SEG AUTOMOTIVE INDIA PRIVATE LIMITED,BENGALURU V. DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-2(3), BENGALURU

ITA 670/BANG/2025

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The case involves SEG Automotive India Pvt. Ltd., which filed an appeal against the order of the CIT(A) - 15, Bangalore, concerning the assessment year 2021-22. The primary issue was the addition of Rs.40,07,84,890 to the assessee's income, which was based on GST and VAT refunds. The assessee argued that these refunds should not be considered as income since they were never debited as expenditure in the Profit & Loss Account. The CIT(A) had partly allowed the appeal but relied on the jurisdictional High Court's decision, which stated that VAT and GST refunds are taxable in the year of receipt. The ITAT, after considering the arguments and the tax audit report, decided to remit the matter back to the AO for a detailed examination of the claims made by the assessee.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 633286 (ITAT-BANGALORE)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-06-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2021-2022
• Other Referred Cases: Mysore Thermal Electricals Pvt. Ltd. Vs. CIT, Nomura Structured Finance Services Pvt. Ltd. Vs. DDIT, WorldQuant research (India) Pvt. Ltd. Vs. Addl. CIT/Joint CIT(A)-2, Surat, DCIT-15(3)(1), Mumbai
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: ADITYA RAIPURIA
• Section: 154

Judgement Text

"IN INCOME TAX APPELLATE TRIBUNAL “B” BENCH : BANGALORE BEFORE SHRI. LAXMI PRASAD SAHU, ACCOUNTANT MEMBER ANDSHRI. SOUNDARARAJAN K, JUDICIAL MEMBER ITA No.670/Bang/2025 Assessment Year :2021-22 M/s. SEG Automotive India Pvt. Ltd., Pb No.1011 Electronics City S.O. Naganathapura, Bangalore – 560 100. PAN : AAHCR 6993 H Vs. DCIT, Central Circle –2(3), Bangalore. APPELLANT RESPONDENT Assessee by : Shri. Aditya Raipuria, CA Revenue by : Shri. Subramanian S, JCIT(DR)(ITAT), Bangalore. Date of hearing : 09.06.2025 Date of Pronouncement : 13.06.2025 ORDER Per Laxmi Prasad Sahu, Accountant Member : This appeal filed by the assesseeagainst Order passed by the CIT(A) – 15, Bangalore, vide Order dated 27.01.2025, on the following grounds of appeal: ITA No.670/Bang/2025 Page 2 of 6 2. Briefly stated, the facts of the case are that assessee filed return of income on 13.03.2022 declaring Nil income. The return was processed and there is addition of Rs.40,07,84,890/-. Accordingly, assessee filed rectification ITA No.670/Bang/2025 Page 3 of 6 application on 12.12.2022 which was disposed off on 13.11.2022 observing as under: “There is inconsistency in amount mentioned in return at SI.No.5(b) of Part A 01 \"The proforma credits, drawbacks, refund of duty of customs or excise or service tax, or refund of sales tax or value due added tax, or refund of GST, where such credits, drawbacks or refunds are admitted as due by the authorities concerned\" and Taxaudit report.” 3. Aggrieved from the above Order, assessee filed appeal before the CIT(A) and CIT(A), based on the submissions of the assessee, dismissed the appeal of the assessee by relying on the case laws of the jurisdictional Hon’ble High Court in the case of Mysore Thermal Electricals Pvt. Ltd., Vs. CIT (89 Taxamann 558) in which it has been held that the refund on account of VAT and GST are liable to be brought to tax in the year of receipt and some grounds raised by the assessee were remitted to the AO and accordingly, he partly allowed appeal of the assessee. 4. Aggrieved from the above Order, assessee filed appeal before ITAT. 5. The learned Counsel reiterated the submissions made before the lower authorities and submitted that GST and VAT refund addition made by the CPC is only on the basis of From3CD report at Sl.No.16 which is placed at Paper Book Page No.157 with the remark as under: \"The proforma credits, drawbacks, refund of duty of customs or excise or service tax, or refund of sales tax or value due added tax, or refund of GST, where such credits, drawbacks or refunds are admitted as due by the authorities concerned\" and Tax audit report.” 6.He further submitted that tis amount was never debited as expenditure in the P & L A/c. Therefore, at the time of refund, it could not be considered as an income ITA No.670/Bang/2025 Page 4 of 6 of the assessee. The CPC as well as CIT(A) has wrongly not accepted. In support of his arguments, he relied on the following two judgments: i. Nomura Structured Finance Services Pvt. Ltd., Vs. DDIT, in ITA No.6666/Mum/2024, vide Order dated 19.03.2025. ii. WorldQuant research (India) Pvt. Ltd., Vs. Addl. CIT/Joint CIT(A)-2, Surat, DCIT-15(3)(1), Mumbai in ITA No.6275/Mum/2024, vide Order dated 30.01.2025. 6. On the other hand, learned DR relied on the Order of learned CIT(A) and submitted that the learned CIT(A) has relied on the Order of the jurisdictional Hon’ble High Court which is in favour of the Revenue and it is squarely applicable to the present facts of the case and further submitted that nowhere in the Order of the CIT(A) has accepted that the assessee has not debited to the payments of VAT and GST in the P & L A/c and claimed as expenditure. Therefore, he requested that matter may be remitted to the AO for verifying whether the assessee has debited or not the VAT and GST in the P & L A/c or has claimed as expenditure earlier. 7. Considering the rival submissions, the CPC, while processing the return of assessee, has considered it as income to which refund of VAT and GST amount as per the report of the tax audit in Form 3CD and in proceedings under section 154 of the Act has been rejected by the CPC observing that the refund of GST and VAT should be considered as part of income of the assessee. The learned CIT(A) has relied on the judgment of the jurisdictional Hon’ble High Court. During the course of argument, the learned Counsel submitted that the assessee has never claimed as expenditure to the payment of VAT and GST. Therefore, the refund of VAT and GST should not be considered as part of the income in the year of receipt. However, we noted that these arguments of the learned Counsel have never been examined by the Revenue authorities. The learned CIT(A) has ITA No.670/Bang/2025 Page 5 of 6 also not examined this fact. Therefore, considering the facts of the case and in the interest of justice, we are remitting this issue back to the file of the AO for fresh examination as to whether the assessee has claimed the payment of VAT and GST as expenditure in the earlier period and has claimed as expenditure in the P & L A/c and decide the issue as per law. The AO is further directed to give reasonable oppourtunity of being heard to the assessee. The learned Counsel further submitted that the addition under section 143(1) of the Act cannot be made by the CPC only on the basis of audit report and he referred to section 143(1)(a) of the Act. In this regard, we noted that the addition has been made by the CPC as per the report of the tax auditor which falls under the provisions of section 143(1)(a)(iv) of the Act. Therefore, the addition made by the CPC is correct. Accordingly, we reject the arguments of the learned Counsel. The assessee is directed to produce necessary documents for substantiating its case. The other grounds raised by the assessee are consequential in nature. 8. In the result, appeal filed by the assessee is allowed for statistical purposes. Pronounced in the court on the date mentioned on the caption page. Sd/- Sd/- Sd/- (SOUNDARARAJAN K) (LAXMI PRASAD SAHU) Judicial Member Accountant Member Bangalore, Dated : 13.06.2025. /NS/* ITA No.670/Bang/2025 Page 6 of 6 Copy to: 1. Appellant 2. Respondent 3. Pr.CIT4.CIT(A) 5. DR, ITAT, Bangalore. By order Assistant Registrar ITAT, Bangalore. "