MAHINDRA & MAHINDRA LIMITED, MUMBAI V. ACIT CIR. 2(2)(2), MUMBAI

MA 46/MUM/2021

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 4663 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 3 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 21-04-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: J
• Assessment Year: 2012-2013
• Appeal Filed On: 17-02-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation; Capital expenditure; Rule 8D

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, „J„ BENCH MUMBAI BEFORE: SHRI MAHAVIR SINGH, VICE PRESIDENT & SHRI M.BALAGANESH, ACCOUNTANT MEMBER MA No.46/Mum/2021 (Arising out of ITA No.719/Mum/2017) (Asse ssment Year : 2012-13) M/s. Mahindra & Mahindra Limited Corporate Taxation, P.K. Kurne Chowk, Worli Mumbai – 400 018 Vs. ACIT, CIT 2(2)(2) Aayakar Bhavan M.K.Road, Mumbai-400020 PAN/GIR No.AAACM3025E (Appellant) .. (Respondent) Assessee by Shri H.P. Mahajani Revenue by Shri S.R. Iyengar Date of Hearing 16/07/2021 Date of Pronouncement 22/04/2022 आदेश / O R D E R PER M. BALAGANESH (A.M): By virtue of this Miscellaneous Application, the assessee seeks modification of the order passed by this Tribunal in ITA No.719/Mum/2017 for A.Y.2012-13 dated 19/06/2020 in respect of the following mistakes apparent on record:- MA Nos. 46 /Mum/2021 M/s. Mahindra & Mahindra Limited 2 Disallowance of expenditure of Rs.8,76,26,695/- : 2. We find that this Tribunal had addressed this issue in para 30 page 53 of its order dated 19/06/2020 wherein this Tribunal had merely placed reliance on the decision rendered for A.Y.2013-14 and directed the ld. AO to suitably replace the figures thereon. But, as rightly pointed out by the ld. AR before us that the reliance on the decision of A.Y.2013-14 Tribunal order would be relevant only for the sum of Rs.4,44,29,522/- (as detailed herein below) and the remaining sum of Rs.4,31,97,173/- (as detailed herein below) which are purely of revenue nature and capital expenditure which are eligible for depreciation, as the case may be, were not adjudicated thereon. Hence, we deem it fit to adjudicate the remaining sum i.e. Rs.4,31,97,173/- by way of this Miscellaneous Application. For the sake of convenience, the entire details of total expenditure of Rs.8,76,26,695/-; details of expenditure of Rs.4,44,29,522/- adjudicated by this Tribunal in its order dated 19/06/2020 and details of expenditure of Rs.4,31,97,173/- to be adjudicated in this Miscellaneous Application are tabulated hereunder:- No Particulars Amount Decided by ITAT in Principal order To be decided vide MA A Automotive Division Marketing Al Professional Charges for Project Ssangyong 1,73,87,200 1,73,87,200 A2 Legal Fees for Project Strike 1,63,54,400 1,63,54,400 B Head Office 1 Legal fees: Bl Professional Charges for Joint Venture with Rand Corporation 1,94,225 1,94,225 B2 Professional Charges Demerger MAD PL 3,74,791 3,74,791 MA Nos. 46 /Mum/2021 M/s. Mahindra & Mahindra Limited 3 Deductible u/s 35DD - B3 Professional Charges - open Offer Swaraj Automotive 577,675 577,675 B4 Other Professional Fees 6,96,640 696,640 Professional fees: B5 Due Diligence in connection with acquisition of Mahindra Aerospace Limited 4,92,449 4,92,449 B6 Professional Fees with respect to restructuring of various investments of Mahindra & Mahindra Limited 73,31,108 73,31,108 B7 Valuation charges of Flats which were not sold 4,89,785 4,89,785 Revenue BS Valuation charges of Flats at Goa and Worli which were sold 3,70,475 3,70,475 To be adjusted to Block of Assets where sale proceeds have been adjusted B9 Professional Charges - open Offer Swaraj Automotive 1,06,000 1,06,000 B10 Consultancy fees for suggestions in layout of Mahindra Tower Building 14,00,000 14,00,000 Revenue Professional Fees for Aircraft Acquisition 29,99,539 29,99,539 To be added, to Cost of Asset eligible for depreciation B12 Purchase of Software 55,16,953 55,16,953 B13 Others 8,58,295 8,58,295 C Directors travelling in connection with restructuring of various investments ofMahindra & Mahindra Limited 4,31,530 D Farm Equipment Sector - Nagpur: Dl Repairs & Maintenance in connection with Installation of plant 120,25,630 120,25,630 To be added to cost of asset eligible for depreciation thereon MA Nos. 46 /Mum/2021 M/s. Mahindra & Mahindra Limited 4 02 Foreign Travel for inspection of Machinery 20,000 20000 to be added to cost of asset eligible for depreciation thereon E Farm Equipment Sector - Swaraj El Paid to Punjab State Electricity Board on account of enhancement of Power load 200,00,000 TOTAL 8,76,26,695 4,44,29,522 4,31,97,173 2.1. We find the details of all these expenditures were already placed on record by the ld. AR vide pages 82-88 of the paper book filed before us. The genuineness of the aforesaid expenditure and its incurrence as wholly and exclusively for the purpose of business of the assessee has not been doubted by the Revenue before us. In this regard the ld. AR rightly placed reliance on the following decisions in support of its contentions:- a) Decision of Hon’ble Jurisdictional High Court in the case of Raychem RPG reported in 346 ITR 138. b) Decision of Hon’ble Delhi High Court in the case of Asahi India Safety Glass Ltd., reported in 203 Taxman 277. c) Decision of Hon’ble Supreme Court in the case of Empire Jute Co. Ltd., reported in 124 ITR 1. 2.2. We hold that non-consideration of a decision of Hon’ble Jurisdictional High Court would constitute mistake apparent on record warranting rectification u/s.254(2) of the Act. The aforesaid tabulation, in our considered opinion, is self-explanatory. Accordingly, the aforesaid expenditure of Rs.4,31,97,173/-, being the expenditure adjudicated herein, would be either allowed as a Revenue expenditure or added to MA Nos. 46 /Mum/2021 M/s. Mahindra & Mahindra Limited 5 cost of asset eligible for depreciation, or as deduction u/s 35DD of the Act, as the case may be. 2.3. Hence, we direct the ld. AO to read this Miscellaneous Application order together with the Tribunal Order dated 19/06/2020 while giving effect to the order of this Tribunal. Accordingly, the grounds raised by the assessee in this regard are disposed of in the abovementioned manner. 3. In para 33 page 54 of this Tribunal order in ITA No.719/Mum/2017 for A.Y.2012-13 (assessee appeal), dated 19/06/2020, this Tribunal had mentioned that additional ground was raised by the assessee vide letter dated 27/08/2019. The correct date of the letter is 25/09/2019. Hence, the said para 33 in page 54 of the Tribunal order dated 19/06/2020 stands modified as under:- “33. The concise ground No.14 raised by the assessee for A.Y.2012-13 together with additional ground No.1 raised by the assessee vide letter dated 25/09/2019 is exactly similar to concise ground No.12 raised by the assessee for A.Y.2013-14 and the decision rendered thereon would apply with equal force for A.Y.2012-13 also except with variance in figures.” 4. We find that this Tribunal in para 36 in page 55 of its order dated 19/06/2020 had erroneously mentioned additional ground No.12 instead of additional ground No.2. This fact has been rightly pointed out by the assessee in its Miscellaneous Application. Accordingly, para 36 in page 55 of the Tribunal order dated 19/06/2020 stands modified as under:- “36. We find that assessee had raised additional ground No.2 seeking exemption from taxability in respect of interest on tax free bonds amounting to Rs.4,47,57,189/-. MA Nos. 46 /Mum/2021 M/s. Mahindra & Mahindra Limited 6 This additional ground No.2 is exactly similar to additional ground No.2 raised by the assessee for A.Y.2011-12 and the decision rendered thereon would apply with equal force for A.Y.2012-13 also except with variance in figures.” Disallowance u/s.14A of the Act 5. We find that this Tribunal had followed the decision rendered in assessee’s own case for A.Y.2013-14 while adjudicating this issue. But, in A.Y.2013-14, the ld. AO made disallowance u/s.14A of the Act r.w.Rule 8D(2)(iii) of the Income Tax Rules only. Whereas, in A.Y.2012-13 that is the year for which this Miscellaneous Application is filed, the ld. AO had made disallowance u/s.14A of the Act r.w.Rule 8D(2)(ii) and Rule 8D(2)(iii) of the Income Tax Rules. Hence, the reliance placed by this Tribunal on the decision of A.Y.2013-14 would hold good only for disallowance made under Rule 8D(2)(iii) of the Income Tax Rules. 5.1. We hold that in respect of disallowance made under rules 8D(2)(ii) of the Rules, we find that assessee is having sufficient interest free funds of Rs.12171 Crores in its kitty for making the tax free investments of Rs.7010 Crores. Hence, by placing reliance on the decision of Hon’ble Jurisdictional High Court in the case of CIT vs. HDFC Bank Ltd., reported in 366 ITR 505 (Bom), and in view of the fact that non-consideration of a decision of Hon’ble Jurisdictional High Court would constitute mistake apparent on record warranting rectification u/s.254(2) of the Act, we direct the ld. AO to delete the disallowance of interest in terms of Rule 8D(2)(ii) of the Rules while re-computing the disallowance u/s.14A of the Act. MA Nos. 46 /Mum/2021 M/s. Mahindra & Mahindra Limited 7 6. In the result Miscellaneous Application of the assessee in MA No.46/Mum/2021 for A.Y.2012-13 is allowed and this order should be read together with the order dated 19/06/2020. Order pronounced on /04 /2022 by way of proper mentioning in the notice board. Sd/- (MAHAVIR SINGH) Sd/- (M.BALAGANESH) VICE PRESIDENT ACCOUNTANT MEMBER Mumbai; Dated 22/ 04 /2022 KARUNA, sr.ps Copy of the Order forwarded to : BY ORDER, (Asstt. Registrar) ITAT, Mumbai 1. The Appellant 2. The Respondent. 3. The CIT(A), Mumbai. 4. CIT 5. DR, ITAT, Mumbai 6. Guard file. //True Copy//