PARLE GLOBAL TECHNOLOGIES PVT. LTD., THANE V. D.C.I.T.-8(2), MUMBAI

ITA 8508/MUM/2011

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 3432 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 5 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-05-2016
• Appeal Filed By: Assessee
• Bench Allotted: C
• Next Hearing Date: 16-04-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 15-12-2011
• Court: TRIBUNAL
• Assessee Lawyers: JIGAR SAIYA
• Keywords: Depreciation; Revenue expenditure

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES C, MUMBAI , , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI RAJENDRA, ACCOUNTANT MEMBER ITA NO.8508/MUM/2011 ASSESSMENT YEAR-2008-09 PARLE GLOBAL TECHNOLOGIES PVT. LTD. PLOT NO.9, RAJVIDESH BUILDING, PRIME INDUSTRIAL COMPLEX, SATIVALI ROAD, WALIVE, VASAI (EAST), MUMBAI-401608 / VS. DCIT - 8(2), AAYAKAR BHAVAN, M.K. MARG, MUMBAI-400020 PAN NO. AAACP2058C ( / ASSESSEE) ( / REVENUE) ITA NO.8508 & 8817/MUM/2011 PARLE GLOBAL TECHNOLOGIES PVT. LTD. 2 ITA NO.8817/MUM/2011 ASSESSMENT YEAR-2008-09 DCIT - 8(2), AAYAKAR BHAVAN, M.K. MARG, MUMBAI-400020 / VS. PARLE GLOBAL TECHNOLOGIES PVT. LTD. PLOT NO.9, RAJVIDESH BUILDING, PRIME INDUSTRIAL COMPLEX, SATIVALI ROAD, WALIVE, VASAI (EAST), MUMBAI-401608 PAN NO. AAACP2058C ( / REVENUE) ( / ASSESSEE) / ASSESSEE BY SHRI KUNAL SHAH & JIGAR SAIYA / REVENUE BY SHRI V.K. AGARWAL-DR / DATE OF HEARING : 18/05/2016 / DATE OF ORDER: 18/05/2016 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THE ASSESSEE AS WELL AS REVENUE IS IN CROSS APPEAL AGAINST THE IMPUGNED ORDER DATED 18/10/2011 OF THE LD. FIRST APPELLATE AUTHORITY, MUMBAI. 2. FIRST WE SHALL TAKE UP THE APPEAL OF THE ASSESS EE (ITA NO.8508/MUM/2012), WHEREIN, FIRST GROUND PERTA INS TO UPHOLDING THE DEPRECIATION ON FURNISH, ALLOWED A T THE RATE OF 15%, INSTEAD OF 80% AND THEREBY CONFIRMING THE AMOUNT OF RS.8,67,468/-. DURING HEARING, THE LD. CO UNSEL FOR THE ASSESSEE, SHRI KUNAL SHAH ALONG WITH JIGAR SAIYA, ITA NO.8508 & 8817/MUM/2011 PARLE GLOBAL TECHNOLOGIES PVT. LTD. 3 DID NOT PRESS THIS GROUND, THEREFORE, THIS GROUND I S DISMISSED AS NOT PRESSED. 2.1. THE NEXT GROUND IS WITH RESPECT TO DEFERRED REVENUE EXPENDITURE FOR A PERIOD OF THREE YEARS AS AGAINST CLAIM AS REVENUE EXPENDITURE. THE CRUX OF ARGUMENT IS IDENTICAL TO THE GROUND RAISED. ON THE OTHER HAND, THE LD. DR, SHRI V.K. AGARWAL, CONTENDED THAT THE CLAIM WAS ALLOWED AS PER THE BOOKS OF THE ASSESSEE, THUS, THE RE IS NO INFIRMITY IN THE IMPUGNED ORDER ON THE ISSUE IN HAN D. 2.2. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND T HAT BEFORE THE LD. ASSESSING OFFICER THOUGH THE BRAKE U P OF DEFERRED REVENUE EXPENSES WAS FURNISHED BUT NO DOCUMENTARY EVIDENCE WAS FURNISHED. IT WAS FOUND TH AT THE TREATMENT GIVEN BY THE ASSESSEE IN ITS BOOKS OF ACC OUNTS ITSELF SHOWS THAT THE EXPENDITURE IS NOT OF REVENUE IN NATURE, THEREFORE, IT WAS ADDED TO THE INCOME OF TH E ASSESSEE. THE DEFERRED REVENUE EXPENDITURE WAS IN R ESPECT OF MARKET DEVELOPMENT EXPENSES AMOUNTING TO RS.59,87,154/-, NEW PRODUCT DEVELOPMENT EXPENSES AMOUNTING TO RS.10,68,044/-, RENT PAID AMOUNTING TO RS.32,35,094/-. THE ASSESSEE ACQUIRED THREE ENTITIE S, TWO PARTNERSHIP FIRM NAMELY PARLE TOOLS INTERNATIONAL A ND PARLE PHARMA MACHINERIES THROUGH SLUMP SALE, AND ONE PRIV ATE LIMITED COMPANY PARLE TOOLS INTERNATIONAL PVT. LTD. THROUGH AMALGAMATION. PRIOR TO THE MERGER, IT WAS ENGAGED ITA NO.8508 & 8817/MUM/2011 PARLE GLOBAL TECHNOLOGIES PVT. LTD. 4 IN MANUFACTURING PUNCHES AND DYES FOR PHARMACEUTICA L INDUSTRIES AND PARLE PHARMA MACHINERIES WAS ENGAGED IN MANUFACTURING OF PACKAGING MACHINE. DUE TO STRATEGI C MERGER, THE FOCUS OF THE ASSESSEE COMPANY WAS REALI GNED IN THAT CONTEXT AND THE ASSESSEE HAD DEFERRED CERTAIN EXPENSES BASED ON SPECIFIC DEVELOPMENT OF NEW MARKE T OR FOR NEW PRODUCT DEVELOPMENT. WE FIND THAT THE LD. COMMISSIONER OF INCOME TAX (APPEAL) HAS DISCUSSED T HE DECISION IN ADDL. CIT VS BIHAR CAUSTIC & CHEMICALS LTD. 44 SOT 27(RANCHI) AND SINCE THE EXPENSES WERE ASCERTAI NABLE FOR A PERIOD OF THREE YEARS, CONSEQUENTLY, IN VIEW OF ACCRUAL, MATCHING PRINCIPLE, IT WAS HELD THAT THE ENTIRE CLA IM OF EXPENSES AS REVENUE WAS NOT WARRANTED, THEREFORE, H E ALLOWED THE DEFERRED REVENUE EXPENDITURE AS PER BOO KS OF ACCOUNTS OF THE ASSESSEE. IN VIEW OF THIS FACTUAL M ATRIX, WE FIND NO INFIRMITY IN THE CLAIM OF THE ASSESSEE, BEC AUSE IT WAS AS PER THE TREATMENT GIVEN BY THE ASSESSEE IN I TS BOOKS OF ACCOUNTS, THEREFORE, THE STAND OF THE LD. COMMIS SIONER OF INCOME TAX (APPEAL) IS AFFIRMED. 3. THE NEXT GROUND I.E. GROUND NO.3 IS WITH RESPEC T TO CAPITALIZATION OF EXPENSES INCURRED IN RELATION TO INSTALLATION OF AIR-CONDITIONERS TAKEN ON RENT AMOU NTING TO RS.1,02,144/-. THIS GROUND WAS NOT PRESSED BY THE L D. COUNSEL FOR THE ASSESSEE, THEREFORE, DISMISSED AS N OT PRESSES. ITA NO.8508 & 8817/MUM/2011 PARLE GLOBAL TECHNOLOGIES PVT. LTD. 5 4. NO OTHER GROUND WAS PRESSED BY THE ASSESSEE, THEREFORE, THE APPEAL OF THE ASSESSEE IS DISMISSED. 5. NOW, WE SHALL TAKE UP APPEAL OF THE REVENUE, WHEREIN, FIRST GROUND PERTAINS TO ALLOWING DEDUCTIO N OF THE ENTIRE DEFERRED REVENUE EXPENDITURE OF RS.1,02,90,2 92/-, AS PER BOOKS AS REVENUE EXPENDITURE WITHOUT APPRECIATI NG THE FACT THAT THE ASSESSEE WOULD DERIVE BENEFIT OF ENDU RING NATURE FROM THE SAID EXPENDITURE BEING CAPITAL IN N ATURE. IN THE LIGHT OF THE MATERIAL FACTS AVAILABLE ON RECORD , WE FIND THAT THE LD. COMMISSIONER OF INCOME TAX (APPEAL) HA D MADE AN ELABORATE DISCUSSION ON THE ISSUE, THEREFOR E, CONSIDERING THE FACTUAL FINDING RECORDED IN THE IMP UGNED ORDER IN PARA 8.3 ONWARDS, WE FIND NO INFIRMITY IN HIS CONCLUSION, THEREFORE, THIS GROUND OF THE REVENUE I S HAVING NO MERIT, CONSEQUENTLY, DISMISSED. 6. THE LAST GROUND RAISED BY THE REVENUE IS WITH RESPECT TO ALLOWING RS.91,25,388/- ON ACCOUNT OF ESTIMATION OF NET PROFIT, SUBJECT TO VERIFICATION B Y THE ASSESSING OFFICER. THE LD. DR ADVANCED ARGUMENTS, WHICH IS IDENTICAL TO THE GROUND RAISED. ON THE OTHER HA ND, THE LD. COUNSEL FOR THE ASSESSEE DEFENDED THE COUNSEL ARRIV ED AT IN THE IMPUGNED ORDER. 6.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACTS , IN BRIEF, ARE THAT THE LD. ASSESSING OFFICER MADE ADDITION OF RS.,91,25,388/- ESTIMATING THE NET PROFIT APPLYING THE NET ITA NO.8508 & 8817/MUM/2011 PARLE GLOBAL TECHNOLOGIES PVT. LTD. 6 PROFIT RATIO OF PREVIOUS YEAR. IT IS NOTED THAT TH E LD. ASSESSING OFFICER HAS CONSIDERED THE SUBMISSIONS OF THE ASSESSEE AS CONTAINED IN PARA 15.2 (PAGE-26 ONWARDS ) OF THE IMPUGNED ORDER AND FOUND THAT VIDE SUBMISSION D ATED 03/09/2010, THE ASSESSEE FURNISHED A NOTE BEFORE TH E ASSESSING OFFICER MENTIONING THE REASONS FOR FALL I N NET PROFIT AS COMPARISON TO PREVIOUS YEAR DUE TO ADDITI ON OF BUSINESS OF PARLE PHARMA MACHINERY, PARLE TOOL INTERNATIONAL TO THE EXISTING BUSINESS AND INCURRED ADDITIONAL EXPENDITURE SUCH AS RENT AND SALARIES WH ICH LEAD TO FALL IN THE NET PROFIT. CONSIDERING THE FACTUAL FINDING RECORDED IN THE IMPUGNED ORDER, BROADLY, WE ARE IN AGREEMENT WITH THE DIRECTION TO THE ASSESSING OFFIC ER TO VERIFY THE FIGURES OF EXPENDITURE AND INCOME OF FOU R ENTITIES BEFORE AND AFTER THE MERGER. WE FIND NO INFIRMITY IN THE DIRECTION, THUS, THE IMPUGNED GROUND IS HAVING NO M ERIT, CONSEQUENTLY, DISMISSED. FINALLY, THE APPEAL OF THE ASSESSEE AS WELL AS OF T HE REVENUE IS DISMISSED. THIS ORDER WAS PRONOUNCED IN THE OPEN IN TH E PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 18/05/2016. SD/- SD/- (RAJENDRA) (JOGINDER SINGH) '# / ACCOUNTANT MEMBER $# / JUDICIAL MEMBER MUMBAI; # DATED : 18/05/2016 ITA NO.8508 & 8817/MUM/2011 PARLE GLOBAL TECHNOLOGIES PVT. LTD. 7 F{X~{T? P.S/. .. %$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. %& '( / THE APPELLANT (RESPECTIVE ASSESSEE) 2. )*'( / THE RESPONDENT. 3. + + , ( %& ) / THE CIT, MUMBAI. 4. + + , / CIT(A)- , MUMBAI, 5. /01 )2 , + %& %23 , / DR, ITAT, MUMBAI 6. 14 5 / GUARD FILE. / BY ORDER, */& ) //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI