DCIT CIR 2(1)(1), MUMBAI V. L & T CUTTING TOOLS LTD, MUMBAI

ITA 710/MUM/2016

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 8220 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 11-02-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJESH KUMAR YADAV
• Section: 143(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL BENCH A MUMBAI BEFORE HONBLE S/SHRI G S PANNU ( A M), AND PAWAN SINGH , ( JM ) I.T.A. NO. 710 /MUM/201 6 ( / ASSESSMENT YEA R :2 0 11 - 12 ) DY. COMMISSIONER OF INCO ME TAX CIRCLE 2(2)(1), ROOM NO. 545 , AAYAKAR BHAVAN, M K ROAD, MUMBAI - 400020 / VS. M/S L & T CUTTING TOOLS LTD, (FORMERLY KNOWN AS TRACTOR ENGINEERING LTD) , L& T HOUSE, N M MARG, BALLARD ESTATE, FORT, MUMBAI - 4000 01 / REVEN UE BY : SHRI RAJESH KUMAR YADAV / ASSESSEE BY : S/ SHRI VIJAY MEHTA AND ANUJ KISHNADWALA PAN : A AA CT4499B / DATE OF HEARING : 30.11. 2017 / DATE OF PRONOUNCEMENT : 30.11. 2017 / O R D E R PER G S PANNU, A. M: THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE LD.CIT(A) - 5, MUMBAI, DATED 27.11.2015 FOR THE ASSESSMENT YEAR 20 11 - 12 WHICH IS ARISING OUT OF ASSESSMENT ORDER PASSED BY THE AO U/S 143(3) OF THE INCOME TAX ACT, 1961 , DATED 6.3.2014. 2. IN THIS APPEAL, THE REVENUE HAS RAISED THE FOLLOWING GROUNDS: 1. THE ORDER OF THE CIT(A) IS OPPOSED TO LAW AND FACTS OF THE CASE; 2. ON THE FACTS AND CIRCUMSTANCES OF CASE, AND IN LAW, THE LD. CIT(A) HAS ERRED IN DIRECTING THE AO TO ALLOW R&D EXPENSES WHICH 2 I.T.A. NO. 710 / MUM/201 6 ARE REVENUE IN NATURE, WITHOUT APPRECIATING THE FACTS THAT NO R&D ACTIVITY IS BEING CARRIED OUT BY THE ASSESSEE COMPANY. 3 . AT THE TIME OF HEARING, THE LD.DR REFERRED TO THE ASSESSMENT ORDER AND CONTENDED THAT THE AO HAS DISALLOWED AN EXPENDITURE OF RS.47,84,618/ - DEBITED IN THE PROFIT AND LOSS ACCOUNT UNDER THE HEAD RESEARCH AND DEVELOPMENT EXPENSES. THE LD. DR DREW THE ATTENTION OF THE BENCH TO THE DISCUSSION MADE BY THE AO IN PARA 5 OF THE ASSESSMENT ORDER. AS PER THE AO, THE ASSESSEE HAD ONLY OFFERED GENERAL EX PLANATION IN RESPECT OF THE CLAIM OF THE IMPUGNED EXPENSES AND THAT THERE WERE NO EVIDENCE IN SUPPORT OF T H E CLAIM THAT ANY RESEARCH AND DEVELOPMENT ACTIVITIES WERE CARRIED OUT. THE AO HAS ALSO REFERRED TO THE STA ND OF THE ASSESSING AUTHORITY FOR THE ASSESSMENT YE A R 2010 - 11 ALSO, WHEREIN THE SIMILAR EXPENSES WERE DISALLOWED IN THE ABSENCE OF EVIDENCE OF CARRYING OUT ANY RESEARCH AND DEVELOPMENT ACTIVITIES . THE AFORESAID DISALLOWANCE HAS SINCE BEEN EXAMINED BY TH E LD.CIT(A) WHO HAS DIRECTED THE AO TO VERIFY AS TO WHETHER THE ITEMS CONTAINED IN THE IMPUGNED EXPENSES OF RS.47,84,618/ - WERE REVENUE IN NATURE OR NOT. THE LD. CIT(A) HAS DIRECTED THE AO TO ALLOW T H E EXPENDITURE TO THE EXTENT IT IS FOUND TO BE OF REVE NUE IN NATURE. THE LD. CIT(A) REFERRED TO THE DECISION OF CIT(A) FOR THE ASSESSMENT YEAR 2010 - 11 WHICH WAS ON SIMILAR LINES. AGAINST SUCH A DECISION OF LD.CIT(A), THE REVENUE IS IN APPEAL BEFORE US. 3 I.T.A. NO. 710 / MUM/201 6 4. AT THE TIME OF HEARING, THE LD.AR - ASSESSEE POINTED OUT THAT THE LEAD YEAR OF DISPUTE WAS THE ASSESSMENT YEAR 2009 - 10 AND THE MA T TER HAD TRAVELLED TO THE TRIBUNAL. THE TRIBUNAL VIDE ITS ORDER PASSED IN ASSESSEES OWN CASE OF ACIT V/S M/S TRACTOR ENGINEERS LTD IN ITA NO.1048 AND 5438/MUM/2014(AY - 2009 - 10 AND 2010 - 11) DATED 25.10.2016 RESPECTIVELY HAS RESTORED THE MATTER BACK TO THE FILE OF THE AO TO DECIDE THE ISSUE AFRESH AND IN ACCORDANCE WITH LAW. THE LD. AR ALSO REFERRED TO THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE IN ITA NO.2855/MUM/20 17(AY - 2012 - 13) DATED 1.9.2017, WHEREIN ALSO THE DIRECTION OF THE LD. CIT(A) TO THE AO TO EXAMINE THE ISSUE AFRESH HAS BEEN AFFIRMED. IN THIS VIEW OF THE MATTER, IT H AS BEEN SUBMITTED THAT THE DECISION OF THE LD.CIT(A) TO RESTORE THE MATTER BACK TO THE FILE OF THE AO DESERVES TO BE AFFIRMED. 5. THE LD. DR FAIRLY HAS NOT CONTROVERTED THE FACTUAL MATRIX BROUGHT OUT BY THE LD.AR - ASSESSEE - RESPONDENT. 6. HAVING REGARD TO THE ABOVE DISCUSSION, IN OUR OPINION, NO FAULT CAN BE FOUND WITH THE DIRECTION OF THE LD.CIT(A) WHICH REQUIRES THE AO TO CARRY OUT THE VERIFICATION OF THE IMPUGNED EXPENDITURES. THE ACTION OF THE LD.CIT(A) IS IN CONSONANCE WITH THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE ON SIMILAR ISSUE FOR THE ASSESSMENT YEAR S 2009 - 10 AND 2010 - 1 1(SUPRA) AND FOR 4 I.T.A. NO. 710 / MUM/201 6 THE ASSESSMENT YEAR 2012 - 13 (SUPRA). AS A CONSEQUENCE, WE HEREBY FIND NO INFIRMITY IN THE DIRECTION OF THE LD.CIT(A) WHICH IS HEREBY UPHOLD. 7. RESULTANTLY, THE APPEAL OF THE REVENUE IS DISMISSED. THE ABOVE DECISION WAS PRONOUNCED IN T HE OPEN COURT AFTER CONCLUDING THE HEARING OF THE BOTH THE PARTIES ON 30.11.2017. SD SD ( PAWAN SINGH ) ( G.S.PANNU ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED : 30. 1 1 . 2017 SR.PS:SRL: / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT( A) 4. / CIT CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F ILE / BY ORDER, TRUE COPY / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI