Tayo Rolls Limited, Jamshepur V. ACIT, Jamshepur

ITA 54/RAN/2013

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 0432 (ITAT-RANCHI)
• Duration Of Justice: 2 year(s) 6 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-10-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2005-2006
• Appeal Filed On: 16-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DEEPAK ROUSHAN SR S C
• Assessee Lawyers: R R MITTAL
• Section: 80HHC

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RANCHI CIRCUIT BENCH, RANCHI BEFORE SHRI N.S. SAINI, HONBLE ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, HONBLE JUDICIAL MEMBER ITA NOS. 52 TO 54/RAN/2013 (ASST. YEARS : 2002-03, 2003-04 & 2005-06) M/S. TAYO ROLLS LTD., XLRI CAMPUS, NEW ADM. BUILDING, C.H. AREA (EAST), JAMSHEDPUR. VS. ACIT, CIRCLE-3, JAMSHEDPUR. PAN NO. AABCT 0210 H (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI R.R. MITTAL FCA DEPARTMENT BY : SHRI DEEPAK ROUSHAN SR.SC DATE OF HEARING : 29/10/2015. DATE OF PRONOUNCEMENT : 29/10/2015. O R D E R PER N.S. SAINI, ACCOUNTANT MEMBER THESE ARE THE APPEALS FILED BY THE ASSESSEE AGAINS T THE CONSOLIDATED ORDER OF THE COMMISSIONER OF INCOME TA X (APPEALS), JAMSHEDPUR, DATED 28/02/2013 FOR THE ASSESSMENT YEA RS 2002-03, 2003-04 & 2005-06. 2. THE COMMON GROUND NO.1 OF THE APPEAL IN ALL THE Y EARS UNDER CONSIDERATION READS AS UNDER:- 1. FOR THAT THE LEARNED LOWER AUTHORITIES ARE UNJ USTIFIED IN DISALLOWING THE CLAIM OF WARRANTY PROVISION OF RS. 40.38 LAC ON WRONG INTERPRETATION OF THE DIRECTION OF THE HON'BL E ITAT IN THE APPEAL ITA NO. 339/PAT/2007 DATED 30/07/2010 TO DEC IDE IN ACCORDANCE WITH PRINCIPLES SET OUT IN THE CASE OF R OTORK CONTROLS INDIA PRIVATE LIMITED VS. CIT BY THE HON'BLE SUPREM E COURT. 2 ITA NOS. 52-54/RAN/2013 3 . WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE O RDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABLE ON RE CORD. 4. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE IS A MANUFACTURER AND SELLER OF ROLLS AND SPECIAL CASTINGS FOR USE OF ROLLING MILLS OF VARIOUS STEEL PLANTS. DURING THE YEARS UNDER CONSIDERATION , THE ASSESSEE HAD CLAIMED PROVISION FOR WARRANTY OF RS. 50.54 LAC IN THE ASSESSMENT YEAR 2002-03, RS. 40.38 LAC IN THE ASSESSMENT YEAR 2003- 04 AND RS. 182.25 LAC IN THE ASSESSMENT YEAR 2005-06, WHICH WAS DISAL LOWED BY THE ASSESSING OFFICER ON THE GROUND THAT DETAILED COMPU TATION OF WARRANTY IN RESPECT OF EACH SALE TRANSACTION WAS NOT SUBMITT ED BEFORE HIM. 5. ON APPEAL, COMMISSIONER OF INCOME TAX (APPEALS) AL SO CONFIRMED THE ACTION OF THE ASSESSING OFFICER. 6 . WE FIND THAT THE HON'BLE SUPREME COURT IN THE CAS E OF ROTORK CONTROLS INDIA (P) LTD. VS. CIT (314 ITR 62) HAS HELD THAT THE PRINCIPLE WHICH EMERGES FROM VARIOUS DECISIONS IS THAT IF THE HISTORICAL TREND INDICATES THAT LARGE NUMBER OF SOPHISTICATED GOODS WERE BEING MANUFACTURED IN THE PAST AND IN THE PAST IF THE FAC TS ESTABLISHED SHOW THAT DEFECTS EXISTED IN SOME OF THE ITEMS MANUFACTU RED AND SOLD THEN THE PROVISION MADE FOR WARRANTY IN RESPECT OF THE A RMY OF SUCH SOPHISTICATED GOODS WOULD BE ENTITLED TO DEDUCTION FROM THE GROSS RECEIPTS UNDER SECTION 37. IN THE INSTANT CASE ALS O, WE FIND THAT THE PROVISION FOR WARRANTY HAS BEEN PROVIDED ON WEIGHTE D AVERAGE OF SALE PROCEEDS ON YEAR TO YEAR BASIS AFTER DEDUCTING UNUT ILIZED PROVISION FROM THE EXPECTED CLAIM ON WHICH THE PROVISION IS MADE. THE ASSESSING OFFICER HAS BROUGHT NO MATERIAL ON RECORD TO CONTRO VERT THE ABOVE CLAIM OF THE ASSESSEE. IT IS ALSO NOT THE CASE OF THE RE VENUE THAT THE ASSESSEE HAS MADE PROVISION FOR WARRANTY WHICH IS N OT BASED ON ANALYSIS OF PAST RESULTS OF THE ASSESSEE WHERE CLAI M FOR DEFECTS IN THE GOODS MANUFACTURED HAD TO BE MET BY THE ASSESSEE OU T OF THE 3 ITA NOS. 52-54/RAN/2013 PROVISIONS MADE. IN ABSENCE OF THE SAME, WE RESPEC TFULLY FOLLOWING THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE O F ROTORK CONTROLS INDIA (P) LTD (SUPRA) ALLOW THE CLAIM FOR DEDUCTION OF PROVISION FOR WARRANT OF RS. 50.54 LAC IN THE ASSESSMENT YEAR 200 2-03, RS. 40.38 LAC IN THE ASSESSMENT YEAR 2003-04 AND RS. 182.25 L AC IN THE ASSESSMENT YEAR 2005-06 AND ALLOW THE GROUND OF APP EAL OF THE ASSESSEE IN ALL THE YEARS UNDER CONSIDERATION. 7 . THE SECOND GROUND OF APPEAL IN THE ASSESSMENT YEA R 2003-04 READS AS UNDER:- FOR THAT THE LEARNED LOWER AUTHORITIES ARE UNJUST IFIED IN DISALLOWING THE CLAIM U/S 80HHC OF THE I.T. ACT, 19 61 AS THE REALIZATION OF THE SALES HAS BEEN RECEIVED DURING T HE EXTENDED TIME. 8 . AT THE TIME OF HEARING, NO SUBMISSIONS MADE BY TH E AUTHORIZED REPRESENTATIVE OF THE ASSESSEE ON THIS GROUND OF AP PEAL, THEREFORE THE SAME IS DISMISSED FOR WANT OF PROSECUTION. 9. IN THE RESULT, APPEALS OF THE ASSESSEE FOR THE ASSE SSMENT YEARS 2002-03 & 2005-06 ARE ALLOWED AND APPEAL FOR THE AS SESSMENT YEAR 2003-04 IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE COURT AT THE CLOSE OF THE H EARING ON THURSDAY, THE 29 TH DAY OF OCTOBER, 2015 AT RANCHI. SD/- SD/- (GEORGE MATHAN) (N.S.SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 29 TH OCTOBER, 2015. VR/- 4 ITA NOS. 52-54/RAN/2013 COPY TO: 1. THE ASSESSEE. 2. THE REVENUE. 3. THE CIT 4. THE CIT(A) 5. THE D.R. 6. GUARD FILE. BY ORDER ASSISTANT REGISTRAR I.T.A.T., RANCHI 5 ITA NOS. 52-54/RAN/2013 DATE INITIAL ORIGINAL DICTATION PAD & DRAFT ARE ENCLOSED IN THE FILE 1. DRAFT DICTATED ON 29/10/2015 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 30/10/2015 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 30/10/2015 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER 30/10/2015 JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 30/10/2015 SR.PS 6. DATE OF PRONOUNCEMENT 29/10/2015 SR.PS 7. FILE SENT TO THE BENCH CLERK 30/10/2015 SR.PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER