Addl.CIT, Special Range-8, New Delhi V. Shriram Pistons & Rings Ltd., New Delhi

ITA 7249/DEL/2017

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 0378 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 7 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-07-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2014-2015
• Appeal Filed On: 05-12-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation; Rule of consistency; Capital expenditure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCH: G NEW DELHI BEFORE SHRI O.P. KANT, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER [THROUGH VIDEO CONFERENCING] ITA NO.7249/DEL/2017 ASSESSMENT YEAR: 2014-15 ADDL. CIT, SPECIAL RANGE-8, NEW DELHI VS. M/S. SHRIRAM PISTONS & RINGS LTD., HIMALAYA HOUSE, 23, KASTURBA GANDHI MARG, NEW DELHI PAN :AAACS0229G (APPELLANT) (RESPONDENT) ORDER PER O.P. KANT, AM: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST ORD ER DATED 10/10/2017 PASSED BY THE LEARNED COMMISSIONER OF IN COME-TAX (APPEALS)-28, NEW DELHI [IN SHORT THE LEARNED CIT( A)] FOR ASSESSMENT YEAR 2014-15 RAISING FOLLOWING GROUNDS: 1. 'WHETHER THE LD. CIT(A) WAS JUSTIFIED IN DELETI NG THE DISALLOWANCE OF RS. 2,75,82,000/- MADE BY THE AO ON ACCOUNT OF E XPENDITURE INCURRED FOR DIES FOR NEW MODE DEVELOPMENT BY TREAT ING THE SAME AS CAPITAL EXPENDITURE.' APPELLANT BY SH. PRAKASH DUBEY SR.DR RESPONDENT BY SH. R.K. KAPOOR, CA DATE OF HEARING 08.07.2021 DATE OF PRONOUNCEMENT 16.07.2021 2 ITA NO.7249/DEL/2017 2. 'WHETHER THE LD. CIT(A) WAS JUSTIFIED IN DELETI NG THE DISALLOWANCE OF RS. 39,52,433/- MADE BY THE AO ON ACCOUNT OF EXP ENSE UNDER 'TOTAL PRODUCTIVITY MAINTENANCE (TPM)/ISO 9001' BY TREATING SUCH EXPENSE AS CAPITAL EXPENDITURE.' 3. 'THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AM END ANY OF THE GROUND(S) OF APPEAL BEFORE OR DURING THE COURSE OF HEARING OF THE APPEAL.' 2. AT THE OUTSET, THE LEARNED COUNSEL OF THE ASSESSEE SUBMITTED THAT THE ISSUE-IN-DISPUTE ARE IDENTICAL TO ADDITION S MADE IN EARLIER YEARS, WHICH HAVE BEEN DELETED BY THE ITAT, AND THU S LD. CIT(A) HAS DELETED THE ADDITION IN DISPUTE IN THE YEAR UND ER CONSIDERATION RELYING ON THE DECISION OF THE ITAT I N EARLIER YEARS. 3. THE LEARNED DR ALSO COULD NOT CONTROVERT THIS STAT EMENT OF THE LEARNED COUNSEL OF THE ASSESSEE. 4. WE HAVE HEARD RIVAL SUBMISSION OF THE PARTIES ON T HE ISSUE IN DISPUTE AND PERUSED THE RELEVANT MATERIAL ON REC ORD. THE FINDING OF THE LEARNED CIT(A) ON THE ISSUE IN DISPU TE ARE REPRODUCED AS UNDER: 7. I HAVE CONSIDERED THE FACTS OF THE CASE, BASIS OF DISALLOWANCES MADE BY AO AND FINDINGS OF HON'BLE ITAT VIDE THEIR ORDER DATED 05.05.2017 IN THE CASE OF APPELLANT ON IDENTICAL FA CTS FOR A.Y. 2010- 11. HON'BLE ITAT. AFTER DISCUSSING THE ISSUE AND RE LYING ON THE DECISION OF JURISDICTIONAL HIGH COURT IN APPELLANT' S OWN CASE, DECIDED BOTH THE ISSUES AS UNDER: '8.1 ON PERUSING THE ABOVE FINDING OF THE LD. C.IT( A), WITH REGARD TO GROUND NO.L RELATING TO DELETION OF DISAL LOWANCE OF RS. 80,34,087/- IS CONCERNED, WE FIND THAT THE ASSE SSEE HAS INCURRED EXPENDITURE OF RS. 1,20,49,317/- ON ACCOUN T OF DIES FOR NEW MODEL DEVELOPMENT. HOWEVER, THE AO TREATED THIS EXPENDITURE AS CAPITAL EXPENDITURE IN NATURE AND TH EREFORE, JUST ALLOWED DEPRECIATION ON THE AMOUNT AND DISALLO WED THE REMAINING AMOUNT OF RS. 80,34,087/-. WE FURTHER NOT E THAT IN THE ASSESSMENT ORDER, THE AO HAS NOT GIVEN ANY REAS ONING FOR TREATING SUCH EXPENDITURE AS CAPITAL IN NATURE AND JUST MENTIONED THAT FOLLOWING EARLIER ASSESSMENT ORDERS, MAINTAINING THE CONSISTENCY AND TO KEEP THE ISSUE A LIVE HE IS TREATING THE EXPENDITURE AS CAPITAL IN NATURE. ON T HE OTHER 3 ITA NO.7249/DEL/2017 HAND, THE ASSESSEE HAS ARGUED THAT THIS ISSUE OF EX PENDITURE ON DIES AND MODELS HAS ALREADY BEEN DECIDED IN ASSE SSEE'S FAVOUR BY THE JURISDICTIONAL DELHI HIGH COURT IN IT A NO.167/2008 FOR A.Y. 1998-99 AND IN ITA NO.480/2003 IN AY 2000-01 IN ASSESSEE'S OWN CASE. WE FURTHER FIND THA T ITAT, DELHI BENCH IN ITA NO.5438/DEL/2012 FOR AY 2009-10 IN ASSESSEE'S OWN CASE HAS AGAIN FOLLOWED THE DECISION OF HON'BLE HIGH COURT AND ALLOWED THE EXPENDITURE AS R EVENUE EXPENDITURE. THEREFORE, THE ISSUE IS SQUARELY COVER ED BY THE DECISIONS OF ITAT AS WELL AS HON'BLE JURISDICTIONAL HIGH COURT IN THE ASSESSEE'S OWN CASE IN EARLIER ASSESSMENT YE ARS, THE AO'S ACTION IN TREATING THE EXPENDITURE ON DIES AND MODELS AS CAPITAL IN NATURE WAS NOT JUSTIFIED. HENCE, THE LD. CIT(A) HAS RIGHTLY DELETED THE DISALLOWANCE OF RS.80,34,087/- MADE BY THE AO, WHICH DOES NOT NEED ANY INTERFERENCE ON OUR PART, HENCE, WE UPHOLD THE ORDER OF THE LD. CIT(A) ON THE ISSUE IN DISPUTE AND DISMISS THE GROUND NO. 1 RAISED BY THE REVENUE IN ITS APPEAL. 8.2 WITH REGARD TO GROUND NO.2 RELATING TO DELETION OF DISALLOWANCE OF RS. 12,16,796/- IS CONCERNED, WE FI ND THAT THE AO HAS NOT GIVEN ANY BASIS FOR MAKING SUCH DISALLOW ANCE AND JUST REPEATED THE SAME LOGIC THAT IN PRECEDING YEAR S SUCH DISALLOWANCE WAS MADE BY THE AO AND THEREFORE, FOLL OWING THE PRINCIPLE OF CONSISTENCY AND JUST TO KEEP THE I SSUE ALIVE, HE MADE THE DISALLOWANCE. IN THE APPELLATE PROCEEDINGS , THE ASSESSEE HAS PRODUCED THE DECISION OF ITAT, DELHI, IN ITA NO. 5438/DEL/2012 IN ASSESSEE'S OWN CASE, WHEREIN THE I SSUE HAS ALREADY BEEN DECIDED IN FAVOUR OF THE ASSESSEE. SINCE THE ISSUE IS SQUARELY COVERED BY THE DECISION OF HIGHER JUDICIAL AUTHORITY, THE AO'S ACTION IN DISALLOWING THE EXPEN DITURE UNDER THE HEADS 'TPM AND 'ISO-9001', TOTAL AMOUNTIN G TO RS. 12,16,796/- WAS NOT JUSTIFIED. HENCE, THE LD. CIT(A ) HAS RIGHTLY DELETED THE DISALLOWANCE OF RS. 12,16,796/- MADE BY THE AO, WHICH DOES NOT NEED ANY INTERFERENCE ON OUR PART, HENCE, WE UPHOLD THE ORDER OF THE LD. CIT(A) ON THE ISSUE IN DISPUTE AND DISMISS THE GROUND NO.2 RAISED BY THE R EVENUE IN ITS APPEAL.' 7.1 SINCE THE HON'BLE ITAT HAS ALREADY TAKEN A VIEW ON BOTH THE ISSUES AS NTENDED BY APPELLANT IN BOTH THE GROUNDS, RESPECTFULLY FOLLOWING THE SAME, ISO DELETE THE ADDITIONS MADE B Y AO ON ACCOUNT OF CAPITAL EXPENDITURE ON DIES FOR NEW MODEL DEVELO PMENT AMOUNTING TO RS. 3,10,82,299/- AND UNDER THE HEAD TOTAL PRODU CTIVITY MAINTENANCE (TPM)/ISO 9001 AMOUNTING TO RS. 39,52,4 33/- AND ALLOW THE GROUNDS TAKEN BY APPELLANT. 4 ITA NO.7249/DEL/2017 4.1 WE FIND THAT LEARNED CIT(A) HAS FOLLOWED DECISION OF THE ITAT IN EARLIER YEARS AND, THEREFORE, WE DO NOT FIN D ANY ERROR IN THE ORDER OF THE LEARNED CIT(A) ON THE ISSUE-IN-DIS PUTE RAISED BEFORE US. ACCORDINGLY, ALL THE GROUNDS OF THE APPE AL OF THE REVENUE ARE DISMISSED. 5. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT ON 16 TH JULY, 2021. SD/- SD/- (KULDIP SINGH) (O.P. KANT) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 16 TH JULY, 2021. RK/- (DTDC) COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI