A.NO. 370/DEL/2013 (ASSESSMENT YEAR 2009-10): ITA NO.369, 370/DEL/2013 2 ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.9,2 0,54,942/- HOLDING THAT IT WAS IN ASCERTAINED LIABILITY AND NOT CONTIN GENT LIABILITY. 2. THE BRIEF FACTS OF THE CASE AS COMING OUT FORM A SSESSMENT ORDERS ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MAN UFACTURE, JOB WORK AND TRADING OF SHEET METAL COMPONENTS AND ALLIED COMPON ENTS. THE ASSESSEE IS MAKING SUPPLIES TO MARUTI SUZUKI INDIA LTD. AND IS ONE OF THE VARIOUS VENDORS. DURING THE FINANCIAL YEAR ENDING 31.03.20 08 AND 31.03.2009, THE ASSESSEE WHILE FINALIZING ITS ACCOUNTS, REDUCED ITS PROFITS BY DEBITING SALES AND BY CREDITING THE ACCOUNT OF OTHER LIABILITIES B Y AN AMOUNT OF RS.6,37,47,120/- AND RS.9,20,54,942/- IN THE TWO YE ARS. HOWEVER, THE AMOUNT IN ASSESSMENT YEAR 2008-09 WAS REDUCED TO RS .2,66,16,709/-.THE SAID ADJUSTMENT WAS REPORTED IN ITS BALANCE SHEETS VIDE NOTES TO ACCOUNT WHICH READ AS UNDER: 16. DURING THE YEAR, COMPANY HAS RECEIVED AMENDME NT TO PURCHASE ORDER FROM MSIL (FORMERLY MUL) FOR MODEL L COMPONEN TS AND RECEIVED PAYMENTS ACCORDINGLY. THE SAME IS IN EXCE SS OF THE PRICE SETTLEMENT, WHICH IS SUBJECT TO MSIL MANAGEMENT APP ROVAL. PENDING FINAL SETTLEMENT, A PROVISION HAS BEEN MADE FOR DIF FERENT AMOUNT OF RS.6,37,47,120/- AND SHOWN UNDER CURRENT LIABILITIE S BY WAY OF REDUCTION FROM SALE. 2.1 SIMILAR REPORTING WAS MADE IN ASSESSMENT YEAR 2 009-10 VIDE NOTE NO.16 WHICH READS AS UNDER: 16. DURING THE YEAR, PROVISION HAS BEEN MADE FOR D IFFERENT AMOUNT OF RS.92,054,942/- ON ACCOUNT OF AMORTIZATION, PRICE O F ADJUSTMENTS ETC. AGAINST CERTAIN MODELS BILLED TO MSIL THE SAME IS P RESENTLY IN THE PROCESS OF RECONCILIATION/SETTLEMENT, HENCE HAS BEE N SHOWN UNDER THE HEAD OTHER LIABILITIES BY WAY OF REDUCTION FROM S ALE. ITA NO.369, 370/DEL/2013 3 2.2 THE ABOVE ADJUSTMENT ENTRIES WERE CLAIMED TO HAVE BEEN PASSED ON ACCOUNT OF DOWNWARDS REVISION OF PROVISIONAL PRICES FROM THE ORIGINAL PRICES. THE ASSESSEE HAD SUBMITTED THAT AS PER BASI C PRICE AGREEMENT WITH MARUTI, THE BILLING IS DONE ON TENTATIVE PRICES AND WITH CONTINUOUS NEGOTIATIONS THE PRICES ARE REVISED UPWARDS OR DOWN WARDS AS THE CASE MAY BE. 2.3 THE A.O. AFTER RAISING QUERIES IN THIS REGARD H ELD THAT IN FACT, ASSESSEE HAD CREATED PROVISIONS WHICH WERE UNASCERTAINED LIA BILITIES AND THEREFORE, WERE NOT ALLOWABLE AND THEREFORE HE MADE THE ADDITI ONS. 3. AGGRIEVED, THE ASSESSEE FILED APPEALS BEFORE LD. CIT(A) AND LD. CIT(A) DELETED THE ADDITIONS BY HOLDING AS UNDER: I) ASSESSMENT YEAR 2008-09: DURING THE YEAR UNDER CONSIDERATION THE APPELLANT COMPANY HAS SUPPLIED 33,551 CAR SETS TO MSIL. A CAR SET CONSIST S OF 17 PARTS. THESE PARTS WERE DEVELOPED BY THE APPELLANT COMPANY AND A FTER APPROVAL, THE TENTATIVE RATE WAS FIXED FOR EACH OF THE PART. THE RATE FIXED INITIALLY FOR 17 PARTS IN AGGREGATE WAS RS.6169 PER CAR SET. THE APPELLANT COMPANY ACCORDINGLY ISSUED SALES INVOICES TO MSIL A T THESE RATES. SINCE THESE WERE PROVISIONAL RATES SUBJECT TO ADJUS TMENT, THERE WERE CERTAIN DISCUSSION BETWEEN THE APPELLANT COMPANY AN D THE MARUTI SUZUKI INDIA LTD. AND AFTER DISCUSSION, AN INTERIM SETTLEMENT WAS REACHED ON 11 TH FEBRUARY, 2008 WHERE THE PRICE WAS RE-FIXED AT RS.4269 PER CAR SET. CONSEQUENT TO THIS, REDUCTION IN THE PRICE DURING THE YEAR OF RS. 1900 PER CAR SET. THE APPELLANT COM PANY REDUCED THE SALES OF 33,551 CAR SETS BY RS.6,37,47,867 AND FINA LIZED ITS ACCOUNTS AND FILED ITS RETURN OF INCOME ACCORDINGLY. IN THE BALANCE SHEET THE ASSESSEE COMPANY DISCLOSED THE ABOVE FACT BY WAY OF A NOTE. SINCE THIS IS AN INTERIM SETTLEMENT AFTER THE DISCUSSION WITH MSIL CONFIRMED THEREAFTER AND FINAL SETTLEMENT WAS DONE ON 8TH DEC EMBER, 2008 WHEREBY MSIL ALLOWED BENEFIT OF TOOL AMORTIZATION E TC. WITH THE RESULT THIS AMOUNT OF RS.6,37,47,867 GOT REDUCED AND THE A PPELLANT COMPANY GOT THE BENEFIT OF RS. 3,71,30,4111- TO RS.2,66, 16 ,709. THE APPELLANT COMPANY, ACCORDINGLY, REVISED ITS RETURN BY INCREAS ING ITS INCOME BY RS.3,71,30,411. ITA NO.369, 370/DEL/2013 4 THE ASSESSING OFFICER BASED ON THE ABOVE FACTS HAS CONSIDERED THAT THE SUM OF RS.2,66,16,709 IS A CONTINGENT LIABILITY AND HENCE NOT ALLOWABLE. THE FINDING OF THE ASSESSING OFFICER, HO WEVER, IS NOT CORRECT. THERE IS NO DISPUTE ABOUT THE FACT THAT TH E ASSESSEE COMPANY HAS SUPPLIED 33,551 CAR SETS TO MSIL AND THE INITIA L RATE FIXED WAS RS. 6169 PER CAR SET ON THE BASIS OF WHICH THE APPELLAN T COMPANY HAS ACCOUNTED FOR THE SALES AND INCLUDED THE SAME IN IT S INCOME. THERE IS ALSO NO DISPUTE TO THE FACT THAT THERE WAS AN INTER IM SETTLEMENT WHEREBY THE PRICE WAS REDUCED TO RS.4269 PER CAR SE T CONSEQUENT TO WHICH THE SALES AMOUNT IN RESPECT OF 33,551 CAR SET S GOT REDUCED BY RS.6,37,47,867. CONSEQUENT TO THIS THE APPELLANT C OMPANY HAS REDUCED THIS AMOUNT WHILE PREPARING ITS ACCOUNTS. T HERE WAS A SUBSEQUENT REVISION . 8TH DECEMBER, 2008 WHEREBY T HIS AMOUNT OF RS. 6,37,47,867/- HE GOT REDUCED TO RS.2,66,16,709. IN VIEW OF THESE FACTS THERE IS NO REASON FOR THE ASSESSING OFFICER TO CON SIDER THAT THE BALANCE AMOUNT OF RS. 2,66,16,709 IS A CONTINGENT L IABILITY. THE APPELLANT IS A SUPPLIER TO THE MSIL. IT HAS RAISED INVOICES AS PER THE ARRANGEMENT IT HAS WITH THE MSIL. BASED ON THE FINA L SETTLEMENT THE APPELLANT COMPANY IS REQUIRED TO GIVE A CREDIT OF R S. 2,66,16,709 TO MSIL. THUS THIS IS AN ASCERTAINED LIABILITY AND NOT CONTINGENT IN NATURE AND THE ASSESSING OFFICER WAS NOT JUSTIFIED IN DISALLOWING THE SAME. THE APPELLANT DURING THE COURSE OF THE ASSESS MENT PROCEEDINGS HAS FILED ALL DETAILS AND 21.3EVIDENCES IN SUPPORT OF ITS CONTENTION. ALL THESE DOCUMENTS CLEARLY ESTABLISH THE CASE OF THE A PPELLANT. AS PER THESE DETAILS, THE FACTS ARE QUITE CLEAR AND ACCORD INGLY I HOLD THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN MAKING AN AD DITION OF RS. 2, 66, 16, 709 AND ACCORDINGLY THE ASSESSING OFFICER IS DI RECTED TO DELETE THE SAME.' II) ASSESSMENT YEAR 2009-10: '4.3 I HAVE GONE THROUGH EACH OF THE OBSERVATION MA DE BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER AND THE C LARIFICATION SUBMITTED BY THE APPELLANT IN THIS REGARD. THE APPE LLANT COMPANY HAS CLARIFIED THE ISSUES RAISED BY THE ASSESSING OFFICE R ABOUT THE TOTAL LIABILITY QUANTIFIED AT RS.10,09,68,831 AS PER LETT ER DATED 20TH DECEMBER, 2011 WHICH IS NET OF THE TWO FIGURES OF R S. 10,96, 18, 793 AND RS. 86, 49, 962 STATED IN THE LETTER DATED 26TH DECEMBER, 2011. ITA NO.369, 370/DEL/2013 5 4.4 THE OBSERVATION OF THE ASSESSING OFFICER THAT M ARUTI SUZUKI INDIA LTD. HAS ACCOUNTED FOR ONLY RS.5,88,00,347 IN ITS A CCOUNT DURING THE ASSESSMENT YEAR UNDER CONSIDERATION CANNOT BE READ IN ISOLATION AND AGAINST THE APPELLANT. IT IS A MATTER ON RECORD THA T MARUTI SUZUKI INDIA LTD. IN RESPONSE TO THE NOTICE ISSUED BY THE ASSESSING OFFICER HAS CLARIFIED THAT IT HAS REDUCED THE PURCHASING PRICE BY RS. 10,51,49,184 AND HAS INCREASED THE PURCHASE PRICE BY RS.2,46,57, 919 IN RESPECT OF THE SUPPLIES MADE BY THE ASSESSEE COMPANY PERTAININ G TO THE FINANCIAL YEAR 2008-09 I.E. ASSESSMENT YEAR 2009-10 UNDER CON SIDERATION. THUS THERE CANNOT BE ANY DISPUTE OF REDUCTION IN PRICE O F RS. 8, 05,01,265 (I.E. RS.10,51,49, 184 - RS.2,46,57,919) THE APPELL ANT COMPANY HAS FURTHER SUBMITTED A CLARIFICATION ABOUT THE DIFFERE NCE BETWEEN THE AMOUNT OF RS.8,05,01,265 AS PER THE MARUTI SUZUKI I NDIA LTD. AND RS. 9, 20, 54, 942 AS PER THE APPELLANT'S SUBMISSION. T HE CONTENTION OF THE ASSESSING OFFICER THAT THE UPWARD REVISION Q UANTIFIED AT RS. 89, 13,888 AS PER LETTER DATED 2DH DECEMBER, 2011 AND R S.1,75,63,851 AS PER LETTER DATED 26TH DECEMBER, 2011, HAS NOT BEEN EXPLAINED IS ALSO NOT FACTUALLY CORRECT. IN FACT IN THE LETTER DATED 2DH DECEMBER, 2011 THE AMOUNT IS NETTED OF, WHEREAS IN THE LETTER DATE D 26TH DECEMBER, 2011 THE GROSS FIGURES HAVE BEEN STATED. 4.5 THE OBSERVATION OF THE ASSESSING OFFICER THAT T HE APPELLANT HAS NOT TAKEN INTO CONSIDERATION THE PRICE INCREASE ON ACCO UNT OF POWER AND TRANSPORT IS ALSO NOT CORRECT. THE APPELLANT HAS FI LED LETTERS BEFORE THE ASSESSING 'OFFICER ALONG WITH EVIDENCE TO THE FACT THAT INCREASE ON ACCOUNT OF POWER HAS BEEN TAKEN INTO CONSIDERATION WHILE DETERMINING THE PRICE AND WHEREAS THE TRANSPORTATION HAS BEEN D ENIED BY THE MARUTI SUZUKI INDIA LTD. FURTHER WHEN THE ASSESSING OFFICER HAS MADE AN ENQUIRY FROM THE MARUTI SUZUKI INDIA LTD. I NDEPENDENTLY AND NOTHING ADVERSE HAS PROVIDED THE EXPLANATION REGARD ING THE DIFFERENCE BETWEEN RS. 9, 20, 54, 942 AND RS.8,05,01,265 AS ST ATED BY MARUTI SUZUKI INDIA LTD. IT HAS BEEN EXPLAINED THAT THIS D IFFERENCE OF RS.1, 15,53,677 HAS ARISEN SINCE MARUTI SUZUKI INDIA LTD. HAS GIVEN A PRICE INCREASE OF RS.81, 76,862 IN THE FINANCIAL YEAR 200 9-10 AND IT HAS BEEN ACCOUNTED FOR BY THE APPELLANT COMPANY IN THE FINANCIAL YEAR 2009-10 I.E. ASSESSMENT YEAR 2010-11. IT HAS BEEN F URTHER EXPLAINED THAT RS. 62, 07, 060 IS THE TOTAL AMORTIZATION AMOU NT SHORT RECOVERED BY MARUTI SUZUKI INDIA LTD. WHICH, AS PER THE ARRAN GEMENT, IT WAS SUPPOSED TO RECOVER FROM THE APPELLANT COMPANY. S INCE MARUTI ITA NO.369, 370/DEL/2013 6 SUZUKI INDIA LTD. HAS FAILED TO RECOVER THIS AMOUNT , THE APPELLANT COMPANY HAS INCLUDED THIS AMOUNT IN ITS INCOME IN T HE SUBSEQUENT YEAR. FURTHER A SUM OF RS. 28, 30, 244 IS THE AMOUN T RECOVERED BY MARUTI SUZUKI INDIA LTD. DURING THE ASSESSMENT YEAR UNDER CONSIDERATION WHICH HAS NOT BEEN PROVIDED FOR BY TH E APPELLANT COMPANY. THUS THE DIFFERENCE OF RS.1,15,53,677 HAS ALSO BEEN FULLY EXPLAINED BY THE APPELLANT COMPANY. 4.9 IN VIEW OF THE ABOVE FACTS, THE CONCLUSION DRAW N BY THE ASSESSING OFFICER THAT THE PROFIT AND LOSS ACCOUNT OF THE APP ELLANT IS NOT REFLECTING THE ACTUAL NATURE OF THE TRANSACTION IS NOT CORRECT. THE APPELLANT HAS RAISED THE INVOICES IN RESPECT OF THE MATERIAL SUPPLIED. THESE SALES HAVE BEEN ADJUSTED BY THE REDUCTION IN PRICES MADE BY THE BUYER, MSIL. THE OBSERVATION OF THE ASSESSING OFFIC ER THAT THESE RECOVERIES WHICH WERE REDUCED FROM THE SALES AND HE NCE WAS NOT ROUTED THROUGH PROFIT AND LOSS ACCOUNT IS INCORRECT . BY REDUCING THE SALES BY THE REDUCTION IN THE PRICES ITSELF MEANS T HAT THE SAME HAVE BEEN ROUTED THROUGH THE PROFIT AND LOSS ACCOUNT. TH E CONTENTION OF THE ASSESSING OFFICER THAT THESE ARE INTHE NATURE OF PR OVISIONS AND CONTINGENT IN NATURE IS ALSO NOT CORRECT. THE NOTE APPENDED TO THE BALANCE SHEET IS BY WAY OF A CLARIFICATION AND NO A DVERSE INFERENCE NEEDS TO BE DRAWN ON THE BASIS OF SUCH NOTE. 4.10 THEREFORE, IN MY OPINION, THE ASSESSING OFFICE R WAS NOT JUSTIFIED IN MAKING THE ABOVE ADDITION OF RS. 9, 20, 54, 942. THE APPELLANT BEING A SUPPLIER TO MARUTI SUZUKI INDIA LTD. IS ENT ITLED TO THE PRICE, WHICH ARE AGREED BETWEEN THE TWO PARTIES. AS PER TH E FACTS ANALYSED HEREINABOVE IT IS QUITE CLEAR THAT THE AMOUNT PROVI DED FOR BY THE APPELLANT COMPANY WAS AS PER OF THE ARRANGEMENT WHI CH IT HAS WITH MARUTI SUZUKI INDIA LTD. AND THUS THE OBSERVATION O F THE ASSESSING OFFICER THAT IT IS A CONTINGENT LIABILITY IS NOT CO RRECT. IN VIEW OF THESE FACTS, THIS GROUND OF APPEAL IS ALLOWED.' 4. AGGRIEVED, THE REVENUE IS IN APPEALS BEFORE US. 5. AT THE OUTSET, LD. D.R. INVITED OUR ATTENTION TO ASSESSMENT ORDER AND SUBMITTED THAT ADDITION IN THESE YEARS WAS MADE ON ACCOUNT OF TRANSACTIONS WITH M/S. MARUTI SUZUKI (INDIA) LTD. IT WAS SUBMIT TED THAT THE AMOUNT ITA NO.369, 370/DEL/2013 7 CLAIMED AS PROVISIONS WERE NOT ASCERTAINED LIABILIT Y AND WERE CONTINGENT IN NATURE AND, THEREFORE, THE A.O. HAS RIGHTLY MADE TH E ADDITIONS. IT WAS SUBMITTED THAT THE NATURE OF PROVISIONS BEING CONTI NGENT CLEARLY COMES OUT FROM THE FACT THAT IN ASSESSMENT YEAR 2008-09, THE ASSESSEE ITSELF HAD REDUCED THE AMOUNT OF PROVISIONS FROM THE ORIGINAL AMOUNT OF RS.6,37,47,120/- TO RS.2,66,16,709/- AND HAD OFFERE D THE DIFFERENCE OF RS.3,71,30,411/- FOR TAXATION THROUGH A REVISED RET URN WHICH WAS FILED ON 01.09.2009 AND THAT TOO AFTER NOTICE U/S 143(2) WAS SERVED ON ASSESSEE ON 10.08.2009. INVITING OUR ATTENTION TO PAPER BOOK PAGE 17 ITEM 16, LD. D.R. SUBMITTED THAT THE ASSESSEE INITIALLY HAD PROVIDED FOR PROVISION OF RS.6.37 CRORES WHICH IT HAD REDUCED TO RS.2.66 CRORES BY WA Y OF FILING A REVISED RETURN WHICH CLEARLY SHOWS THAT THE AMOUNT OF PROVI SION WAS NOT ASCERTAINED LIABILITY. LD. D.R. FURTHER SUBMITTED THAT THE A SSESSEE AND MARUTI SUZUKI LTD. WERE RELATED PARTIES AS M/S. MARUTI SUZUKI LTD . HAD 25% SHARE IN THE ASSESSEES BUSINESS. HIGHLIGHTING VARIOUS CLAUSES OF SUPPLY AGREEMENT, LD. D.R. SUBMITTED THAT THE PRICES WERE FIXED AS PER TH E AGREEMENT AND THE GOODS WERE SUPPLIED AND, THERE WAS NO DEFECT IN THE GOODS THEREFORE THE REDUCTION IN SALES PRICE WAS ARBITRARY AND WAS BE PART OF OVE RALL TAX PLANNING. ARGUING FOR ASSESSMENT YEAR 2009-10, LD. D.R. SUBMITTED THA T THOUGH THE FACTS REMAINED SIMILAR, IN THIS YEAR ALSO, BUT IN THIS YE AR, THE A.O. HAD CONDUCTED INQUIRY U/S 133(6) FROM MARUTI SUZUKI LTD. AND AS P ER THE INQUIRY, THERE STILL REMAINED A DIFFERENCE OF RS.1,15,53,677/- WHICH AT LEAST SHOULD HAVE BEEN CONFIRMED BY LD. CIT(A) AND WHICH HE HAS NOT DONE. LD. D.R. PLACED RELIANCE ON THE FOLLOWING CASE LAWS: I) 37 ITR 66 INDIAN MOLASSES CO. (PVT. ) LTD. VS C IT ITA NO.369, 370/DEL/2013 8 III) 266 ITR 47 ALEMBIC CHEMICAL WORKS LTD. VS DCIT (GUJ.) IV) 248 ITR 04 INDIAN SMELTING & REFINING CO. LTD. VS CIT (S.C.) 6. LD. A.R. ON THE OTHER HAND EXPLAINING THE FACTS OF THE CASE, SUBMITTED THAT THE ASSESSEE IS A VENDOR FOR MARUTI SUZUKI LTD . AND IT IS IN THE BUSINESS OF SUPPLYING VARIOUS PARTS OF CARS TO MARUTI SUZUKI LTD. AND THE RATES FIXED FOR SUPPLY OF ITEMS ARE AT COST PLUS PROFIT BASIS A ND THE ASSESSEE HAD MADE BILLINGS TO MARUTI SUZUKI INDIA LTD. AT TENTATIVE PRICES AND NEGOTIATION FOR THE FINAL PRICES CONTINUED AND ULTIMATELY LOWER PR ICES FROM BILLED PRICES WERE AGREED AND THEREFORE, THE ASSESSEE PROVIDED FO R THE DIFFERENCE BY DEBIT OF SALES ACCOUNT AND CREDIT TO OTHER LIABILITIES. IT WAS SUBMITTED THAT IN ASSESSMENT YEAR 2008-09 BY WAY OF ANOTHER AGREEMENT THE PRICES WERE REVISED UPWARDS WHICH NECESSITATED THE REDUCTION IN EARLIER PROVISION AND THAT IS WHY THE ASSESSEE OFFERED THE DIFFERENCE FOR TAXATION BY WAY OF REVISED RETURN. EXPLAINING THE FACTS OF THE CASE LD. A.R. SUBMITTED THAT IN FACT THESE WERE NOT PROVISIONS AND, THEREFORE, THERE WAS NO QU ESTION OF ASCERTAINED OR UNASCERTAINED LIABILITIES. IT WAS SUBMITTED THAT T HE ASSESSEE HAD REDUCED SALES PRICES FOR SUPPLY OF GOODS TO MARUTI SUZUKI L TD. ON ACCOUNT OF MUTUAL DISCUSSIONS AND, THEREFORE, HAD ACCORDINGLY PROVIDE D FOR THE SAME IN THE BOOKS OF ACCOUNT BY DEBIT TO SALES AND CREDIT TO OT HER LIABILITIES ACCOUNT. LD. A.R. SUBMITTED THAT THE A.O. DURING INVESTIGATION U /S 133(6) HAD OBSERVED THAT STILL THERE WAS DIFFERENCE OF RS.1,15,53,677/- WHICH WAS AGAIN EXPLAINED TO HIM BY WAY OF FILING A RECONCILIATION STATEMENT, THEREFORE, THERE WAS NO UNASCERTAINED LIABILITIES. LD. A.R. INVITED OUR AT TENTION TO LD. CIT(A)S ORDER IN BOTH THE YEARS AND SUBMITTED THAT LD. CIT( A) HAS PASSED THE ORDER AFTER TAKING INTO ACCOUNT ALL THE FACTS AND CIRCUMS TANCES OF THE CASE AND THEREFORE NEEDS TO BE UPHELD. DURING APPELLATE PRO CEEDINGS BEFORE US THE ITA NO.369, 370/DEL/2013 9 LD. A.R. WAS ASKED TO EXPLAIN AS TO WHETHER THE ENT RIES PASSED ON ACCOUNT OF REVISED PRICES RELATED ONLY TO FINANCIAL ENTRIES OR EXCISE DUTY WAS ALSO RECALCULATED TO WHICH LD. A.R. SUBMITTED THAT HE WA S NOT AWARE ABOUT THESE FACTS BUT HE WILL FILE A WRITTEN NOTE ON THIS POINT . THE SAID NOTE WAS FILED AFTER THE CONCLUSION OF HEARING ON 24.02.2015. 7. WE HAVE HEARD RIVAL PARTIES AND HAVE GONE THROU GH THE MATERIAL PLACED ON RECORD. WE FIND THAT THE ASSESSEE SUPPLI ED MATERIAL TO MARUTI SUZUKI LTD. IN TERMS OF AGREEMENTS WHEREBY IT BILLE D TO MARUTI UDYOG LTD. ON TENTATIVE PRICES AND BEFORE FINALIZATION OF ACCO UNTS ON THE BASIS OF CONTINUED MUTUAL DISCUSSIONS HAD REDUCED THE PRICES AND THEREFORE, IT REVISED SALES AMOUNT TO THAT EXTENT AND CREDITED THE CORRES PONDING AMOUNT TO OTHER LIABILITIES. DURING ASSESSMENT YEAR 2008-09, THE A SSESSEE SUPPLIED 33551 CAR SETS COMPRISING OF 17 PARTS TO MARUTI SUZUKI LT D. AT A PROVISIONAL RATE OF RS.6169/- WHICH WAS GOT REDUCED TO RS.4269/- BY INT ERIM AGREEMENT DATED 12.02.2008 AND, THEREFORE, WHILE FINALIZING THE ACC OUNTS FOR 31.03.2008, THE ASSESSEE HAD CREDITED AN AMOUNT OF RS.6,37,47,120/- TO THE ACCOUNTS OF OTHER LIABILITIES BY DEBITING EQUIVALENT AMOUNT TO SALES ACCOUNT. HOWEVER ON 08.12.2008, FINAL SETTLEMENT TOOK PLACE WHEREBY AMO UNT PAYABLE UNDER OTHER LIABILITIES WAS REDUCED TO RS.2,66,16,704/- AND, TH EREFORE THE ASSESSEE REVISED ITS RETURN OF INCOME AND OFFERED THE DIFFER ENCE OF RS.3,71,30,411/- FOR TAXATION. THEREFORE, FROM THE ABOVE, IT BECOME S APPARENT THAT AMOUNT CREDITED IN OTHER LIABILITIES WAS NOT DUE TO ASCERT AINED OR UNASCERTAINED LIABILITIES BUT WAS DUE TO REVISION IN SALE PRICES OF GOODS. SIMILAR IS THE POSITION IN ASSESSMENT YEAR 2009-10 HOWEVER, THE AM OUNT INVOLVED IS RS.9,20,54,942/- AND IN THAT YEAR THE AMOUNT REMAIN ED THE SAME AS PRICES AFTER FIRST REDUCTION WAS NOT REVISED UPWARD & MORE OVER IN THAT YEAR, TH A.O. ITA NO.369, 370/DEL/2013 10 HAD MADE ENQUIRIES U/S 133(6) ALSO. WE NOTE FROM T HE FACTS THAT THIS IS NOT A CASE OF ASCERTAINED OR UNASCERTAINED LIABILITIES AN D RATHER IT IS A CASE WHERE AFTER RAISING BILLS, FURTHER DISCUSSION TOOK PLACE BETWEEN ASSESSEE AND MARUTI UDYOG LTD. AND ON THE BASIS OF FURTHER DISCUSSIONS, THE PRICES WERE REDUCED AND ACCORDINGLY, THE AMOUNTS WERE CREDITED. FROM T HE NOTE FILED BY LD. A.R. WE FIND THAT ASSESSEE USED TO RAISE BILLS ON T ENTATIVE PRICES & EXCISE DUTY + VAT AND IN CASE OF DOWNWARD REDUCTION IN THE BASIC PRICES, THE ASSESSEE USED TO CONSIDER ONLY BASIC PRICE AND VAT AND DID NOT TOUCH EXCISE AS THE PURCHASING PARTY MUST HAVE TAKEN CREDIT OF C ENVAT. HOWEVER, WHILE REVISING THE PRICES UPWARDS THE DIFFERENCE IN EXCIS E DUTY ALONG-WITH INTEREST THEREON WAS USED TO BE RECOVERED. THE NOTE FILED B Y LD. A.R. PLACED IN THE FILE IS SELF EXPLANATORY. THE CASE LAWS RELIED UPO N BY REVENUE RELATE TO CONTINGENT LIABILITIES WHICH ARE DISTINGUISHABLE FR OM THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASES. 8. IN VIEW OF THE ABOVE, WE ARE IN AGREEMENT WITH T HE FINDINGS OF LD. CIT(A) EXCEPT FOR FINDINGS WITH RESPECT TO DIFFEREN CE OF RS.1,15,53,678/-. THE DIFFERENCE OF RS.1,15,53,677/- IN THAT YEAR WAS CLAIMED TO HAVE BEEN EXPLAINED TO LD. CIT(A) BY WAY OF A RECONCILIATION STATEMENT RECONCILING THE DIFFERENCES. 9. WE FIND THAT LD. CIT(A) ACCEPTED THE RECONCILIAT ION STATEMENT FILED BY ASSESSEE. THE DIFFERENCE OF RS.1,15,53,677/- COMPR ISED OF THE FOLLOWING AMOUNTS: I) PRICE INCREASE GIVEN BY MARUTI LTD. CLAIMED TO HAVE BEEN OFFERED FOR TAXATION IN SUCCEEDING YEAR 81,76,862/- II) SHORT RECOVERY BY MARUTI LTD. WHICH IT FAILED T O RECOVER AND THEREFORE, OFFERED FOR TAXATION IN SUCCEEDING YEAR. 62,07,060/- --------------- ITA NO.369, 370/DEL/2013 11 1,43,83,922/- III) AMOUNT RECOVERED BY MARUTI UDYOG LTD. WHICH WAS NOT PROVIDED BY ASSESSEE (-) 28,30,244/- --------------- 1,15,53,678/- --------------- 10. THE LD. CIT(A) HAS GIVEN RELIEF OF THIS AMOUNT ON THE BASIS OF SIMPLE EXPLANATION BY ASSESSEE AND HAS NOT GOT VERIFIED FR OM SUCCEEDING YEAR WHETHER THE SAID DIFFERENCES WERE OFFERED FOR TAXAT ION OR NOT. THEREFORE, IN VIEW OF THE ABOVE, WE SET ASIDE THIS ISSUE TO THE O FFICE OF A.O. FOR VERIFICATION OF THE CLAIM THAT THE SAID AMOUNTS WER E OFFERED FOR TAXATION IN THE SUCCEEDING YEAR. 11. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES, T HE APPEAL FOR ASSESSMENT YEAR 2008-09 IS DISMISSED WHEREAS APPEAL FOR ASSESSMENT YEAR 2009-10 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 12. ORDER PRONOUNCED IN THE OPEN COURT ON 04 TH MARCH, 2015. SD./- SD./- (G. C. GUPTA) (T.S. KAPOOR ) VICE PRESIDENT ACCOUNTANT MEMBER DATE: 04 TH MARCH, 2015 SP COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)-, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DEL HI. TRUE COPY. BY ORDER (ITAT, NEW DELHI). ITA NO.369, 370/DEL/2013 12 S.NO. DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON SR. PS/PS 2 DRAFT PLACED BEFORE AUTHOR SR. PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/AM 5 APPROVED DRAFT COMES TO THE SR. PS/PS SR. PS/PS 6 KEPT FOR PRONOUNCEMENT SR. PS/PS 7 FILE SENT TO BENCH CLERK SR. PS/PS 8 DATE ON WHICH THE FILE GOES TO HEAD CLERK 9 DATE ON WHICH FILE GOES TO A.R. 10 DATE OF DISPATCH OF ORDER