M/S MARUTI SUZUKI INDIA LTD,NEW DELHI V. DCIT, NEW DELHI

MA 354/DEL/2024

AI Insights

The case involves Maruti Suzuki India Ltd. challenging the disallowance of a business deduction related to Foreseen Price Increase (FPI) and specific items of disallowance under section 43B of the Income Tax Act, 1961. The Tribunal initially set aside the matter to the Assessing Officer based on an earlier ITAT order, which was later found to be based on a non-existent direction due to an amendment in the order. The Tribunal rectified this by aligning the decision with the amended order. Additionally, certain grounds of appeal regarding duty paid deductions were inadvertently not adjudicated, leading to a recall of the order for these specific issues to be addressed.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 34378 (ITAT-DELHI)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 13-03-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I
• Assessment Year: 2003-2004
• Other Referred Cases: Honda Siel Power Products Ltd vs. CIT, Reliance Telecom Ltd vs. CIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANAND BHASKAR
• Assessee Lawyers: AJAY VOHRA; . ADVOCATES; SOMYA JAIN
• Section: 254(2); 43B

Judgement Text

"M.A. Nos.354 & 355/Del/2024 Page 1 of 11 IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCH: ‘I’ NEW DELHI BEFORE CHALLA NAGENDER PRASAD, JUDICIAL MEMBER AND NAVEEN CHANDRA, ACCOUNTANT MEMBER Miscellaneous Application Nos.354 &355/Del/2024 ( Arising out of ITA Nos.4174 &4081/Del/2010 ) Assessment Years: 2003-04& 2003-04 Maruti Suzuki India Ltd., Plot No.1, Nelson Mandela Road, Vasant KJunj, New Delhi- 1100 01 Vs. Addl. CIT, Range-1, New Delhi. PAN :AAACM0829Q (Applicant) (Respondent) ORDER PER NAVEEN CHANDRA, ACCOUNTNT MEMBER: Both the captioned applications filed by the assessee under Section 254(2) of the Income Tax Act, 1961, seeking rectification of certain apparent mistakes from the record with respect to the grounds of appeals taken by the assessee. Assessee by Shri Ajay Vohra,Sr. Advocates& Somya Jain, Advocate Department by Shri Anand Bhaskar, Sr. DR Date of hearing 21.02.2025 Date of pronouncement 13.03.2025 MA Nos.354&355/Del./2024 Page 2 of 11 M.A. 354/Del/2024 2. The brief facts of the case are that the applicant has accounted for liability on account of foreseen price increase (FPI) based on a scientific analysis of increase in the prices of components due to change in input cost. FPI of Rs.108,18,31,688 was debited to consumption of raw material and components in the profit and loss account in accordance with mercantile system of accounting, therefore, the same was claimed as business deduction in the computation of income accordingly. 3. The assessing officer, however, disallowed the aforesaid claim of the applicant on the ground that assessee has quantified the liability without acknowledging the quantified liability to the creditors. On appeal, the CIT(A) deleted the disallowance made by the assessing officer. Aggrieved, the department filed the captioned appeal before this Tribunal. 4. Learned counsel for the assessee submitted before us that while adjudicating upon this appeal raised by the department, the Tribunal relied upon and followed the ITAT order dated 17.10.2018 in MA Nos.354&355/Del./2024 Page 3 of 11 applicant's own case for assessment year 2009-10 in ITA No. 467/Del/2014, and held as under: \"71. A similar issue came up for consideration before this Tribunal in IПА No. 467/DEL/2014A. Y 2009-10. The relevant findings read as under: 72. Respectfully following the findings of the co-ordinate [supra] we remand this issue to the file of the Assessing Officer to decide afresh as per directions given in earlier A.Y. This ground is allowed for statistical purposes.\" (emphasis supplied) 5. In this regard, the counsel for the assessee submitted that the ITAT has inadvertently referred to and relied upon the original order dated 17.10.2018 for assessment year 2009-10, which, however, stood amended vide MA Order dated 19.06.2019 issued subsequently. The ld AR stated that initially original order dated 17.10.2018 was passed by the Hon'ble Tribunal for AY 2009-10.Subsequently, on an application filed by the applicant under section 254(2) of the Act, the Tribunal, vide MA Order dated 19.06.2019, amended its original order dated 17.10.2018 and substituted the direction issued thereunder. Therefore, the original order dated 17.10.2018, in fact, stood amended vide MA Order dated 19.06.2019 and therefore, the original order had to necessarily be read along with the MA order. The ld AR stated that MA Nos.354&355/Del./2024 Page 4 of 11 vide MA Orderdated 19.06.2019 for assessment year 2009-10, the Tribunal, in fact, substituted the directions given in the original order and finally adjudicated the aforesaid issue of disallowance on disallowance on account of FPI in favour of the applicant, observing as under: \"We have heard both the parties and perused the material available on record. Considering the corrigendum dated 12/17/2018 for Assessment Year 2008-09 passed by the Tribunal in assessee's own case we are hereby substituting earlier directions which should be read as under: \"Thus, the issue is identical in assessee's own case for A.Y. 2008-09. Therefore, we are remanding back this issue to the file of the Assessing Officer with direction to decide this issue afresh after giving opportunity of hearing to the assessee. Hence Ground No. 9 to 9.8 are partly allowed for statistical purposes.\" And issuing the fresh direction as under: \"Following the reasoning adopted by the Co-ordinate Bench of this Tribunal Bench of this Tribunal for the Assessment Year 2007-08 & 2008-09 vide corrigendum dated 12.07.2018 we direct the Assessing Officer to delete the disallowance of Rs. 36.38 crores on account of provisional liability relating to expenditure on account of FPI-OE components. Ground Nos. 9- to 9.5 are disposed of accordingly.\" (emphasis supplied) MA Nos.354&355/Del./2024 Page 5 of 11 6. On perusal of the aforesaid, the ld AR stated that vide MA order dated 19.06.2019 for assessment year 2009-10, the Tribunal had, in fact, deleted the disallowance made by the assessing officer on account of FPI. In the light of the aforesaid, the ld AR submitted that the Tribunal has, while adjudicating the appeal for assessment year 2003-04, i.e. the year under consideration, on the aforesaid issue of disallowance on account of FPI, inadvertently followed the non- existent directions in the original order dated 17.10.2018 for the assessment year 2009-10 and set-aside the matter to the file of the assessing officer. As explained supra, the directions in the original order dated 17.10.2018 stood substituted/ amended vide the MA order dated 19.06.2019. 7. There is, thus, patent and glaring mistake apparent on the face of record in considering non-existent observations of the original order dated 17.10.2018 rather than considering the directions in the Order dated 19.06.2019 for the said assessment year, wherein the aforesaid disallowance had been deleted by the Hon'ble Tribunal. 8. On the other hand, Learned DR could not controvert the findings raised by the learned counsel for the assessee. MA Nos.354&355/Del./2024 Page 6 of 11 9. We have heard the rival submissions. In view of the aforesaid, we are of the considered view that the order dated 12.03.2024 contains apparent mistake on record and the same is required to be rectified. The said mistake is rectified by issuing necessary directions to the limited extent that the disallowance made on account of FPI may, in conformity with the rectified decision of the Tribunal dated 19.06.2019 issued for assessment year 2009-20, is deleted and the grounds of appeal No.6 is accordingly allowed. 10. In the result, the miscellaneous application no 354/Del/2024 is allowed. M.A. 355/Del/2024 11. In the instant MA, the assessee states that vide various sub- grounds of Ground No.2, the applicant had challenged the specific items of disallowance made under section 43B of the Act. The Tribunal, vide paras 17 to 33 of the order dated 12.03.2024, dealt with each of the sub-grounds separately; however, inadvertently, the above grounds Nos. 2.1 to 2.1.2 not been adjudicated, resulting in mistake apparent from record. MA Nos.354&355/Del./2024 Page 7 of 11 12. Brief facts in respect of the aforesaid grounds are that the applicant had, during the year under consideration, claimed deduction of duty paid amounting to Rs.85,24,400/-, being balance inthe PLA, under section 43B of the Act. The aforesaid amount was paid by the applicant under Rule 4 of the Excise Rules, 2002 in order to cover the duty required to be paid on the goods to be removed from bonded warehouse. At the time of removal of the goods, excise duty/R&D Cess payable on the goods is debited to the PLA. 13. The assessing officer disallowed the aforesaid deduction claimed by the applicant, following the assessment order for the assessment year 2005-06. On appeal, the Commissioner of Income Tax (Appeals) ['CIT(A)'] upheld the disallowance so made.Against the action of the CIT(A) in confirming the disallowance, the applicant preferred the captioned appeal before this Hon'ble Tribunal vide ground no.2.1 to 2.1.2. 14. It is the say of the ld AR that in the impugned order, the aforesaid grounds have, however, inadvertently not been adjudicated. In view of the aforesaid, it is prayed that the aforesaid grounds of appeal nos. 2.1 to 2.1.2 raised in the captioned appeal may, by way of a supplementary order/corrigendum, be decided on merits and the MA Nos.354&355/Del./2024 Page 8 of 11 impugned order may be rectified/ modified to this extent. Alternatively, the order may kindly be recalled and fixed for hearing for the limited purpose of adjudicating the aforesaid grounds nos. 2.1 to 2.1.2. 15. The ld AR further pointed out that the applicant had consistently been following exclusive method of accounting in respect of custom duty paid on import of components for export purposes. Accordingly, duties paid on purchases are not included in the cost of purchases and the value of closing stock in the profit and loss account. Addition of the duty, both in the purchases as well as the closing stock as per the requirement of section 145A, is tax neutral inasmuch as the same amount is both debited as well as credited to the profit and loss account. 16. However, to give effect to the provisions of section 43B, which mandates that duties paid by an assessee are to be allowed as deduction on payment basis, custom duty paid by the applicant on import of components for export purposes, whether or not export against the same had actually taken place during the relevant year, is claimed as deduction in the return of income. The assessing officer, however, disallowed the deduction claimed by the applicant by MA Nos.354&355/Del./2024 Page 9 of 11 following the assessment for the assessment year 2005-06. On appeal, the Commissioner of Income Tax (Appeals) ['CIT(A)'] upheld the disallowance so made. Against the action of CIT(A) in confirming the disallowance, the applicant preferred the captioned appeal before this Hon'ble Tribunal vide ground no.2.2. 17. The ld AR pointed out that in the impugned order, the aforesaid ground has, however, inadvertently not been adjudicated. In view of the aforesaid, it was prayed that the aforesaid grounds of appeal nos. 2.2 raised in the captioned appeal may, by way of a supplementary order/ corrigendum, be decided on merits and the impugned order may be rectified/ modified to this extent. Alternatively, the order may kindly be recalled and fixed for hearing for the limited purpose of adjudicating the aforesaid grounds nos. 2.1 to 2.1.2. 18. Per contra, the ld DR relied on the orders of the lower authorities and did not controvert the facts narrated by the ld AR. 19. We have heard the rival submissions and perused the materials on record. We find that ground no 2.1 to 2.1.2 relating to deduction of duty paid and ground no 2.2 relating to deduction claimed on account of custom duty, have not been adjudicated. We are of considered view MA Nos.354&355/Del./2024 Page 10 of 11 that non-adjudication of grounds of appeal, constitutes mistake apparent from record falling within the scope of section 254(2) of the Act, as held by the Hon'ble Supreme Court in the case of Honda Siel Power Products Ltd: 295 ITR 466 (SC), CIT vs. Reliance Telecom Ltd: 440 ITR 1 (SC).The said Tribunal order is therefore recalled for the limited purpose of adjudicating the grounds 2.1 to 2.1.2 and ground 2.2.Accordingly, the M.A. no 355/Del/2024 is allowed. Order pronounced in the open court on 13th March, 2025. Sd.- Sd/- (CHALLA NAGENDRA PRASAD) (NAVEEN CHANDRA) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated:13th March, 2025. Mohan Lal Copy forwarded to: 1. Applicant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, New Delhi "