Maruti Suzuki India Ltd,(formerly Known as Maruti Udyog Ltd), v. DCIT Circle 6 (1),

ITA 662/DEL/2008 | 1996-1997
Pronouncement Date: 29-10-2010 | Result: Partly Allowed

Appeal Details

RSA Number 66220114 RSA 2008
Bench Delhi
Appeal Number ITA 662/DEL/2008
Duration Of Justice 2 year(s) 8 month(s) 7 day(s)
Appellant Maruti Suzuki India Ltd,(formerly Known as Maruti Udyog Ltd),
Respondent DCIT Circle 6 (1),
Appeal Type Income Tax Appeal
Pronouncement Date 29-10-2010
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted E
Tribunal Order Date 29-10-2010
Date Of Final Hearing 16-09-2010
Next Hearing Date 16-09-2010
Assessment Year 1996-1997
Appeal Filed On 21-02-2008
Judgment Text
ITA NOS. 4441- 4444 & 4953-4954/DEL/2007 AND ITA NOS. 662-664 & 365-367/DEL/2008 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E NEW DELHI BEFORE SHRI RAJPAL YADAV JUDICIAL MEMBER AND SHRI SHAMIM YAHYA ACCOUNTANT MEMBER ITA NOS. 4441 4442 4443 & 4444/DEL/2007 A.Y.RS. 1992-93 93-94 94-95 & 95-96 MARUTI SUZUKI INDIA LIMITED VS. DY. COMMISSIONER OF I NCOMETAX 11 TH FLOOR JEEVAN PRAKASH CIRCLE-6(1) C.R. BUILDIN G 25 KASTURBA GANDHI MARG NEW DELHI NEW DELHI 110 001 AND ITA NOS. 4953 & 4954/DEL/2007 A.Y.RS. 1994-95 & 1995-96 DY. COMMISSIONER OF INCOMETAX VS. MARUTI SUZUKI IN DIA LIMITED R.N. 413 CIRCLE-6(1) C.R. BUILDING 11 TH FLOOR JEEVAN PRAKASH NEW DELHI 25 KASTURBA GANDHI MARG NEW DELHI 110 001 (APPELLANTS) (RESPONDENTS) AND ITA NOS. 662 663 & 664/DEL/2008 A.Y.RS. 1996-97 97-98 & 98-99 MARUTI SUZUKI INDIA LIMITED VS. DY. COMMISSIONER OF I NCOMETAX 11 TH FLOOR JEEVAN PRAKASH CIRCLE-6(1) C.R. BUILDIN G 25 KASTURBA GANDHI MARG NEW DELHI NEW DELHI 110 001 ITA NOS. 4441- 4444 & 4953-4954/DEL/2007 AND ITA NOS. 662-664 & 365-367/DEL/2008 2 AND ITA NOS. 365 366 & 367/DEL/2008 A.Y.RS. 1996-97 97-98 & 98-99 DY. COMMISSIONER OF INCOMETAX VS. MARUTI SUZUKI IND IA LIMITED R.N. 413 CIRCLE-6(1) C.R. BUILDING 11 TH FLOOR JEEVAN PRAKASH NEW DELHI 25 KASTURBA GANDHI MARG NEW DELHI 110 001 (APPELLANTS) (RESPONDENTS) ASSESSEE BY : AJAY VOHRA ADV. ROHIT JAIN CA & MS. SH IKSHA SHAM DEPARTMENT BY : SMT. SANGEET GUPTA C.I.T. (D.R.) ORDER PER BENCH THESE APPEALS BY THE ASSESSEE AND REVENUE EMANATE O UT OF RESPECTIVE ORDERS OF THE LD. COMMISSIONER OF INCOME T AX (APPEALS). SINCE THE ISSUES INVOLVED ARE CONNECTED AND APPEALS WERE HEARD TOGETHER THESE ARE BEING CONSOLIDATED FOR THE SA KE OF CONVENIENCE. ASSESSEES APPEALS 2. THE FIRST COMMON ISSUE PERTAINS TO CLASSIFICATION OF INTEREST ON INTER-CORPORATE DEPOSITS INTEREST ON BANK FDRS (AFT ER SETTING OFF AGAINST INTEREST PAID) AND INTEREST ON BONDS AND SECURITIES AS INCOME FROM OTHER SOURCES AS AGAINST INCOME FROM B USINESS AS CLAIMED BY THE ASSESSEE. 3. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE R ECORDS. LD. COUNSEL OF THE ASSESSEE FAIRLY SUBMITTED THAT THE ISSUE HAS BEEN DECIDED AGAINST THE ASSESSEE BY THE HONBLE DELHI H IGH COURT IN ASSESSEES OWN CASE FOR A.Y. 1985-86. FOLLOWING TH E SAID ORDER SIMILAR ISSUE WAS ALSO DECIDED IN THE CASE OF THE AS SESSEE BY THIS TRIBUNAL IN A.Y. 1999-2000 IN ITA NO. 993/D /2007. IT IS FURTHER ITA NOS. 4441- 4444 & 4953-4954/DEL/2007 AND ITA NOS. 662-664 & 365-367/DEL/2008 3 SUBMITTED THAT THE ISSUE ALSO COVERED AGAINST THE A SSESSEE BY THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE O F C.I.T. VS. SHRI RAM HONDA EQUIPMENT 289 ITR 475. 3.1 CONSIDERING THE ABOVE PRECEDENTS WE DO NOT FI ND ANY INFIRMITY IN THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (AP PEALS). ACCORDINGLY WE UPHOLD THE SAME. 4. ANOTHER ISSUE RAISED FOR ASSESSMENT YEAR 1994-95 1995-96 96- 97 97-98 & 98-99 PERTAINS TO ADDITION MADE ON ACCOU NT OF CUSTOM DUTY DRAW BACK ALLEGED TO HAVE BEEN ACCRUED TO TH E ASSESSEE DURING THE RELEVANT ASSESSMENT YEAR. 4.1 WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. IN THIS REGARD LD. COUNSEL OF THE ASSESSEE HAS SUBMI TTED THAT IN THE PRESENT ASSESSMENT YEARS 1994-95 AND 1995-96 THE ITA T VIDE ITS ORDER DATED 24.12.2006 FOLLOWING THE ITAT ORDER DATED 11. 10.2004 FOR THE ASSESSMENT YEAR 1999-2000 REMANDED THE ISSUE TO THE ASSESSING OFFICER. THE BASIS OF ADDITION BY THE ASSESSING OF FICER SUSTAINED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) IS ITAT ORDER DATED 11.10.2004. THE ITAT VIDE ITS ORDER DATED 11.10.20 04 REMANDED THE ISSUE TO ASSESSING OFFICER FOR ADJUDICATION. S UBSEQUENTLY IN THE APPEAL EFFECT ORDER OF ASSESSING OFFICER AND LD. COMMISSIONER OF INCOME TAX (APPEALS) REPEATED THE ADDITION WHICH I SSUE IS NOW DECIDED IN FAVOUR OF THE ASSESSEE BY THE ORDER OF T HE ITAT IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 1999-2000 IN ITA NO. 399/DEL/2007. THE RELEVANT OBSERVATION OF THE TRIBU NAL ARE AS UNDER:- WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND FOU ND FROM THE RECORD THAT IN THE FIRST ROUND OF APPEAL TRIBU NAL HAS RESTORED THE MATTER BACK TO THE FILE OF THE ASSESSIN G OFFICER ITA NOS. 4441- 4444 & 4953-4954/DEL/2007 AND ITA NOS. 662-664 & 365-367/DEL/2008 4 WITH SPECIFIC DIRECTION TO VERIFY AS TO WHEN THE CL AIM OF THE ASSESSEE WAS ACCEPTED AND IF THE ASSESSING OFFICER FINDS THAT THE CLAIM OF THE ASSESSEE WAS ACCEPTED IN THE YEAR UNDER CONSIDERATION THEN NO ADDITION SHALL BE MADE BY HIM. EVEN AFTER SUBMITTING FULL DETAILS OF EXPORT AND DAT E OF RECEIPT OF CLAIM WHICH SHOWS TIME GAP OF 9 TO 10 MONT HS BETWEEN THE DATE OF EXPORT AND DATE OF RECEIPT OF C LAIM NONE OF THE LOWER AUTHORITIES COULD BROUGHT ON RECO RD ANY MATERIAL TO SUBSTANTIATE THE STAND THAT CLAIM LODGED BY THE ASSESSEE HAD ACTUALLY BEEN ACCEPTED BY THE GOVERNMEN T DEPARTMENT THEREBY GIVING RISE TO ACCRUAL OF INCOME DURING THE YEAR UNDER CONSIDERATION. ON THE CONTRARY T HE ASSESSEE HIMSELF HAS OFFERED THE INCOME IN THE RELEV ANT YEAR THE CLAIM WAS ACCEPTED AND PAYMENT MADE TO THE ASSESSEE. THERE IS NO DISPUTE TO THE WELL SETTLED L EGAL PROPOSITION THAT EVEN UNDER ACCRUAL SYSTEM OF ACCOUN TING TILL THE ASSESSEE GET RIGHT TO RECEIVE THE INCOME TH E SAME CANNOT BE BROUGHT TO TAX. UNLESS THE CONCERNED DEPARTMENT INTIMATE THE ACCEPTANCE OF CLAIM OF THE ASSESSEE THE ASSESSEE DO NOT ACQUIRE ANY RIGHT TO RECEIVE THE SAME. WE THEREFORE DO NOT FIND ANY MERIT IN THE ACTION OF THE LOWER AUTHORITIES FOR TAKING THE SAME INCOME AGAIN DURING THE YEAR UNDER CONSIDERATION WITHOUT PROPERL Y APPRECIATING THE DIRECTION OF THE TRIBUNAL GIVEN IN ITS ORDER DATED 21.10.2004. 4.2 RESPECTFULLY FOLLOWING THE ABOVE PRECEDENT WE DECIDE THE ISSUE IN FAVOUR OF THE ASSESSEE. ITA NOS. 4441- 4444 & 4953-4954/DEL/2007 AND ITA NOS. 662-664 & 365-367/DEL/2008 5 5. THE NEXT ISSUE RAISED IS THAT LD. COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN NOT DELETING THE WITHDRAWAL OF I NTEREST GRANTED U/S 244A FOR A.Y. 1992-93 1994-95 96-97 & 98-99. 5.1 BOTH THE COUNSELS FAIRLY AGREED THAT THIS IS CO NSEQUENTIAL TO THE FINAL TAX LIABILITY. 6. THE NEXT ISSUE RAISED FOR A.Y. 92-93 TO A.Y. 95- 96 IS THAT LD. COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN LEVELI NG INTEREST U/S 234B OF THE IT ACT OF ` 15 45 67 121/- FOR A.Y. 199 5-96. 6.1 ON THIS ISSUE ASSESSING OFFICER HAS LEVIED INT EREST U/S 234B. 6.2 UPON ASSESSEES APPEAL LD. COMMISSIONER OF INCOME TAX (APPEALS) HELD AS UNDER:- GROUND NO. 8 IS WITH REGARD TO LEVY OF INTEREST U/ S 234B. THIS IS A CONSEQUENTIAL GROUND AND THE ASSESSING OFFICER IS DIRECTED TO CHARGE INTEREST U/S 234B AFTER GIVING EFFECT TO THI S APPEAL ORDER. 6.3 AGAINST THIS ORDER THE ASSESSEE IS IN APPEAL B EFORE US. 6.4 LD. COUNSEL OF THE ASSESSEE SUBMITTED DETAIL ED SUBMISSIONS AND CASE LAWS FOR THE PROPOSITION THAT INTEREST WAS NOT LEVIABLE. MOREOVER HE ALSO SUBMITTED THAT HE HAS GIVEN ELABORATE SUBMIS SIONS BEFORE THE LD. COMMISSIONER OF INCOME TAX (APPEALS). BUT LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS NOT ADDRESSED ALL THE SUB MISSIONS. FURTHER WE FIND THAT LD. COMMISSIONER OF INCOME TAX (APPEALS )S ORDER IS A LACONIC ORDER ON THIS ISSUE. ACCORDINGLY WE REMIT THIS ISSUE TO THE FILES OF LD. COMMISSIONER OF INCOME TAX (APPEALS) TO CONSI DER THE ISSUE AFRESH AND PASS A PROPER AND SPEAKING ORDER. ITA NOS. 4441- 4444 & 4953-4954/DEL/2007 AND ITA NOS. 662-664 & 365-367/DEL/2008 6 7. ANOTHER ISSUE RAISED FOR A.YRS. 1992-93 94-95 95-96 96-97 & 98-99 WITH REGARD TO LEVY OF INTEREST U/S 220(2) O F THE IT ACT. 7.1 UPON ASSESSING OFFICER S LEVY OF INTEREST U/S 220(2) THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HELD AS UNDER:- I HAVE CONSIDERED THE MATTER. THE FINAL DEMAND HAS BEEN QUANTIFIED IN ORDER PASSED U/S 143(3) / 254. I A M OF THE CONSIDERED VIEW THAT THE DEMAND ARISING OUT OF THE ORIGINAL ASSESSMENT TO THE EXTENT IT HAS BEEN CONFIRMED BY T HE ITAT CONTINUES TO EXIST. THE KERALA HIGH COURT IN TH E CASE OF K. VENOGOPALAN NAMBIAR VS. ACIT 231 ITR 607 HAS STATE D THAT A NOTICE OF DEMAND REMAINS ALIVE AND EFFECTIVE TO THE EXTENT THAT TAX IS FINALLY DETERMINED TO BE DUE AND PAYABLE BY THE ASSESSEE. THUS IT WOULD BE CLEAR THAT INTEREST U/S 220(2) OF THE ACT CHARGED ON THE UNPAID TAX REMAINS ALIVE AND EFF ECTIVE TO THE EXTENT THAT TAX IS FINALLY DETERMINED TO BE DUE AND PAYABLE BY THE ASSESSEE. IN THIS CASE THE ASSESSEES CONTENTION I S THAT THE ORIGINAL DEMAND WAS PAID IN FULL WITH 30 DAYS BY WA Y OF ADJUSTMENT AGAINST REFUND DUE TO THE ASSESSEE IN ANO THER YEAR. HOWEVER IT WOULD BE SEEN THAT SUBSEQUENTLY A MAJOR PORTION OF THE DEMAND WAS REFUNDED TO THE ASSESSEE ON PASSING OF ORDER U/S 250 CONSEQUENT TO GRANTING OF CERTAIN RELIEF BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS). THE BASIC PRIN CIPLE OF CHARGING OF INTEREST U/S 220(2) IS THAT INTEREST WO ULD BE CHARGEABLE ON GOVERNMENT MONEY WHICH IS DUE AND HAS NOT COME INTO GOVERNMENT ACCOUNT. ONCE THE DEMAND ACHIEVED FI NALITY AFTER PASSING OF THE ITAT ORDER THE ORIGINAL DEMAND TO THAT EXTENT SURVIVED. THEREFORE EVEN IF THE DEMAND WA S PAID IN FULL ITA NOS. 4441- 4444 & 4953-4954/DEL/2007 AND ITA NOS. 662-664 & 365-367/DEL/2008 7 BY WAY OF ADJUSTMENT INTEREST WOULD BE CHARGEABLE FR OM THE DATE OF PORTION OF THE DEMAND WAS REFUNDED TO THE A SSESSEE IN CONSEQUENCE OF ORDER U/S 250. THE ASSESSING OFFICER IS THEREFORE DIRECTED TO DRAW UP A CHRONOLOGICAL CHAR T AND CHARGE INTEREST FOR THE PERIOD THE MONEY REPRESENTING THE O RIGINAL DEMAND WAS WITH THE ASSESSEE. 7.2 AGAINST THIS ORDER THE ASSESSEE IS IN APPEAL BEFORE US. 7.3 ASSESSEES SUBMISSIONS IN THIS REGARD ARE VERY E LABORATE AND ASSESSEE HAS ALSO MADE VARIOUS ALTERNATE PLEAS ALSO AND REFERRED TO CATENA OF CASE LAWS. LD. DEPARTMENTAL REPRESENTATI VE ON THE OTHER HAND SUPPORTED THE LEVY. 7.4 WE HAVE CAREFULLY CONSIDERED THE SUBMISSION. TH E SUBMISSION INCLUDES REFERENCES TO VARIOUS ORDERS AND THEIR D ATES. ADMITTEDLY THESE SUBMISSIONS WERE NOT BEFORE THE ASSESSING OFFI CER AS THERE IS NO DISCUSSION IN THIS REGARD IN ASSESSING OFFICER S ORDER. LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ALSO NOT AD DRESSED ALL THE SUBMISSIONS THAT HAS BEEN BROUGHT OUT BEFORE US. UN DER THE CIRCUMSTANCES WHEN THESE SUBMISSIONS ARE NOT FINDING PART IN ORDERS OF AUTHORITIES BELOW WE CONSIDER IT APPROPRIATE TO REMIT THE ISSUE TO THE FILES OF THE ASSESSING OFFICER TO CONSIDER THE ISSUE AFRESH IN LIGHT OF THE ASSESSEES SUBMISSION IN THIS REGARD. HE SHALL A LSO FACTUALLY VERIFY THE VERACITY OF THE VARIOUS ORDERS AMOUNTS AND DATES MENTIONED THEREIN. ACCORDINGLY THE ISSUE STAND REMITTED TO TH E FILES OF ASSESSING ITA NOS. 4441- 4444 & 4953-4954/DEL/2007 AND ITA NOS. 662-664 & 365-367/DEL/2008 8 OFFICER. NEEDLESS TO ADD ASSESSEE SHOULD BE GIVEN ADEQUATE OPPORTUNITY OF BEING HEARD. REVENUES APPEALS 8. ONE COMMON ISSUE RAISED IS THAT LD. COMMISSIONER O F INCOME TAX (APPEALS) WAS JUSTIFIED IN DELETING THE DISALLOWANC E MADE BY THE ASSESSING OFFICER U/S 43B (ACTUAL PAYMENT CLAUSE) O F THE FOLLOWING:- A.Y. 94-95 A.Y. 95-96 A.Y. 96-97 A) PLA BALANCE OF EXCISE DUTY ON VEHICLES 7626026 /- 16653498/- 236445673/- B) PLA BALANCE OF R&D CESS ON VEHICLES 284598/ - 353472/- 628572/- C) PLA BALANCE OF EXCISE DUTY OF SPARE PARTS 1302158/ - 388005/- 2077765/- 8.1 ON THIS ISSUE THE ASSESSING OFFICER OBSERVED T HAT IN ASSESSMENT YEAR 1994-95 AS UNDER:- PLA BALANCE : A) THE HONBLE ITAT ON THIS ISSUE HAS STATED IN ITS OR DER THAT: THE TRIBUNAL IN THE A.Y. 1999-2000 HAS HELD THAT ADVANCE PAYMENT IN CASH OF TAXES OR DUTIES WITHOUT INCURRING LIABILITY TO PAY SUCH TAXES OR DUTIES CANNOT BE ALLOWED AS DE DUCTION U/S 43B OF THE IT ACT. B) IT HAS BEEN FURTHER STATED IN THE ORDER