DCIT 2(2)(2), MUMBAI V. MAHINDRA SONA LTD, MUMBAI

ITA 5821/MUM/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 2287 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-06-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2014-2015
• Appeal Filed On: 12-09-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation; Rule of consistency; Set aside
• Section: 142(1); 115JB; 143(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA , AM AND SHRI AMARJIT SINGH, JM / I .T.A. NO. 5821 /MUM/201 7 ( / ASSESSMENT YEAR: 20 14 - 15 ) DCIT - 2(2)(2) ROOM NO.545, 5 TH FLOOR, AAY AKAR BHAVAN, M.K. ROAD, CHURCHGATE, MUMBAI - 400020 . / VS. M/S. MAHINDRA SONA LTD. GATEWAY BUILDING, APOLLO BUNDER, MUMBAI - 400001. ./ ./ PAN/GIR NO. : AAACM3524A ( / APPELLANT ) .. ( / RESPONDENT ) / DATE OF HEARING : 15 / 0 5/ 201 9 / DATE OF PRONOUNCEMENT : 25 /0 6 / 201 9 / O R D E R PER AMARJIT SINGH, J M: THE REVENUE HAS FILED THE PRESENT APPEAL AGAINST THE ORDER DATED 01 . 0 6 .201 7 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 5 , MUMBAI [HEREINAFTE R REFERRED TO AS THE CIT(A)] RELEVANT TO THE A.Y. 20 14 - 15 . 2 . THE REVENUE HAS RAISED THE FOLLOWING GROUN DS: - ' 1 . ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, WHETHER THE LD. CIT(A) WAS RIGHT IN DELETING THE DISALLOWANCE MADE BY THE AO IN RESPECT OF INTEREST ON ASSETS NOT PUT TO USE U/ S. 36(1)(IA) FOLLOWING THE DECISION OF THE LD. CIT(A) O N THE SAME ISSUE IN THE ASSESSEE'S OWN CASE IN THE EARLIER A.YRS. 2008 - 09, REVENUE BY : SHRI S. SINDHU (SR. A R) ASSESSEE BY: SHRI PRASAD BAPAT ITA NO. 5821 /M/201 7 A.Y.20 14 - 15 2 2009 - 10 & 2010 - 11. EVEN WHEN UNDER INCOME M.K ACT EACH ASSESSMENT IS SEPARATE AND MORE SO WITHOUT BRINGING ON RECORD THE BASIS OF SIMILARITY OF FACTS'. 2. 'ON THE FACTS AND IN THE C IRCUMSTANCES OF THE CASE AND IN LAW, WHETHER THE C1T(A) IS RIGHT IN DIRECTING THE AO TO ALLOW THE EXPENDITURE OF ISO EXPENSES OF RS.5,18,025/ - AS REVENUE IN NATURE'. 3. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW WHETHER THE LD. CIT(A) IS RIGHT IN DELETING THE ADDITION MADE ON ACCOUNT OF PROVISION FOR WARRANTY TO THE TUNE OF RS.1,16,68,762/ - RELYING ON THE EARLIER YEAR DECISION OF THE LD CIT(A) IN THE ASSESSEE'S OWN CASE EVEN WHEN UNDER THE INCOME TAX ACT TREATS EACH ASSESSMENT TO B E SEPARATE AND MORE SO WITHOUT BRINGING ON RECORD THE BASIS OF SIMILARITY OF FACTS'. 4. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, WHETHER THE LD. CIT(A) IS RIGHT IN DIRECTING THE AO TO EXAMINE THE RECONCILIATION STATEMENT FURNISHED BY THE ASSESSEE AND TAKE APPROPRIATE DECISION IN ACCORDANCE WITH LAW IN RESPECT OF CENVET CREDIT AND VAT SET OFF TO THE TUNE OF RS. 1,18,25509/ - TO R. BY INVOKING SECTION 145A '. 3 . THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME ON 28 . 11.2014 DECLARING TOTAL INCOME TO THE TUNE OF RS.22,77,92,230 / - . THEREAFTER, THE RETURN WAS PROCESSED U/S 143(1) OF THE I.T. ACT, 1961. THE CASE WAS SELECTED FOR SCRUTINY. NOTICES U/S 143(2) & 142(1) OF THE ACT WERE ISSUED AND SERVED UPON THE ASSESSEE. THE ASSESSEE IS ENGAGED IN THE BUSINESS IN MANUFACTURING AND SUPPLY OF AUTOMOTIVE COMPONENTS LIKE PROPELLER SHAFT, AXLE SHAFT, CLUTCH REPAIR KITS ETC. ON VERIFICATION, IT WAS FOUND THAT THE ASSESSEE HAS CLAIMED THE INTEREST ON ASSET NOT PUT TO U SE U/S 36(1)(III) OF THE ACT . AFTER GETTING THE REPLY OF THE ASSESSEE, THE CLAIM TO THE EXTENT OF 2.50,000/ - WAS DISALLOWED AND ADDED TO THE INCOME OF THE ASSESSEE. THE ASSESSEE ALSO CLAIM ED THE ISO OHSAS EXPENSES OF RS.5,18,025/ - WHICH WAS TREATED AS CA PI TAL IN NATURE AND ITA NO. 5821 /M/201 7 A.Y.20 14 - 15 3 DEPRECIATION @ 15% WAS ALLOWED . THE AMOUNT IN SUM OF RS.4,40,321/ - WAS ADDED TO THE INCOME OF THE ASSESSEE. THE ASSESSEE ALSO MADE A PROVISION FOR WARRANTY PERIOD IN SUM OF RS.11.6 MILLIONS WHICH WAS ALSO DISALLOWED AND ADDED TO THE INCOM E OF THE ASSESSEE. THE ASSESSEE CLAIMED THE MODVAT CREDIT ON INVENTORS IN SUM OF RS.1,18,25,509/ - WHICH WAS ALSO DISALLOWED AND ADDED TO THE INCOME OF THE ASSESSEE. THE TOTAL INCOME OF THE ASSESSEE WAS ASSESSED TO THE TUNE OF RS. 25,19,76,818/ - AND IN VIEW OF THE PROVISIONS U/S 115JB OF THE ACT IN SUM OF RS.9,06,95,161/ - . FEELING AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A) WHO ALLOWED THE CLAIM OF THE ASSESSEE ON THE ISSUES MENTIONED ABOVE, THEREFORE, THE REVENUE HAS FILED THE PRESENT APPEAL BE FORE US. ISSUE NO.1 4. UNDER THIS ISSUE THE REVENUE HAS CHALLENGED THE ALLOWANCE OF CLAIM OF INTEREST ON ASSET WHICH WAS NOT PUT TO USE U/S 36(1)(III) OF THE ACT. BEFORE GOING FURTHER, WE DEEM IT NECESSARY TO ADVERT THE FINDING OF THE CIT(A) ON RECORD.: - 2. 1. THIS IS REFERRING ISSUE WHICH HAS ARISEN I N EARLIER YEARS IN AY 2011 - 12 IN PARA - 4.1 IN PAGE 56 HELD AS UNDER: - 'THE AO , HOWEVER, INFERRED THAT THE ASSESSEE HAD NOT BEEN ABLE TO SUBSTANTIATE ITS CLAIM THAT THE WHOLE OF THE LOAN WAS NOT USED FOR THE P URPOSE OF ACQUIRING SUC H NEW ASSETS AND IN ABSENCE OF QUANTIFICATION OF ACTUAL AMOUNT OF INTEREST PAYABLE FOR ACQUISITION OF WORK - IN - PROGRESS, HE DISALLOWED ITS. 2,50,000/ - [OUT OF TOT AL INTEREST OF RS. 24,16,061/ - AND ADDED THE SAME TO THE TOTAL INCOME OF THE ASS ESSEE AS PROVISO TO SECTION 36(1 )(III). DURING THE APPEAL PROCEEDINGS, IT HAS BEEN POINTED OUT THAT THE IDENTICAL ISSUE HAD ARISEN IN Y 2008 - 09 & 2009 - 10 AND THE CIT (A) HAD DELETED SUCH ADHOC DISALLOWANCE, AND THE ISSUE IS COVERED IN THE FAVOUR O F THE ASSESSEE VID E CIT(A) ORDER DATED 12.07.2011 AND 31.01.2013 IN APPEAL NOS.IT - 48/1 0 - IL ITA NO. 5821 /M/201 7 A.Y.20 14 - 15 4 AND IT - 25 4 /2011 - 12 FOR THE AFORESAID ASSESSMENT YEARS RESPECTIVELY. FOLLOWING HOSE ORDERS, I TOO HAD DECIDED THIS IN FAVOUR OF ASSESSEE IN AY 2010 - 11 TOT).' ACCOR DI NGLY, THE DISALLOWANCE OF RS. 2,50,000 / - MADE U/S 36(1 )(III) FOR THIS YEAR TOO IS DELETED AND GROUND OF APPEAL IS ALLOWED. 5. ON APPRAISAL OF THE ABOVE MENTIONED FINDING, WE NOTICED THAT THE CLAIM OF THE ASSESSEE WAS ALLOWED ON THE BASIS OF THE DECISION OF THE CIT(A) FOR THE A.Y.2008 - 09 & 2009 - 10. NOTHING CAME INTO NOTICE THAT THE DECISION ON THE ISSUES FOR THE A.Y.2008 - 09 & 2009 - 10 HAS BEEN CHANGED OR VERIFIED. SINCE THE ISSUE HAS BEEN ALLOWED BY CIT(A) IN EARLIER YEARS WHICH HAS NOT BEEN CHANGED OR VARIED , THEREFORE, WE FIND NO GROUND TO INTERFERE WITH THE DECISION OF THE CIT(A) ON THIS ISSUE EVEN ON THE BASIS OF PRINCIPLE OF CONSISTENCY . THE FACTS ARE NOT DISTINGUISHABLE AT THIS STAGE ALSO. THEREFORE, WE ARE OF THE VIEW THAT THE CIT(A) HAS RIGHTLY ALLOWED THE CLAIM OF THE ASSESSEE. ACCORDINGLY, THE FINDING OF THE CIT(A) IS QUITE CORRECT WHICH IS NOT LIABLE TO BE INTERFERE WITH AT THIS APPELLATE STAGE. ACCORDINGLY, THIS ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE AGAINST THE REVENUE. ISSUE NO.2 6. ISSUE NOS . 2 IS IN CONNECTION WITH THE ALLOWANCE OF EXPENDITURE OF ISO EXPENSES OF RS.5,18,025/ - AS REVENUE IN NATURE. BEFORE GOING FURTHER, WE DEEM IT NECESSARY TO ADVERT THE FINDING OF THE CIT(A) ON RECORD.: - 3.1. THIS IS REFERRING ISSUE WHICH HAS ARISEN IN EARL IER YEARS IN AY 2011 - 1 2 IN PARA 4.4 IN PAGE 56 HELD AS UNDER: - 'THE AO, HOWEVER, INFERRED THAT THE ASSESSEE HAD NOT BEEN ABLE TO SUBSTANTIATE ITS CLAIM THAT THE WHOLE OF THE LOAN WAS NOT USED FOR THE PURPOSE OF ACQUIRING SUCH NEW ASSETS AND IN ABSENCE OF QUANTIFICATION OF ACTUAL AMOUNT OF INTEREST PAYABLE FOR ACQUISITION OF WORK - IN - PROGRESS, HE DISALLOWED ITS. 2,50,0001 - (OUT OF TOTAL INTEREST OF ITS. 24,16,061/ - I AND ADDED THE SAME TO ITA NO. 5821 /M/201 7 A.Y.20 14 - 15 5 THE TOTAL INCOME OF THE ASSESSEE AS PROVISO TO SECTION 36( I )(III). D URING THE APPEAL PROCEEDINGS, IT HAS BEEN POINTED OUT THAT THE IDENTICAL ISSUE HAD ARISEN IN AL 2008 - 09 & 2009 - 10 AND THE CIT(A) HAD DELETED SUCH ADHOC DISALLOWANCE, AND THE ISSUE IS COVERED IN THE FAVOUR OF THE ASSESSEE VIDE CIT(A)'S ORDER DATED 12.07.201 1 AND 31.01.2013 IN APPEAL NOS.1 - 48/ 10 - IL AND IT - 254/2011 - 12 FOR THE AFORESAID ASSESSMENT YEARS RESPECTIVELY. FOLLOWING THOSE ORDERS, I TOO HAD DECIDED THIS IN FAVOUR OF ASSESSEE IN AY2010 - 11 TOO.' ACCORDINGLY, THE DISALLOWANCE OF ITS. 2,50,000/ - MADE U/S 36(1)(III) FOR THIS YEAR TOO IS DELETED AND GROUND OF APPEAL IS ALLOWED. 7. ON APPRAISAL OF THE ABOVE MENTIONED FINDING , WE NOTICED THAT THE ISSUE HAS BEEN DECIDED BY CIT(A) IN FAVOUR OF THE ASSESSEE IN THE A.Y. 2008 - 09 & 2010 - 11 & 2011 - 12 IN WHICH THE C LAIM OF THE ASSESSEE OF ISO EXPENSES HAS BEEN ALLOWED. THE FACTS ARE NOT DISTINGUISHABLE AT THIS STAGE. NO THING CAME INTO NOTICED THAT THE REVENUE HIS CHALLENGED THE FINDING OF THE CIT(A) BEFORE THE HONBLE ITAT OR BEFORE HONBLE HIGH COURT. THE ORDER HAS NOT BEEN CHANGED OR VARIED. T AKING INTO ACCOUNT ALL THE FACTS AND CIRCUMSTANCES , WE ARE OF THE VIEW THAT THE FINDING OF THE CIT(A) IS QUITE JUSTIFIABLE WHICH IS NOT LIABLE TO BE INTERFERE WITH AT THIS APPELLATE STAGE. ACCORDINGLY, THIS ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE AGAINST THE REVENUE. ISSUE NO.3 8. UNDER THIS ISSUE THE REVENUE HAS CHALLENGED THE DELETION OF THE ADDITION MADE ON ACCOUNT OF PROVISION FOR WARRANTY TO THE TUNE OF RS.1,16,68,762/ - . THIS ISSUE HAS ALSO BEEN ALLOWED IN FAVOUR OF THE ASSESSEE ON THE BASIS OF THE DECISION ON THE ISSUE IN EARLIER YEARS. THE RELEVANT FINDING HAS BEEN GIVEN IN PARA NO. 4.1 WHICH IS HEREBY REPRODUCED AS UNDER.: - ITA NO. 5821 /M/201 7 A.Y.20 14 - 15 6 4.1 THIS IS REFERRING ISSUE WHICH HAS ARISEN IN THE EARLIER YEAR IN AY 2011 - 12 IN PARA 4.2 PAGE 57 HAS HELD AS UNDER: 'THE AO DISALLOWED THE PROVISION SAYING THAT NO SUCH LIABILITY HAD CRYSTALLIZED. IN APPEAL PROCEEDINGS, IT HAS BEEN POINTED OUT THAT THIS ISSUE HAD ALSO ARISEN IN AY 2009 - 10 AND CIT(A) VIDE HIS ORDER DATED 31.01.2013 IN APPEAL NO. I T - 254/11 - 12 HAS DELETED THE ADDITION ON FOLLOWING THE 1TAT'S ORDER IN THE ASSESSEE'S OWN CASE FOR AY 2005 - 06. THUS THIS ISSUE HAD COME UP BEFORE ME TOO IN ITS APPEAL FOR AY 2010 - 11. IN THE CONTEXT, IT WAS PLEADED THAT ASSESSEE COMPANY IS OBLIGED TO HONOUR WARRANTY CLAIMS UPTO THREE YEARS FROM THE DATE OF SUPPLY; AND THAT PROVISION IS MADE ON THE BASIS OF EMPIRICAL STUDY AND THE AVAILABLE DATE USING SCIENTIFIC METHOD AND THAT THE WARRANTY PROVISION IS MADE BASED ON ACTUAL WARRANTY CLAIMS ACCEPTED BY THE COMP ANY OVER THE PERIOD OF LAST THREE YEARS. THEY HAD ALSO FURNISHED A CHART CONTAINING THE AMOUNT OF PROVISIONS SO CLAIMED DURING THE LAST FOUR YEARS; AND THE UTILIZATION THEREOF TO PROVE ITS CLAIM THAT THE PROVISION WAS QUITE REASONABLE. THUS, KEEPING IN VIE W THE APPELLATE DECISION FOR THE PAST YEARS, I HAD ALSO DELETED THE ADDITION IN AY 2010 - 11.' THE FACTS ARE IDENTICAL THIS YEAR TOO. THEREFORE, THE DISALLOWANCE MADE BY THE M) IN THIS REGARD, IN THE YEAR UNDER CONSIDERATION, ALSO STANDS DELETED. GROUND OF A PPEAL IS ALLOWED. 9. ON APPRAISAL OF THE ABOVE MENTIONED FINDING , WE NOTICED THAT THE CIT(A) HAS DECIDED THE MATTER OF CONTROVERSY ON THE BASIS OF THE DECISION OF THE CIT(A) IN THE A.Y.2009 - 10 & 2011 - 12 AND A.Y. 2005 - 06. THIS ISSUE HAS ALSO BEEN DECIDED B Y HONBLE ITAT IN FAVOUR OF THE ASSESSEE IN THE ASSESSEES OWN CASE FOR THE A.Y.2005 - 06 . THE FACTS ARE NOT DISTINGUISHABLE AT THIS STAGE. THEREFORE, WE ARE OF THE VIEW THAT THE CIT(A) HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE CORRECTLY AND JUSTIFIABL E WHICH IS NOT LIABLE TO BE INTERFERE WITH AT THIS APPELLATE STAGE. ACCORDINGLY, THIS ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE AGAINST THE REVENUE. ISSUE NO.4 ITA NO. 5821 /M/201 7 A.Y.20 14 - 15 7 10. ISSUE NOS. 4 IS IN CONNECTION WITH THE ALLOWANCE OF CLAIM CENVET CREDIT AND VAT SET OFF TO THE TUNE OF RS.1,18,25,509/ - . THE RELEVANT FINDING HAS BEEN GIVEN IN PARA NO.4.1 WHICH IS HEREBY REPRODUCED AS UNDER.: - 5.2 . I HAD CONSIDERED THE APPELLANTS SUBMISSION IN THE APPELLANT OWN CASE THIS ISSUE WAS CONSIDERED BY ITAT IN ITA. NO.3343/MUM/2014 F OR AY 2010 - 11 WHICH HS HELD A S UNDER: WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ASSESSEE HAS DEMONSTRATED IN THE STATEMENT PREPARED BY HIM THAT THERE IS NO IMPACT ON THE NET PROFIT, IF TAXED ARE ACCOUNTED EITHER UNDER EXCLUSIVE OR UND ER INCLUSIVE METHOD. WE HAVE NOTICED THAT THE TAX AUTHORITIES HAVE NOT EXAMINED THE STATEMENT FURNISHED BY THE ASSESSEE THOUGH LD. CIT (A) HAS MADE CERTAIN COMPUTATIONS AND GRANTED PARTIAL RELIEF TO THE ASSESSEE. WE HAVE NOTICED THAT HER HAS NOT FOUND FAULT WITH THE STATEMENT FURNISHED BY THE ASSESSEE. UNDER THESE SET OF FACTS, WE ARE OF THE VIEW THAT THIS ISSUE REQUIRES FRESH EXAMINATION AT THE END OF THE A O BY DULY CONSIDERING RECONCILIATION STATEMENT FURNISHED BY THE ASSESSEE. ACCORDINGLY, WE SET ASIDE TH E ORDER PASSED BY LD. CIT(A) ON THIS ISSUE AND RESTORE THE SAME TO THE FILE OF THE AO WITH THE DIRECTION TO EXAMINE THE RECONCILIATION STATEMENT FURNISHED BY THE ASSESSEE AND TAKE APPROPRIATE DECISION IN ACCORDANCE WITH LAW AFTER AFFORDING NECESSARY OPPORT UNITY OF BEING HEARD TO THE ASSESSEE. A|O IS DIRECTED TO FOLLOW THE DIRECTION OF THE ITAT REGARDING THE DISALLOWANCE. GROUND OF APPEAL IS ALLOWED. 11. ON APPRAISAL OF THE ABOVE MENTIONED FINDING, WE NOTICED THAT THE CIT(A) HAS DECIDED THE MATTER OF CONTRO VERSY ON THE BASIS OF DECISION OF HONBLE ITAT IN THE ASSESSEES OWN CASE IN ITA. NO. 3343/M/2014 FOR A.Y.2010 - 11. SINCE THIS ISSUE HAS DULY BEEN COVERED IN FAVOUR OF THE ASSESSEE ON THE BASIS OF THE DECISION OF HONBLE ITAT IN THE ASSESSES OWN CASE FOR TH E A.Y. 2010 - 11 (SUPRA), THEREFORE, WE ARE OF THE VIEW THAT THE CIT(A) HAS DECIDED THE MATTER OF CONTROVERSY JUDICIOUSLY AND CORRECTLY WHICH IS NOT LIABLE TO BE INTERFERE AT THIS APPELLATE STAGE. ITA NO. 5821 /M/201 7 A.Y.20 14 - 15 8 12 . IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS HEREBY ORDERED TO BE D ISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 25 /06 /2019 . SD/ - SD/ - ( SHAMIM YAHYA ) (AMARJIT SINGH) / ACCOUNTANT MEMB ER /JUDICIAL MEMBER MUMBAI; DATED : 25 /06 /2019 V IJAY / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. / BY ORDER, //TRUE COPY// / / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI