M/s. RICOH INDIA LTD., MUMBAI V. ITO - 3(3)(1), MUMBAI

ITA 4489/MUM/2008

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 2711 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-12-2009
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 01-12-2009
• Assessment Year: 1997-1998
• Appeal Filed On: 02-07-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MOHAMED USMAN
• Assessee Lawyers: R SANTHAN AM; SUR ESH MALIK
• Keywords: Opportunity of being heard; Revenue expenditure; Capital expenditure
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH D, MUMBAI BEFORE SHRI A.L. GEHLOT, A.M. AND SMT. P. MADHAVI D EVI, J.M. ITA NO. 4489/M/08 ASSESSMENT YEAR: 1997-98 M/S RICOH INDIA LTD., APPELLANT 1104, ARCADIA, 195, N.C.P.A. ROAD, NARIMAN POINT, MUMBAI 400 021. (PAN AAACR 4151 J) VS. INCOME TAX OFFICER - 3(3)(1), RESPONDENT MUMBAI. APPELLANT BY : MR. R. SANTHANAM & MR. SURESH MALIK RESPONDENT BY : MR. MOHAMED USMAN ORDER PER A.L. GEHLOT, A.M.: THIS APPEAL FILED BY THE ASSESSEE ARISES OUT OF TH E ORDER PASSED BY THE CIT(A)-XXXII, MUMBAI, ON 30.043.2008 FOR THE ASSESSMENT YEAR 1997-98 WHEREIN THE ASSESSEE HAS RAISED THE FO LLOWING GROUND OF APPEAL:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LEARNED CIT(A) HAS ERRED, BOTH ON FACTS AND IN LAW, IN REJE CTING THE APPELLANTS PLEA FOR RAISING ADDITIONAL GROUNDS AND PLACING ADDITIONAL DOCUMENTS BEFORE HIM IN REGARD TO THE AS SESSEES CLAIM FOR INTEREST ON UNPAID PURCHASE PRICE PAID TO CEAT LTD. FOR BEING ALLOWED AS DEDUCTION IN VIEW OF THE SAME HAVI NG BEEN DISALLOWED IN AY 1999-2000 ON THE GROUND OF THE INT EREST BEING RELATABLE TO THE EARLIER YEAR(S). 2. 3. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSES SEE ENTERED INTO A MOU WITH CEAT LTD. FOR PURCHASE OF PLAIN PAPER COPI ER DIVISION OF CEAT LTD. THE MOU HAD NOT SPECIFIED THE QUANTIFICAT ION AND AMOUNT ITA NO. 4489/M/08 M/S RICOH INDIA LTD. 2 OF PRICE FOR PURCHASE OF THE UNIT BUT THE PRICE CLA USE IN THE MOU READS THAT PURCHASE PRICE FOR THE SALE/TRANSFER/ASSIGNMEN T OF THE SAID PPC UNIT SHALL BE A LUMPSUM AMOUNT TO BE AGREED UPON WI THIN A PERIOD OF 90 DAYS FROM THE TRANSFER DATE SUBJECT TO SUCH ADJU STMENTS AS MAY BE NECESSARY AS A RESULT OF DUE DILIGENCE AND REVIEW P ERTAINING TO PPC AND UPDATED TO TRANSFER DATE. THE MOU DOES NOT SPEC IFY THE SCHEDULE FOR PAYMENT OF PURCHASE CONSIDERATION AND THERE WAS NO MENTION EXPLICITLY FOR PAYMENT OF INTEREST IN THE EVENT OF DELAY IN PAYMENT OF THE PURCHASE CONSIDERATION. THE CLAIM OF THE ASSESS EE WAS THAT THE AMOUNT OF INTEREST MUTUALLY AGREED AT 15%, OF WHICH YEAR-WISE BIFURCATION IS AS UNDER:- PARTICULARS AMOUNT (RS.) INTEREST FOR THE FINANCIAL YEAR 1996-97 89,82,620.7 1 INTEREST FOR THE FINANCIAL YEAR 1997-1998 47,74,587 .93 INTEREST FOR THE FINANCIAL YEAR 1998-1999 4,30,780. 15 TOTAL 1,41,87,988.79 4. THE ASSESSEE CLAIMED ENTIRE AMOUNT OF INTEREST O F RS. 1,41,87,988.79 AS REVENUE EXPENDITURE IN AY 1999-20 00. THE AO WHILE MAKING ASSESSMENT IN AY 1999-00 DISALLOWED IN TEREST ON THE GROUND THAT THE SAME IS RELATED TO FY 1996-97 AND 1 997-98. THE ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A) AND THE CIT(A) TREATED THE INTEREST LIABILITY AS CAPITAL EXPENDITURE AND NOT R ELATED TO THE BUSINESS OF THE ASSESSEE COMPANY AND CONFIRMED THE DISALLOWANCE MADE BY THE AO. THE ASSESSEE FILED APPEAL BEFORE TH E TRIBUNAL AGAINST THE ORDER OF CIT(A) FOR AY 1999-2000. HOWEVER, MEAN WHILE, WHEN APPEAL FOR AY 1997-98 CAME FOR HEARING BEFORE THE C IT(A), THE ASSESSEE HAS RAISED ADDITIONAL GROUND BEFORE THE CI T(A), WHICH READS AS UNDER:- THE APPELLANT COMPANY IS AGGRIEVED BY THE ADDITIONS AND DISALLOWANCES OF RS. 89,82,620.71 FORMING PART OF T OTAL DISALLOWANCE OF RS. 1,37,57,208.64 MADE BY THE LEAR NED DCIT IN HIS ORDER OF ASSESSMENT DATED 11 TH MARCH 2002 FOR THE ASSESSMENT YEAR 1999-2000 PASSED U/S 143(3) OF THE INCOME TAX ACT, 1961. ITA NO. 4489/M/08 M/S RICOH INDIA LTD. 3 4.1 THE CIT(A) DID NOT ADMIT THE ADDITIONAL GROUND FOR THE YEAR UNDER CONSIDERATION I.E. AY 1997-98 ON THE GROUND T HAT THE APPEAL IS PENDING BEFORE ITAT ON THE SAME ISSUE, THEREFORE, T HERE IS NO NEED TO ADJUDICATE UPON THE ISSUE. 5. AT THE OUTSET, THE LEARNED AR SUBMITTED THAT THE ITAT HAS DECIDED THE APPEAL FOR AY 1999-2000 IN ITA NOS. 878 1/MUM/2004 AND ITA NO. 9017/MUM/2004 VIDE ORDER DATED 28 TH MAY, 2008. THE RELEVANT FINDING OF THE ITAT ON THE ISSUED DECIDED AS UNDER:- 12. ON CAREFUL PERUSAL OF THE ORDER OF THE AO WE FI ND THAT ONE OF THE REASON FOR DISALLOWANCE WAS THAT THE INTERES T LIABILITY WHICH WAS PAID BY THE ASSESSEE DURING THE YEAR RELA TE TO THE EARLIER YEARS AND THE AO ACCORDINGLY DISALLOWED THE CLAIM OF THE PAYMENT OF INTEREST AS PRIOR PERIOD EXPENSES. IN TH IS REGARD, THE LEARNED COUNSEL FOR THE ASSESSEE HAS EMPHATICALLY A RGUED THAT THE INTEREST LIABILITY WAS CLAIMED IN THIS PREVIOUS YEAR ON ITS CRYSTALLIZATION, BUT, NO EVIDENCE IS PLACED ON RECO RD, WHEREAS, FACTS AVAILABLE ON RECORD SPEAK OTHERWISE. AO HAS H OWEVER ALREADY ALLOWED THE INTEREST CLAIMED FOR THE IMPUGN ED ASSESSMENT YEAR. SINCE, NOTHING HAS BEEN PLACED ON RECORD ON BEHALF OF THE ASSESSEE, TO ESTABLISH THAT THE CONTR ACTUAL LIABILITY OF PAYMENT OF INTEREST WAS CRYSTALLIZED IN THE IMPU GNED ASSESSMENT YEAR, ITS PAYMENT CANNOT BE ALLOWED. THE ASSESSEE, HOWEVER, CAN CLAIM THIS LIABILITY IN RESPECTIVE YEA RS IF PERMISSIBLE UNDER THE LAW. ACCORDINGLY, THE DISALLOWANCE MADE B Y THE LOWER AUTHORITIES IS STAND CONFIRMED. 6. AFTER HEARING THE LEARNED DR, WE FIND THAT THE I SSUE IS REQUIRED TO BE DECIDED IN THE LIGHT OF ABOVE DECISION OF ITA T. THE LEARNED DR SUBMITTED THAT THE ISSUE MAY BE SENT BACK TO THE FI LE OF THE CIT(A) IN STEAD OF AO. WE ARE OF THE VIEW THAT THE ADDITIONAL GROUND RAISED BEFORE THE CIT(A) OUGHT TO HAVE BEEN ADMITTED BY HI M. TO AVOID REPEATED/MULTIPLE LITIGATION, AS THE REVENUE HAS TO SIMPLY CARRY OUT THE DIRECTION OF THE ITAT, WHICH WAS GIVEN IN AY 19 99-2000 AND SINCE THE BASIC RECORD IN THIS CONNECTION IS AVAILABLE WI TH THE AO, WE FIND IT PROPER TO REMIT THE ISSUE TO THE FILE OF THE AO WIT H A DIRECTION TO CONSIDER THE ASSESSEES CLAIM AND RE-COMPUTE THE ALLOWANCE/DISALLOWANCE IN ACCORDANCE WITH THE DECIS ION OF ITAT IN AY ITA NO. 4489/M/08 M/S RICOH INDIA LTD. 4 1999-2000 AFTER PROVIDING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. PRONOUNCED ON THIS 10 TH DAY OF DECEMBER, 2009. SD/- SD/- (P. MADHAVI DEVI) (A.L. GEHLOT) JUDICIAL MEMBER ACCOUNTANT M EMBER DATED: 10 TH DECEMBER, 2009 COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A) CONCERNED. 4) THE CIT CONCERNED. 5) THE DEPARTMENTAL REPRESENTATIVE, D BENCH, I.T .A.T., MUMBAI. BY ORDER //TRUE COPY// ASST. REGISTRAR, I.T.A.T., MUMBAI. KV S.NO. DESCRIPTION DATE INITLS 1. DRAFT DICTATED ON 01.12.09 SR.P.S./P.S 2. DRAFT PLACED BEFORE AUTHOR 02.12.09 SR.P.S/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR.P.S./PS SR.P.S./P.S 6. KEPT FOR PRONOUNCEMENT ON SR. P.S./P.S. 7. FILE SENT TO THE BENCH CLERK SR.P.S./P.S 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER