BROTHER INTERNATIONAL (INDIA) P.LTD, MUMBAI V. ASST CIT 10(3)(2), MUMBAI

MA 556/MUM/2019

• Counselvise Citation: [2019] 111 COUNSELVISE.COM (IT) 9905 (ITAT-MUMBAI)
• Duration Of Justice: 2 month(s) 15 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 18-12-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 03-10-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Rectification of order
• Section: 115JB

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL B BENCH MUMB AI BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER M.A. NO. 556/MUM/2019 IN ITA NO. 2371/MUM/2014 (AY 2008-09 ) M.A. NO. 557/MUM/2019 IN ITA NO. 5347/MUM/2015 (AY 2009-10 ) BROTHER INTERNATIONAL (INDIA) PVT LTD, UNIT NO.111- 115, 1ST FLOOR, C- WING, 215 ATRIUM, ANDHERI KURLA ROAD, ANDHERI (EAST), MUMBAI- 400059 PAN : AADCB0263E VS. ACIT, RANGE - 10(3) (2), ROOM NO. 451, 4TH FLOOR AAYAKAR BHAVAN, M. K. ROAD, MUMBAI-400020 APPELLANT RESPONDE NT APPELLANT BY : SHRI VINAY DESHMANE WITH SH. PAWAN SHARMA (AR) RESPONDENT BY : SMT. JOTHILAKSHMI NAYAK (SR.DR) DATE OF HEARING : 13.12.2019 DATE OF PRONOUNCEMEN T : 18.12.2019 ORDER UNDER SECTION 254(2)OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER; 1. THESE TWO MISCELLANEOUS APPLICATIONS (M.A.) ARE FIL ED BY THE ASSESSEE FOR RECTIFICATION OF MISTAKES IN ORDER DATED 22.05. 2019 PASSED IN ITAS NO. 2371/MUM/2014 ASSESSMENT YEAR 2008-09 AND ITA NO. 5347/MUM/2015 FOR ASSESSMENT YEAR 2009-10. 2. IN M.A. NO. 556/MUM/2019 , THE APPLICANT/ASSESSEE SUBMITS THAT THE TRIBUNAL WHILE ADJUDICATING THE GROUND NO.2 OF THE APPEAL HAS NOT EFFECTIVELY DISPOSED OF THE GROUND AS THE ASSESSEE HAS CONTENDED THAT OUT OF THE PROVISIONS FOR WARRANTY OF RS. 44,57,867/- C LAIMED IN A.Y. 2008- M.A.NO. 556 & 557 MUM 2019-BROTHER INTERNATIONAL (I NDIA) PVT LTD. 2 09, AMOUNT OF RS. 18,19,487/- PERTAINS TO ACTUAL WA RRANT EXPENSES INCURRED BY ASSESSEE DURING F.Y. 2007-08 ON AFTER S ALE SERVICE. IT WAS FURTHER SUBMITTED THAT THE TRIBUNAL HAS NOT CONSIDE RED THE FACT THAT THE PROVISION FOR WARRANTY HAS BEEN DULY ALLOWED FROM A LL SUBSEQUENT YEARS FROM A.Y. 2010-11 ONWARDS. FURTHER, THE TRIBUNAL HE LD THAT GROUND NO.4 PERTAINS TO PROVISION OF WARRANTY UNDER MAT PROVISI ONS ARE CONSEQUENTIAL TO GROUND NO.2, THE SAID OBSERVATION IS INCORRECT AS IN GROUND NO.2 THE ASSESSEE HAS CONTENDED DISALLOWANCE OF PROVISION FOR WARRANTY UNDER NORMAL PROVISIONS OF ACT, WHEREAS GR OUND NO.4, THE CONTENTION OF ASSESSEE WAS THAT PROVISION FOR WARRA NTY IS NEITHER THE PROVISION FOR DIMINUTION IN VALUE OF ASSET NOR PROV ISION FOR MEETING UNASCERTAINED LIABILITY. THE LD. AR OF THE ASSESSEE SUBMITS THAT PROVISION FOR WARRANTY IS AN UNASCERTAINED LIABILITY WHICH DO ES NOT FALL WITHIN THE PURVIEW OF CLAUSE-(A) TO (F) OF EXPLANATION 1 TO SU B-CLAUSE (2) OF SECTION 115JB AND DISALLOWANCE FOR PROVISION FOR WARRANTY U NDER BOOK PROFIT IS NOT WARRANTED. THE LD. AR PRAYED FOR RECALLING THE ORDER OR TO PASS ANY OTHER OR SUCH ORDER WHICH THE CIRCUMSTANCES MAY REQ UIRE. 3. ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESENTAT IVE (DR) FOR THE REVENUE SUBMITS THAT THERE IS NO MISTAKES IN THE OR DER WHICH CAN BE CLASSIFIED AS MISTAKE APPARENT OR REQUIRE RECTIFICA TION. THE TRIBUNAL HAS ELABORATELY DISCUSSED THE ISSUE NO.2 IN PARA-7 & 8 OF THE ORDER. THE TRIBUNAL HAS SPECIFICALLY HELD THAT THE ASSESSEE IS NOT MANUFACTURER OF THE M.A.NO. 556 & 557 MUM 2019-BROTHER INTERNATIONAL (I NDIA) PVT LTD. 3 ITEMS IN HIS TRADING ACTIVITIES AND THAT NO SUCH EV IDENCE TO SUBSTANTIATE THAT AFTER SALE SERVICES, THE ASSESSEE MADE ANY EXP ENSES ON ACCOUNT OF WARRANTY. THE TRIBUNAL ADJUDICATED THE ISSUE ON THE BASIS OF MATERIAL/EVIDENCE PLACED BEFORE IT. THE ASSESSEE UN DER THE GARB OF RECTIFICATION APPLICATION IS SEEKING THE REVIEW OF THE ORDER WHICH IS BEYOND THE SCOPE OF THE APPLICATION UNDER SECTION 2 54(2). FOR ISSUE RELATED TO MAT PROVISION IS RESTORED TO THE FILE OF ASSESSING OFFICER FOR CONSEQUENTIAL ADJUSTMENT. THE LD. DR PRAYED FOR DIS MISSAL OF APPLICATION. 4. WE HAVE CONSIDERED THE SUBMISSION OF BOTH THE REPRE SENTATIVES OF THE PARTIES AND PERUSED THE ORDER DATED 22.05.2019. WE HAVE SEEN THAT WHILE ADJUDICATING GROUND NO.2, THE ISSUE WAS DISCUSSED A FTER CONSIDERING THE RIVAL SUBMISSION OF THE PARTIES AND HELD THAT THE A SSESSEE IS A TRADER IN COMMUNICATION EQUIPMENT AND NOT A MANUFACTURER AND THAT ASSESSEE HAS NOT FILED ANY EVIDENCE TO SUBSTANTIATE FOR EXPENSES INCURRED ON AFTER SALE SERVICES ON ACCOUNT OF WARRANTY. THIS WAS THE FIRST YEAR OF THE ASSESSEE INTO THE TRADING ACTIVITY AND NO FUTURE OBLIGATION AS A RESULT OF PAST EVENT TO SETTLE THE OBLIGATION ON RELIABLE ESTIMATION WAS BROUGHT ON RECORD. IN OUR VIEW, THERE IS NO MISTAKE IN THE ORDER WHICH MA Y BE CLASSIFIED AS MISTAKE APPARENT AND REQUIRE RECTIFICATION. HENCE, THE CONTENTION OF LD. AR OF THE ASSESSEE WITH REGARD TO RECTIFICATION OF MISTAKE IN THE ORDER ON GROUND NO.2 IS MISCONCEIVED AND THE SAME IS REJECTE D. SO FAR AS SUBMISSION/CONTENTION WITH REGARD TO ADJUSTMENT/DIS ALLOWANCE UNDER M.A.NO. 556 & 557 MUM 2019-BROTHER INTERNATIONAL (I NDIA) PVT LTD. 4 SECTION 115JB, WE HAVE ALREADY RESTORED THE ISSUE T O THE FILE OF ASSESSING OFFICER FOR MAKING CONSEQUENTIAL ADJUSTMENT ON DISA LLOWANCE OF GRATUITY. THEREFORE, THERE IS NO MISTAKE IN ADJUDICATING GROU ND NO.4 AS WELL. 5. IN THE RESULT, THE M.A. FILED BY ASSESSEE IN APPEAL FOR A.Y. 2008-09 IS DISMISSED. M.A. NO. 557/MUM2019 IN ITA NO. 5347/M/2015 6. THE APPLICANT/ASSESSEE IN THIS M.A. HAS RAISED SIM ILAR CONTENTION WITH REGARD TO THE ORDER ON GROUND NO.2 WITH REGARD TO P ROVISION OF WARRANTY AND COMPUTING BOOK PROFIT UNDER SECTION 115JB. WE H AVE NOTED THAT THE ASSESSEE HAS RAISED SIMILAR CONTENTION IN M.A. NO. 556/MUM/2019 FOR A.Y. 2008-09, WHICH WE HAVE DISMISSED IN THE FOREGO ING PARAGRAPH. THEREFORE, TAKING THE CONSISTENT VIEW, THIS M.A. IS ALSO DISMISSED WITH SIMILAR OBSERVATION. 7. IN THE RESULT, BOTH THE M.AS ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN C OURT ON 18.12.2019. SD/- SD/- S. RIFAUR RAHMAN PAWAN SINGH ACCOUNTANT MEMBER JUD ICIAL MEMBER MUMBAI, DATE: 18.12.2019 SK COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. DR B BENCH, ITAT, MUMBAI 6. GUARD FILE BY ORDER, DY./ASST. REGISTRAR ITAT, MUMBAI