ACIT 1(1), MUMBAI V. NEW HOLLAND FIAT (I) P. LTD ( FORMELRY KNOWN AS FIAT INDIA P.LTD), MUMBAI

ITA 4961/MUM/2010

• Counselvise Citation: 496119914 RSA 2010
• Duration Of Justice: 1 year(s) 11 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-06-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 17-09-2013
• Assessment Year: 2004-2005
• Appeal Filed On: 15-06-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M MURALI
• Assessee Lawyers: SUNIL M LALA
• Keywords: Difference of opinion; Reason to believe; Change of opinion; Reassessment proceedings
• Section: 147; 148; 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIB UNAL MUMBAI BENCHES B, MUMBAI BEFORE SHRI R.S.SYAL, AM AND SHRI VIVEK VARMA, JM ITA NO.4961/MUM/2010 : ASST. YEAR 2004-2005 THE DY.COMMISSIONER OF INCOME-TAX CIRCLE 10(1) MUMBAI. M/S.NEW HOLLAND FIAT (INDIA) PVT.LTD. (FORMERLY KNOWN AS FIAT INDIA PVT.LTD.), 303 CENTRAL PLAZA 166 CST ROAD, SANTACRUZ (EAST) MUMBAI 400 098. PAN : AAACI3922Q. (APPELLANT) VS. (RESPONDENT) CO NO.92/MUM/2011 : ASST. YEAR 2004-2005 M/S.NEW HOLLAND FIAT (INDIA) PVT.LTD. 303 CENTRAL PLAZA 166 CST ROAD, SANTACRUZ (EAST) MUMBAI 400 098. THE DY.COMMISSIONER OF INCOME-TAX CIRCLE 10(1) MUMBAI. (CROSS OBJECTOR) VS. (RESPONDENT) REVENUE BY : SHRI M.MURALI ASSESSEE BY : SHRI SUNIL M.LALA DATE OF HEARING : 05.06.2012 DATE OF PRONOUNCEMENT : 08.06.2012 O R D E R PER R.S.SYAL, AM : THIS APPEAL BY THE REVENUE AND CROSS OBJECTION BY T HE ASSESSEE ARISE OUT OF THE ORDER PASSED BY THE COMMISSIONER OF INCOME-T AX (APPEALS) ON 17.03.2010, IN RELATION TO THE ASSESSMENT YEAR 2004 -2005. 2. THE REVENUE IS AGGRIEVED AGAINST THE QUASHING OF REASSESSMENT MADE BY THE A.O. U/S.143(3) READ WITH SECTION 147. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT THE ASSESSEE FILED ITS RETURN DECLARING LOSS O F ` 184.80 CRORE. ORDER U/S 143(3) WAS PASSED ON 29.12.2006 ASSESSING THE TOTAL INCOME AT LOSS OF ` 162.94 CRORE. THEREAFTER NOTICE U/S 148 WAS ISSUED ON 30.0 3.2009 GIVING FOLLOWING REASONS:- ITA NO.4961/M/2010 & CO 92/M/2011 M/S.NEW HOLLAND FIAT (INDIA) PRIVATE LIMITED. 2 RETURN OF INCOME WAS FILED ON 31.10.2004 DECLARING LOSS OF ` 184,80,29,692/-. ASSESSMENT WAS COMPLETED U/S.143(3 ) ON 29.12.2006 COMPUTING THE LOSS OF ` 162,94,69,692/-. 2. IT IS NOTICED THAT CUSTOMS DUTY OF ` 72,69,471/- PAID ON FERRARI CAR PROVIDED TO MR.SACHIN TENDULKAR HAS BEE N DEBITED UNDER THE HEAD `ADVERTISEMENT EXPENSES. THE SAID C USTOM DUTY WAS NOT THE LIABILITY OF THE ASSESSEE COMPANY BUT W AS THE LIABILITY OF MR.SACHIN TENDULKAR. THEREFORE, THE SAID AMOUNT WAS REQUIRED TO BE DISALLOWED AND ADDED TO THE TOTAL IN COME OF THE ASSESSEE COMPANY. 3. I THEREFORE, HAVE REASON TO BELIEVE THAT THE IN COME TO THE EXTENT OF ` 72,69,471/- CHARGEABLE TO TAX HAS ESCAPED ASSESSMEN T WITHIN THE MEANING OF SECTION 147 OF THE ACT. 3. AFTER THE ASSESSEE REQUESTED FOR SUPPLY OF REAS ONS, WHICH WERE DULY SUPPLIED, THE ASSESSEE MADE SUBMISSIONS CONTENDING THAT THE ENTIRE RELEVANT MATERIAL WAS PLACED BEFORE THE ASSESSING OFFICER DU RING THE COURSE OF ORIGINAL ASSESSMENT PROCEEDINGS. IT WAS SUBMITTED THAT ON TH E CONSIDERATION OF SUCH MATERIAL, THE ASSESSING OFFICER ACCEPTED THE ASSESS EES CLAIM ABOUT THE ALLOWABILITY OF A SUM OF ` 72.69 LAKH ON ACCOUNT OF PAYMENT OF CUSTOM DUTY ON FERRARI CAR PROVIDED TO SHRI SACHIN TENDULKAR AS IT S BRAND AMBASSADOR TOWARDS ADVERTISEMENT AND PUBLICITY EXPENSES. NOT CONVINCED WITH THE ASSESSEES SUBMISSION, THE ASSESSING OFFICER REJECTED THE ASSE SSEES CONTENTION AND UPHELD THE VALIDITY OF ISSUANCE OF NOTICE U/S 148. CONSEQU ENTLY THE ASSESSMENT WAS COMPLETED BY DISALLOWING THE AMOUNT OF CUSTOM DUTY AT ` 72.69 LAKH. THE LEARNED CIT(A) CONCURRED WITH THE SUBMISSIONS ADVAN CED ON BEHALF OF THE ASSESSEE AND QUASHED THE ASSESSMENT ORDER PASSED BY THE A.O. U/S 143(3) READ WITH SECTION 147. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. IT IS OBSERVED FROM THE REASONS RECORDED BY THE A.O. BEFORE ISSUING NOTICE U/S 148, THAT THE CUSTOM DUTY OF ` 72.69 LAKH PAID ON FERRARI CAR PROVIDED TO SHRI SACHIN TENDULKAR ALLOWED IN THE OR IGINAL ASSESSMENT LED TO THE ITA NO.4961/M/2010 & CO 92/M/2011 M/S.NEW HOLLAND FIAT (INDIA) PRIVATE LIMITED. 3 ESCAPEMENT OF INCOME. IN HIS OPINION THIS AMOUNT WA S LIABLE TO BE DISALLOWED. IN THIS REGARD IT IS RELEVANT TO OBSERVE THAT THE A SSESSING OFFICER, WHILE PASSING ORIGINAL ASSESSMENT ORDER U/S 143(3), ISSUED SPECIF IC QUERY IN THIS REGARD. THE ASSESSEE MADE REPLY VIDE ITS LETTER DATED 23.12.200 6 EXPLAINING THE POSITION AS UNDER:- 2. NOTE ON EXPENSES OF ` 72,69,471/- CLASSIFIED UNDER THE HEAD OF ADVERTISEMENT EXPENSES: IT IS SUBMITTED THAT FIPL HAD ENGAGED MR.SACHIN TE NDULKAR AS ITS BRAND AMBASSADOR TO PROMOTE ITS CARS IN INDIA. IN THIS REGARD, FIPL HAS INCURRED AN EXPENDITURE OF AN AMOUNT OF ` 72,69,471/- TOWARDS PAYMENT OF CUSTOM DUTY ON THE FERRARI CAR, PROVIDED TO SACHIN TENDULKAR AS ITS BRAND AMBASSADOR FOR ADVERT ISEMENT / PUBLICITY PURPOSES. IT IS SUBMITTED THAT THIS EVENT GENERATED A LOT OF MILEAGE IN TERMS OF ADVERTISEMENT AND PUBLICITY FOR FIPL. COPY OF BILL OF ENTRY EVIDENCING THE PAYMENT OF C USTOM DUTY BY FIPL IS ENCLOSED AS ANNEXURE-1. 5. FROM QUERY RAISED BY THE A.O. DURING THE COURSE OF ORIGINAL ASSESSMENT PROCEEDINGS AND THE REPLY SUBMITTED BY THE ASSESSEE AS EXTRACTED ABOVE, IT BECOMES MANIFEST THAT THE A.O. DID MAKE AN INQUIRY ON THIS ASPECT AND IMPLIEDLY GOT SATISFIED AND DID NOT VENTURE TO MAKE ANY ADDITION ON THIS ASPECT. THEREAFTER, THE SUBSEQUENT ASSESSING OFFICER INITIA TED REASSESSMENT PROCEEDINGS ENTERTAINING THE VIEW THAT THE AMOUNT WAS NOT ALLOW ABLE. FROM SUCH REASONS IT IS SEEN THAT THERE IS NOTHING EXCEPT CHANGE OF OPIN ION BY THE ASSESSING OFFICER AS TO THE ALLOWABILITY OR OTHERWISE OF THE AMOUNT O F CUSTOM DUTY OF ` 72.69 LAKH. IT IS DISCERNIBLE THAT THERE IS NO REFERENCE TO ANY FRESH MATERIAL COMING TO THE NOTICE OF THE ASSESSING OFFICER AFTER THE PASSING O F ORIGINAL ASSESSMENT ORDER, PROPELLING HIM TO ISSUE NOTICE FOR REASSESSMENT ON ACCOUNT OF ESCAPEMENT OF INCOME . THE HONBLE SUPREME COURT IN THE CASE OF CIT V. KELVINATOR OF INDIA LIMITED [(2010) 320 ITR 561 (SC)] HAS HELD THAT THERE CAN BE NO REOPENING OF ITA NO.4961/M/2010 & CO 92/M/2011 M/S.NEW HOLLAND FIAT (INDIA) PRIVATE LIMITED. 4 ASSESSMENT SIMPLY ON THE BASIS OF CHANGE OF OPINION . IT HAS FURTHER BEEN HELD IN THIS CASE THAT THERE MUST BE SOME TANGIBLE MATERIA L WITH THE ASSESSING OFFICER PROPOSING TO ISSUE NOTICE FOR REASSESSMENT LEADING TO THE CONCLUSION ABOUT THE ESCAPEMENT OF INCOME. ADVERTING TO THE FACTS OF THE INSTANT CASE, IT IS SEEN THAT THERE IS NO FRESH MATERIAL BY WHICH THE ASSESSING O FFICER COULD HAVE ENTERTAINED REASON TO BELIEVE ABOUT THE ESCAPEMENT OF INCOME. IN OUR CONSIDERED OPINION, IT IS A SIMPLE CASE OF CHANGE OF OPINION. FOLLOWING TH E PRESCRIPTION OF THE HONBLE SUPREME COURT IN THE CASE OF KELVINATOR OF INDIA LIMITED (SUPRA) WE UPHOLD THE IMPUGNED ORDER ON SETTING ASIDE THE ASSESSMENT ORDER PASSED BY THE A.O. U/S 143(3) READ WITH SECTION 147. 6. THE LEARNED COUNSEL FOR THE ASSESSEE FAIRLY SUBMITTED THAT IF THE REVENUES APPEAL IS TO BE DISMISSED BY THE TRIBUNAL , THEN ITS CROSS OBJECTION WOULD BECOME INFRUCTUOUS. IN VIEW OF OUR DECISION O N THE DEPARTMENTAL APPEAL IN THE PRECEDING PARA, THERE IS NO NEED TO CONSIDER THE GROUND RAISED IN THE ASSESSEES APPEAL. 7. IN THE RESULT, THE REVENUES APPEAL AS WELL AS A SSESSEES CROSS OBJECTION ARE DISMISSED. ORDER PRONOUNCED ON THIS 08 TH DAY OF JUNE, 2012. SD/- SD/- (VIVEK VARMA) (R.S.SYAL) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI : JUNE, 2012. DEVDAS* ITA NO.4961/M/2010 & CO 92/M/2011 M/S.NEW HOLLAND FIAT (INDIA) PRIVATE LIMITED. 5 COPY TO : 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT CONCERNED 4. THE CIT(A) - XXI, MUMBAI. 5. THE DR/ITAT, MUMBAI. 6. GUARD FILE. TRUE COPY. BY ORDER ASSISTANT REGISTRAR, ITAT, MUMBAI.