EMERSON NETWORK POWER (INDIA) P.LTD ( FORMERLY KNOWN AS TATA LIEBERT LTD), THANE V. ADDL CIT RG 1, THANE

ITA 5025/MUM/2012

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 71254 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-09-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2008-2009
• Appeal Filed On: 06-08-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: GIRIJA DAYAL
• Assessee Lawyers: DEEPAK P TIKEKA R
• Section: 37; 143(3)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI , , , BEFORE SHRI RAJENDRA SINGH , ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA , JUDICIAL MEMBER . / ITA NO. 5025 / MUM ./ 2012 ( / ASSESSMENT YEAR : 200 8 - 09 ) EMERSON NETWORK POWER (INDIA) PVT. LTD. (FORMERLY KNOWN AS TATA LIEBERT LTD.) PLOT NO.C - 20, ROAD NO.19, WAGLE INDUSTRIAL ESTATE, THANE (W) 400 604 .. / APPELLANT V/S ADDL. COMMISSIONER OF TAX OFFICER RANGE - 1, VARDAN BUILDING LOWER GROUND FLOOR, MIDC WAGLE INDUSTRIAL ESTATE THANE (W) 400 604 .... / RESPONDENT . / PERMANENT ACCOUNT NUMBER AAACT4033H / ASSESSEE BY : M R. DEEPAK P. TIKEKAR / REVENUE BY : MR. GIRIJA DAYAL / DATE OF HEARING 2 3 .09.2013 / DATE OF ORDER 27.09.2013 / ORDER , / PER AMIT SHUKLA , J.M. THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSESSEE, CHALLENGING THE IMPUGNED ORDER DATED 27 TH APRIL 2012 , PASSED BY THE LEARNED EMERSON NETWORK POWER (INDIA) PVT. LTD. 2 COMMISSIONER (APPEALS) II, MUMBAI, FOR THE QUANTUM OF ASSESSMENT PASSED UN DER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT ) FOR THE ASSESSMENT YEAR 200 8 - 09 , VIDE WHICH, THE SOLE GROUND RAISED BY THE ASSESSEE IS THAT THE LEARNED COMMISSIONER (APPEALS) HAS ERRED IN REJECTING THE CLAIM OF THE APPELLANT COMPANY TH AT THE INCOME IN THE NATURE RETENTION MONEY DOES NOT ACCRUE TILL PERIOD OF PERFORMANCE GUARANTEE IS OVER. 2. FACTS IN BRIEF, AS CULLED OUT FROM THE ORDER OF THE LEARNED COMMISSIONER (APPEALS) ARE THAT THE ASSESSEE HAD ADDED AN AMOUNT OF ` 15,42,30,302 IN TH E COMPUTATION OF INCOME AS RETENTION MONEY AS ON 31 ST MARCH 2007 AND HAD REDUCED THE RETENTION MONEY AMOUNTING TO ` 39,38,43,104 AS ON 31 ST MARCH 2008 AND THEREBY REDUCING THE CLAIM OF DEDUCTION OF ` 23,96,12,802. . THE ASSESSEE HAS CLAIMED THAT, THIS AMOU NT REPRESENTED THE MONEY RETAINED BY CUSTOMERS AND, THEREFORE, THIS AMOUNT COULD NOT BE APPROPRIATED AND TREATED AS INCOME UNTIL PERFORMANCE GUARANTEE PERIOD IS OVER. THE ASSESSEE HAS CONTENDED THAT THIS AMOUNT SHOULD BE EXCLUDED FROM THE TOTAL INCOME. HOW EVER, THE ASSESSING OFFICER IN THE YEAR UNDER CONSIDERATION NOTED THAT ASSESSEE WAS REQUIRED TO GIVE PERFORMANCE GUARANTEE TO CUSTOMERS UP TO 10% OF THE CONTRACT PRICE TO INDEMNIFY THE CUSTOMER TO THE EXTENT OF BANK GUARANTEE , IN CASE OF ANY LOSS OR DAMAG E WHICH MAY BE SUFFERED BY THE CUSTOMERS DUE TO BREACH BY THE ASSESSEE COMPANY , AS PER THE TERMS AND CONDITIONS OF THE CONTRACT. AS PER THIS CONTRACT, GUARANTEE WAS ENFORCEABLE TILL ALL SUCH SUPPLIES AND SERVICES ARE COMPLETE TO THE ENTIRE SATISFACTION OF THE CUSTOMER. THIS PERFORMANCE GUARANTEE CAN BE ENFORCED BY THE CUSTOMERS IF AND ONLY IF THERE IS A FAILURE ON THE PART OF THE ASSESSEE. ACCORDING TO ASSESSING OFFICER, THIS, AT BEST IT C OULD BE A CONTINGENT LIABILITY WHICH IS DEPENDENT UPON THE HAPPENING OR NOT HAPPENING OF AN EVENT AND BEING SO IT DOES NOT QUALIFY AS A DEDUCTION UND ER SECTION 37 OF THE ACT. ON THIS BASIS , THE ASSESSING OFFICER HAD DISALLOWED AN AMOUNT OF ` 23,96,802 CLAIMED AS DEDUCTION EMERSON NETWORK POWER (INDIA) PVT. LTD. 3 FOR RETENTION MONEY AND ADDED BACK THE SAME TO THE I NCOME OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION. 3. THE LEARNED COMMISSIONER (APPEALS), AFTER FOLLOWING THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE IN THE ASSESSMENT YEARS AS WELL AS FOR THE ASSESSMENT YEAR 2005 06, HELD THAT THIS ISSUE HAS B EEN DECIDED AGAINST THE ASSESSEE AND, ACCORDINGLY, HE CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICER. 4. BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE FAIRLY ADMITTED THAT THIS ISSUE STANDS COVERED AGAINST THE ASSESSEE IN VARIOUS YEARS DECIDED BY THE TRIBUNAL. 5. AFTER GOING THROUGH THE IMPUGNED ORDER AND ALSO THE EARLIER YEARS ORDERS OF THE TRIBUNAL IN ASSESSEES OWN CASE, WE FIND THAT THIS ISSUE STAN DS DECIDED AGAINST THE ASSESSEE I N ITA NO.118/MUM./2010, FOR THE ASSESSMENT YEAR 2005 06, THE TRIBUNAL , VIDE ORDER DATED 25 TH MARCH 2011, AFTER FOLLOWING THE EARLIER YEARS ORDER FOR THE ASSESSMENT YEARS 1994 95 AND 2001 02, AS DECIDED THIS ISSUE AGAINST THE ASSESSEE. CONSISTENT WITH THE SAID VIEW TAKEN BY THE TRIBUNAL IN ASSESSEES OWN CASE, THE GROUND RA ISED BY THE ASSESSEE IS TREATED AS DISMISSED. 6. 6. IN THE RESULT, ASSESSEES APPEAL IS DISMISSED. 27TH SEPTEMBER 2013 ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH SEPTEMBER 2013 SD / - RAJENDRA SINGH ACCOUNTANT MEMBER SD / - AMIT SHUKLA JUDICIAL MEMBER MUMBAI, DATED : 27 TH SEPTEMBER 2013 EMERSON NETWORK POWER (INDIA) PVT. LTD. 4 / COPY OF THE ORDER FORWARDED TO : (1) / THE ASSESSEE ; (2) / THE REVENUE; (3) ( ) / THE CIT(A ) ; (4) / THE CIT, MUMBAI CITY CONCERNED ; (5) , , / THE DR, ITAT, MUMBAI ; (6) / GUARD FILE . / TRUE COPY / BY ORDER . / PRADEEP J. CHOWDHURY / SR. PRIVATE SECRETARY / / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI