Flaktgroup India Pvt ltd, New Delhi V. ACIT Circle-9(1), New Delhi

ITA 4447/DEL/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 2422 (ITAT-DELHI)
• Duration Of Justice: 10 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-03-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 15-05-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Principle of natural justice
• Section: 143(3); 40(a)(ia); 37

Judgement Text

1 ITA NO. 4447/DEL/2019 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: I(2) + SM C NEW DELHI BEFORE MS SUCHITRA KAMBLE, JUDICIAL MEM BER, AND SHRI PRASHANT MAHARISHI, ACCOU NTANT MEMBER ITA NO. 4447/DEL/2019 ( A.Y 2014-15) FLAKTGROUP INDIA PVT. LTD. A-1, FF, FIEE COMPLEX, NEAR C LAL CHOWK, OKHLA INDUSTRIAL AREA, NEW DELHI AACCF020ID (APPELLANT) VS ACIT CIRCLE-9(1) C. R. BUILDING, I.P. ESTATE NEW DELHI (RESPONDENT) APPELLANT BY NONE RESPONDENT BY SH. PRADEEP SINGH GAUTAM, SR. DR ORDER PER SUCHITRA KAMBLE, JM THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE OR DER DATED 15/03/2019 PASSED BY CIT(A)- 34 FOR ASSESSMENT YEAR 2014-15. 2. THE GROUNDS OF APPEAL ARE AS UNDER:- 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CA SE, THE ORDER DATED AS 02.11.2016 PASSED BY THE ASST. COMMISSIONE R OF INCOME-TAX, CIRCLE- 9(1),NEW DELHI [HEREINAFTER REFERRED TO AS 'THE LD. A.O.'] UNDER SECTION 143(3) OF THE INCOME-TAX ACT, 1961 [HEREINAFTER REFERRED T O AS 'THE ACT'] AND AS UPHELD BY THE LD. COMMISSIONER OF INCOME-TAX (APPEALS) -34 , NEW DELHI [HEREINAFTER REFERRED TO AS 'THE CIT(A)'] IS BAD AT LAW AND VOID AB INITIO. 2. THAT ON THE FACTS AND IN CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) ERRED IN DATE OF HEARING 04.03.2020 DATE OF PRONOUNCEMENT 19.03.2020 2 ITA NO. 4447/DEL/2019 UPHOLDING THE DISALLOWANCE TO THE TUNE OF RS. 55,69 ,690/ OUT OF CONTRACTUAL SERVICES EXPENSES BEING CONTINGENT IN NATURE AND DI SALLOWED UNDER THE PROVISION OF SECTION 40(A)(IA) OF THE ACT. 3. THAT ON THE FACTS AND IN CIRCUMSTANCES OF THE C ASE, THE LD. CIT(A) ERRED IN UPHOLDING THE DISALLOWANCE OF RESTRUCTURING EXPENSE S OF RS. 1,07,75,000/ UNDER SECTION 37 OF THE ACT. 4.1. THAT ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN UPHOLDING THE DISALLOWANCE OF PROVISION OF WARRANTY COST OF RS. 26,65,716 BEING CONTINGENT IN NATURE. 4.2 THAT ON THE FACTS AND IN CIRCUMSTANCES OF THE C ASE, THE LD.CIT(A) ERRED IN UPHOLDING THE DISALLOWANCE OF PROVISION OF WARRANTY COST OF RS. 26,65,716/- BEING CONTINGENT IN NATURE. 5.1 ALL THE ABOVE MENTIONED GROUNDS ARE INDEPENDENT AND WITHOUT PREJUDICE TO OTHER; AND 5.2. THAT THE APPELLANT CARVES THE RIGHT TO ADD, AL TER, AMEND AND DELETE THE GROUND(S) OF APPEAL DURING HEARING. 3. THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND SALE OF AIR TREATMENT EQUIPMENT AND PARTICULARLY AI R HANDLING UNITS. THE COMPANY IS ALSO ENGAGED IN THE BUSINESS OF SYSTEM S OLUTION BEING OPERATED FORM KOLKATA OFFICE. RETURN DECLARING TOTAL LOSS O F RS.1,64,64,017/- WAS FILED ON 28/11/2014. THE ASSESSING OFFICER COMPLETED TH E ASSESSMENT U/S 143(3) VIDE ORDER DATED 2/11/2016 AFTER MAKING ADDITION ON ACCOUNT OF CONTRACTUAL SERVICE EXPENSES AT RS. 55,69,690/-, RESTRICTING EX PENSES RS. 1,07,75,000/- AND DISALLOWANCE OF PROVISION ON ACCOUNT OF LIQUIDA TED DAMAGES AND WARRANTY COST AT RS.41,78,951/-. 4. BEING AGGRIEVED BY THE ASSESSMENT ORDER, THE ASS ESSEE FILED APPEAL BEFORE THE CIT(A). THE CIT(A) DISMISSED THE APPEAL OF THE ASSESSEE. 3 ITA NO. 4447/DEL/2019 5. NONE APPEARED ON BEHALF OF THE ASSESSEE AND THER E IS NO ADJOURNMENT APPLICATION ON BEHALF OF THE ASSESSEE. THE NOTICE HAS BEEN SERVED TO THE ASSESSEE. THEREFORE, WE ARE TAKING UP THE SUBMISSI ONS OF THE ASSESSEE BEFORE THE CIT(A) AS WELL AS BEFORE THE ASSESSING OFFICER . 6. THE LD. DR RELIED UPON THE ASSESSMENT ORDER AND THE ORDER OF THE CIT(A). 7. WE HAVE HEARD THE LD. DR AND PERUSED THE MATERIA L AVAILABLE ON RECORD. FROM THE ORDER OF THE ASSESSING OFFICER AS WELL AS THE CIT(A) IT IS PERTINENT TO NOTE THAT THE ASSESSING OFFICER AS WELL AS THE CIT (A) HAS NOT TAKEN THE COGNIZANCE OF ANY EVIDENCE PRODUCED BY THE ASSESSE E BEFORE THE REVENUE AUTHORITIES. THERE IS NO REASON GIVEN BY THE CIT(A ) AS TO WHY THE ADDITION HAS TO BE SUSTAINED. THEREFORE, IT WILL BE APPROPRIATE TO REMAND BACK ALL THE ISSUES CONTESTED BY THE ASSESSEE TO THE FILE OF THE CIT(A) FOR FRESH ADJUDICATION. NEEDLESS TO SAY, THE ASSESSEE BE GIVEN OPPORTUNITY OF HEARING BY FOLLOWING PRINCIPLES OF NATURAL JUSTICE. 8. IN RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 19TH MARC H, 2020. SD/- SD/- (PRASHANT MAHARISHI) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIA L MEMBER DATED: 19/03/2020 R. NAHEED COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT 4 ITA NO. 4447/DEL/2019 ASSISTANT REGISTRAR ITAT NEW DELHI DATE OF DICTATION 03.03.2020 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 06.03.2020 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. PS/PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/PS 1 9 .03.2020 DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT 1 9 .03.2020 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 1 9 .03.2020 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER