ACIT 3(1)(1), MUMBAI V. ALD AUTOMOATIVE P.LTD, MUMBAI

ITA 802/MUM/2017

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 7847 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-08-2018
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 03-02-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES A, MUMBAI , , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER ITA NO.802/MUM/2017 ASSESSMENT YEAR: 2011-12 ACIT-3(1)(1), ROOM NO.607, 6 TH FLOOR, AAYAKAR BHAVAN, M. K. ROAD, MUMBAI-400020 VS M/S ALD AUTOMOTIVE PRIVATE LIMITED, 13, FLOOR, MAKER CHAMBER-IV, NARIMAN POINT. MUMBAI-400021 ( / REVENUE) ( ! ' /ASSESSEE) PAN. NO. AAFCA0924K # $ % ' & / DATE OF HEARING : 09/08/2018 % ' & / DATE OF ORDER: 09/08/2018 / REVENUE BY SHRI NISHANT SAMAIYA- DR ! ' / ASSESSEE BY NONE ITA NO.802/MUM/2017 M/S ALD AUTOMOTIVE PVT. LTD . 2 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THE REVENUE IS AGGRIEVED BY THE IMPUGNED ORDER DATE D 28/10/2016 OF THE LD. FIRST APPELLATE AUTHORITY, MU MBAI, DELETING HE DISALLOWANCE OF RS.4,35,56,762/-, BEING DEFERRED MAINTENANCE CHARGES, RELYING UPON THE DECISION OF T HE TRIBUNAL IN THE CASE OF THE ASSESSEE ITSELF FOR ASS ESSMENT YEARS 2007-08 AND 2008-09, WITHOUT APPRECIATING THE FACT THAT NO DIRECT RELIEF WAS GIVEN BY THE TRIBUNAL BUT THE ISSUE WAS SUBJECT TO VERIFICATION BY THE LD. ASSESSING OF FICER TO IDENTIFY THE COST WHICH ESCALATE WITH TIMES AND FUR THER IT IS NOTHING BUT PROVISION FOR UNASCERTAINED LIABILITY, WHICH IS NOT ALLOWABLE AS PER THE PROVISIONS OF THE ACT. 2. DURING HEARING, NONE WAS PRESENT FOR THE ASSESS EE IN SPITE OF ISSUANCE OF REGISTERED NOTICE ISSUED ON 19/06/2018 AT THE ADDRESS OF THE ASSESSEE PROVIDED IN FORM NO.36(FORM OF APPEAL). THE ASSESSEE NEITHER PRESEN TED ITSELF NOR MOVED ANY ADJOURNMENT PETITION. ON THE OTHER H AND, THE LD. DR, SHRI NISHANT SAMAIYA, INVITED OUR ATTENTION TO PAGE- 18(PARA 5.2.3) OF THE IMPUGNED ORDER AND THE ORDER OF THE ITA NO.802/MUM/2017 M/S ALD AUTOMOTIVE PVT. LTD . 3 TRIBUNAL FOR ASSESSMENT YEAR 2008-09 AND 2009-10 (I TA NO.2179 & 601/MUM/2013 AND ITA NO.3173/MUM/2015 RESPECTIVELY). 2.1. WE HAVE CONSIDERED THE SUBMISSIONS OF LD. DR AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE OBSERV E THAT IN PARA 5.2.3 OF THE IMPUGNED ORDER, THE LD. COMMISSIO NER OF INCOME TAX (APPEAL) HAS MENTIONED SOME OBSERVATION MADE IN THE ORDER OF THE TRIBUNAL DATED 25/07/2016. THE RELEVANT PORTION OF THE TRIBUNALS ORDER IS REPRODUCED HEREU NDER:- WE, ACCORDINGLY, APPROVE THE ACCOUNTING TREATMENT - WHICH FORMS THE BASIS FOR RETURNING INCOME QUA THE SAID S ERVICE, IN PRINCIPLE. TRUE, THE EXCESS AMOUNT RECEIVED IN TH E INITIAL YEARS CANNOT BE CALLED OR SAID TO BE AN ADVANCE PROPER - WHICH COULD ONLY BE SO IN TERMS OF THE CONTRACT, AND NEITHER TH E AMOUNT APPROPRIATED (TO THE RESERVE A/C) A PROVISION. YE T, THE AMOUNT SO APPROPRIATED CAN BE SAID AS NOT LIABLE TO BE REC OGNIZED AS REVENUE FOR THE YEAR OF RECEIPT, CONSIDERING THAT T HE CORRESPONDING COSTS, WHICH FORM THE BASIS OF THE CH ARGE, IS YET TO BE INCURRED (TO THAT EXTENT). IN-AS-MUCH AS UNEV EN REPAIRS AND, THEREFORE, CORRESPONDING SERVICES, ARE LIABLE TO BE RENDERED OVER THE LEASE TERM AS INDICATED BY THE CORRESPONDING EXPENDITURE, THE ACCOUNTING TREATMENT IS IN CONSONANCE WITH AS-9. THE ASSESSEES RELIANCE ON TH E DECISIONS IN CALCUTTA CO. LTD. VS. CIT [1959] 37 IT R 1 (SC) AND MADRAS INDUSTRIAL INVESTMENT CORPORATION LTD. VS. C IT [1997] 225 ITR 802 (SC), BOTH ADVOCATING THE MATCHING PRIN CIPLE, IS APPOSITE. THE AO SHALL CAUSE NECESSARY VERIFICATION AS INDICATED ABOVE, SUBJECT TO WHOSE FINDINGS OF FACT WE ALLOW THE ASSESSEES CLAIM. WE MAY FURTHER ADD THAT THE ASSES SEES PLEA IS ACCEPTABLE ONLY QUA SUCH EXPENDITURE WHICH IS SU BJECT TO, IN THE NORMAL COURSE OF EVENTS, AN INCREASE WITH TIME, I.E., IS AGE ITA NO.802/MUM/2017 M/S ALD AUTOMOTIVE PVT. LTD . 4 (OF THE VEHICLE) RELATED. WE SAY SO AS WE OBSERVE S EVERAL EXPENSES FORMING PART OF THE FLEET MANAGEMENT SERVI CES, VIZ. PROVIDING RELIEF VEHICLES, DRIVERS, EMERGENCY BREAK DOWN SERVICES, DOOR TO DOOR SERVICES, ETC., AND WHICH AR E ESSENTIALLY PERIOD COSTS, SO THAT ALL SUCH COSTS WHICH DO NOT E XHIBIT A PRONOUNCED INCREASE WITH TIME, I.E., IN RELATION TO THE AGE OF THE CORRESPONDING VEHICLE, WOULD NOT BE SUBJECT TO SUCH APPROPRIATION. THE AOS FINDING SHALL FURTHER INCLU DE THAT IN RESPECT OF REVERSAL OF THE CREDIT (ON THE BASIS OF THE RULE BEING PURPORTEDLY FOLLOWED) AS WELL. REFERENCE TO THE SAI D RULE, WE MAY ADD, IS ONLY TOWARD THE ASSESSEE FOLLOWING A SC IENTIFIC BASIS IN ALLOCATING THE REVENUE OVER THE TERM OF TH E LEASE AND, ACCORDINGLY WOULD STAND TO BE EXAMINED BY THE A.O., AND THE ALLOWANCE OF THE ASSESSEES CLAIM BY US IS SUBJECT TO HIS RETURNING POSITIVE FINDINGS. WE DECIDE ACCORDINGLY. 6. IN THE RESULT, THE ASSESSEES APPEALS ARE ALLOWE D FOR STATISTICAL PURPOSES, WHILE THE REVENUES APPEALS A RE DISMISSED. IN THE AFORESAID ORDER, THE TRIBUNAL HAS RELIED UPO N THE DECISIONS FROM HON'BLE SUPREME COURT IN CALCUTTA CO MPANY LTD. VS CIT (37 ITR 1)(SUPREME COURT) AND MADRAS IN DUSTRIAL INVESTMENT CORPORATION LTD. VS CIT 225 ITR 802(SUPR EME COURT). IN THE AFORESAID ORDER, THE LD. COMMISSION ER OF INCOME TAX (APPEAL) HAS DIRECTED THE LD. ASSESSING OFFICER TO ALLOW THE CLAIM OF THE ASSESSEE AFTER DUE VERIFICAT ION AS PER THE DIRECTION OF THE TRIBUNAL, THEREFORE, FOR THE I MPUGNED YEAR ALSO, WE REMAND THIS APPEAL TO THE FILE OF THE ASSE SSING OFFICER WITH SIMILAR DIRECTION AS CONTAINED IN PARA 5 & 6 OF ITA NO.802/MUM/2017 M/S ALD AUTOMOTIVE PVT. LTD . 5 THE ORDER OF THE TRIBUNAL DATED 25/07/2016, THUS, T HIS APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PU RPOSES ONLY. FINALLY, APPEAL OF THE REVENUE IS ALLOWED FOR STATI STICAL PURPOSES. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN TH E PRESENCE OF LD. DR AT THE CONCLUSION OF THE HEARING ON 09/08/2018. SD/- SD/- ( RA MIT KOCHAR ) (J OGINDER SINGH) ! ' / ACCOUNTANT MEMBER # ' /JUDICIAL MEMBER # $ MUMBAI; ( DATED : 09/08/2018 F{X~{T? P.S/. . . $#%&'(')% / COPY OF THE ORDER FORWARDED TO : 1. *+,- / THE APPELLANT 2. ./,- / THE RESPONDENT. 3. 0 0 # 1' ( *+ ) / THE CIT, MUMBAI. 4. 0 0 # 1' / CIT(A)- , MUMBAI 5. 34 .' , 0 *+& * 5 , # $ / DR, ITAT, MUMBAI 6. 6 7$ / GUARD FILE. / BY ORDER, / (DY./ASSTT. REGISTRAR) , # $ / ITAT, MUMBAI