Rohde & Schwarz India Pvt. Ltd., New Delhi V. DCIT, New Delhi

ITA 3692/DEL/2016

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 9421 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 9 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2010-2011
• Appeal Filed On: 21-06-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S SRINIVASAN
• Keywords: Set aside

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: C , NEW DELHI BEFORE SMT. BEENA A PILLAI, JUDICIAL MEMBER AND SHRI ANADI NATH MISHRA , ACCOUNTANT MEMBER ITA NO. 36 92 /DEL/201 6 AY: 20 10 - 11 ROHDE & SCHWARZ INDIA P LTD. A - 27, FIRST FLOOR MOHAN CO - OPERATIVE INDUSTRIAL ESTATE MATHURA ROAD NEW DELHI 110 044 PAN: AAACR3267P VS . DY.CIT, CIRCLE 15(1) NEW DELHI (APPELLANT) (RESPON DENT) ASSESSEE BY : : SH . S.SRINIVASAN, C.A. DEPARTMENT BY : SH. V.P.GUPTA, SR.D.R. DATE OF HEARING : 03/04/ 2019 DATE OF PRONOUNCEMENT : 05 /04/2019 ORDER PER BEENA A PILLAI, JUDICIAL MEMBER PRESENT APPEAL HAS BEEN FILED B Y ASSESSEE AGAINST ORDER DATED 22/04/16 PASSED BY LD.CIT(A) - 7, NEW DELHI FOR A SSESSMENT Y EAR (A.Y.) 2010 - 11 ON FOLLOWING GROUNDS OF APPEAL: BASED ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE APPELLANT RESPECTFULLY SUBMITS THAT: - 1. THE LEARNED COMMIS SIONER OF INCOME TAX (APPEALS ) HAS ERRED IN : - ITA 3692/DEL/2016 A.Y.2010 - 11 RHODE & SCHWARZ INDIA P LTD. 2 (A) CONFIRMING THE DISALLOWANCES MADE FOR THE PROVISION FOR WARRANTY ESPECIALLY WHEN THE DETAILS AND THE BASIS WERE SUBMITTED BEFORE HIM. (B) FURTHER ERRED IN NOTING THAT THE APPELLANT FAILED TO SUBMIT THE DE TAILS OF WARRANTY AND HOW IT WAS LINKED TO COMMISSION AND ONLY A SIMPLE CHART WAS PRODUCED BEFORE HIM, ESPECIALLY WHEN THE AGREEMENT, DETAILS OF THE BILLS AND ALSO THE BASIS OF THE WORKING AND THE CLAUSE 6 OF THE AGREEMENT PROVIDED FOR THE WARRANTY SERVICE S. (C ) HE HAS FURTHER ERRED IN DISALLOWING THE PROVISION FOR WARRANTY ONLY BECAUSE THE AMOUNT WAS DEDUCTED FROM THE COMMISSION RECEIVED AND NOT SEPARATELY DEBITED TO THE PROFIT AND LOSS ACCOUNT. 2. THE APPELLANT PRAYS FOR APPROPRIATE RELIEF BASED ON THE SAID GROUNDS OF APPEAL AND THE FACTS AND CIRCUMSTANCES OF THE CASE. 3. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, VARY, OMIT OR SUBSTITUTE ANY OF THE AFORESAID GROUNDS OF APPEAL AT ANY TIME BEFORE OR AT THE TIME OF HEARING OF THE APPEAL. 2. BRIEF FACTS OF THE CASE ARE AS UNDER: ASSESSEE FILED ITS RETURN OF INCOME ON 15/10/2010 WHICH WAS REVISED ON 02.12.2011 DECLARING TAXABLE INCOME OF RS.5,74,74,146/ - THE CASE WAS SELECTED FOR SCRUTINY, SUBSEQUENTLY NOTICE UNDER SECTION 143(2)/142(1) FOLLOWED BY QUESTIONN AIRE WERE ISSUED TO ASSESSEE. IN RESPONSE TO STATUTORY NOTICES, REPRESENTATIVES OF ASSESSEE APPEARED BEFORE LD.AO AND PRODUCED BOOKS OF ACCOUNTS, BILLS, VOUCHERS WHICH WERE PUT TO TEST CHECK. 2.1 . LD.AO OBSERVED THAT ASSESSEE IS ENGAGED IN BUSINESS OF TRA DING OF TESTING AND MEASURING EQUIPMENT AND COMMUNICATION AND BROADCASTING SYSTEMS. 2.2 . LD.AO DISALLOWED RS.42,98,065/ - UNDER SECTION 40(A)(I) OF THE INCOME TAX ACT, 1961 (THE ACT) AND RS.36,06,987/ - BEING ITA 3692/DEL/2016 A.Y.2010 - 11 RHODE & SCHWARZ INDIA P LTD. 3 COMMISSION THAT RELATED TO WARRANTY PERIOD WH ICH WAS ACCOUNTED AND RECOGNISED IN THE N EXT ASSESSMENT YEAR BY ASSESSEE, AND ADDED TO THE TOTAL INCOME OF ASSESSEE. 2.3. AGGRIEVED BY ADDITIONS MADE BY LD.AO ASSESSEE PREFERRED APPEAL BEFORE LD.CIT(A) WHO DELETED DISALLOWANCE UNDER SECTION 40 (A) (I) O F THE A CT AND CONFIRMED ADDITION ON ACCOUNT OF PROVISION OF WARRANTY. 2.4 . AGGRIEVED BY THE ORDER OF LD. CIT (A) ASSESSEE IS IN APPEAL BEFORE US NOW. 3 . LD. AR SUBMITTED THAT ONLY ISSUE RAISED IS IN RESPECT OF DISALLOWANCE OF PROVISION FOR WARRANTY. HE SUBMITTED THAT SAID ISSUE NOW STANDS COVERED BY ORDER DATED 30/03/16 PASSED BY THIS T RIBUNAL FOR PRECEDING ASSESSMENT YEARS BEING ASSESSMENT YEAR 2007 - 08 AND 2008 - 09 IN ITA NO. 894/ D EL/2012 AND 520/ D EL/2013 RESPECTIVELY. HE SUBMITTED THAT THIS T RIBUNAL REMANDED ISSUE BACK TO LD.AO TO RE - COMPUTE INCOME RECEIVED BY ASSESSEE ON ACCOUNT OF COMMISSION AND SERVICES INCLUDING WARRANTY OBLIGATION BY APPLYING RATIONA LE INITIATED BY HONBLE SUPREME COURT IN CASE OF ROTORK CONTROLS INDIA P. LTD. VS. CIT REPOR TED IN 314 ITR 62 ( 2009 ) . HE SUBMITTED THAT SUBSEQUENTLY , IN REMAND PROCEEDINGS LD. AO ADOPTED REASONABLE APPROACH TO TAKE PROVISION OF EXPENDITURE IN CARRYING ON WARRANTY AT THE RATE OF 7% INSTEAD OF 6.4% AS CONTENDED BY DEPARTMENT AS AGAINST 8% BY ASSESSEE. 3.1 . LD.AR THUS REQUESTED FOR ISSUE TO BE REMANDED TO LD.AO FOR RE - COMPUTING PROVISION FOR WARRANTY. 4. LD.SR.DR DID NOT OPPOSE FOR ISSUE TO BE SET - ASIDE TO LD.AO ITA 3692/DEL/2016 A.Y.2010 - 11 RHODE & SCHWARZ INDIA P LTD. 4 5. WE HAVE PERUSED SUBMISSIONS ADVANCED BY BOTH SIDES IN LIGHT OF RECORDS PL ACED BEFORE US. 6. WE THUS ARE INCLINED TO SET ASIDE THIS ISSUE BACK TO FILE OF LD. AO IN ORDER TO DECIDE THE ISSUE AFRESH REGARDING CLAIM OF WARRANTY EXPENSES AS PER LAW . NEEDLESS TO SAY THAT PROPER OPPORTUNITY IS TO BE GRANTED TO ASSESSEE AS PER LAW . ACCORDINGLY THIS GROUND RAISED BY ASSESSEE STANDS ALLOWED FOR STATISTICAL PURPOSES. 7. IN THE RESULT APPEAL FILED BY ASSESSEE STANDS ALLOWED FOR ST ATISTICAL PURPOSES . ORDER PRONOUNCED IN THE OPEN COURT ON 05 TH APRIL, 2019. SD/ - SD/ - ( ANADI NATH MISHRA ) (BEENA A PILLAI) ACCOUNTANT MEMBER JUDICIAL MEMBER DT. 05 TH APRIL, 2019 GMV COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT - TRUE COPY - BY ORDER, ASSISTANT REGISTRAR ITAT DELHI BENCHES ITA 3692/DEL/2016 A.Y.2010 - 11 RHODE & SCHWARZ INDIA P LTD. 5 DATE DRAFT DICTATED ON 04 /0 4 /19 DRAFT PLACED BEFORE AUTHOR 0 4 /04/19 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER DRAFT DISCUSSED/APPROVED BY SECOND MEMB ER. APPROVED DRAFT COMES TO THE SR.PS/PS KEPT FOR PRONOUNCEMENT ON & ORDER UPLOADED ON : 05/04/19 FILE SENT TO THE BENCH CLERK DATE ON WHICH FILE GOES TO THE AR DATE ON WHICH FILE GOES TO THE HEAD CLERK. DATE OF DISPATCH OF O RDER.