ON THIS ISS UE THAT: THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (AP PEALS) ON THIS COUNT IS SET ASIDE AND THE ASSESSING OFFICE R IS DIRECTED TO REWORK THE DISALLOWANCE AS PER DIRECTIONS OF THE TRIBUNAL. C) IN VIEW OF THE ABOVE DIRECTIONS ` 92 12 783/- BEI NG THE CREDIT IN THE PERSONAL LEDGER ACCOUNT (PLA) BALANCE OF EXCI SE DUTY AS ITA NOS. 4441- 4444 & 4953-4954/DEL/2007 AND ITA NOS. 662-664 & 365-367/DEL/2008 9 ON 31.3.1994 IS NOT ALLOWABLE. THE ASSESSEE DOES NOT HAVE ANY ALTERNATE CLAIM IN THIS YEAR HENCE THE AMOUNT OF ` 92 12 783/- ALLOWED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) IS DISALLOWED AND ADDED BACK TO THE TOTAL INCOME. 8.1 BEFORE THE LD. COMMISSIONER OF INCOME TAX (APPEALS ) ASSESSEE SUBMITTED THAT THE ISSUE WAS COVERED IN ASSESSEES FAVOUR BY ITAT ORDER IN A.Y. 1999-2000 AND BY ORDER OF LD. COMMISSI ONER OF INCOME TAX (APPEALS) IN A.Y. 2001-02 2002-03 AND 2004-05. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) NOTED THAT THIS ISSUE HAS COME UP BEFORE HIM IN ASSESSEES OWN CASE AND HE IN HIS ORDER DATED 28.3.2007 IN APPEAL NO. 241/06-07 FOR THE A.Y. 200 4-05 IN PARAGRAPH NO. 7 OF THE SAID ORDER HELD THE ASSESSEES CLAIM T O BE ALLOWABLE. HE HELD THAT ASSESSEE GETS RELIEF OF ` 92 12 783/- IN RESPECT OF DEDUCTION U/S 43B OF THE ACT ON ACCOUNT OF PLA BALANCES AS ON 31.3.1994. 8.2 AGAINST THIS ORDER REVENUE IS IN APPEAL BEFORE US. 8.3 LD. DEPARTMENTAL REPRESENTATIVE RELIED UPON THE ORDERS OF THE ASSESSING OFFICER. 8.4 ASSESSEES SUBMISSION IN THIS REGARD ARE THAT THE ISSUE IS COVERED IN FAVOUR OF ASSESSEE BY ITAT ORDER FOR A. Y. 1999-2000 (REPORTED IN 92 ITD 119) AND A.Y. 2000-01. THE HO NBLE ITAT IN A.Y. 1999-2000 HAS HELD THAT :- 28. IN VIEW OF THE ABOVE DISCUSSION IT IS HELD TH AT ADVANCE PAYMENT IN CASH OF TAXES OR DUTIES WITHOUT INCURRING LIABILITY TO PAY SUCH TAXES OR DUTIES CANNOT BE AL LOWED AS DEDUCTION UNDER SECTION 43B. THEREFORE THE LO WER AUTHORITIES WERE JUSTIFIED IN DISALLOWING THE SUM OF ` ITA NOS. 4441- 4444 & 4953-4954/DEL/2007 AND ITA NOS. 662-664 & 365-367/DEL/2008 10 3 19 41 668/- REPRESENTING PLA BALANCE OF EXCISE DUT Y ON VEHICLE IN AS MUCH AS THERE IS CLEAR FINDING OF F ACT IN PARA 9.5 OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) THAT PLA BALANCES ARE NOT RELATABLE TO AN Y GOODS MANUFACTURED. 29. HOWEVER WE FIND FORCE IN THE ALTERNATE OF ASS ESSEES COUNSEL THAT SUCH AMOUNT SHOULD BE ALLOWED IN THE YEAR IN WHICH IT IS ADJUSTED AGAINST LIABILITY TO PA Y EXCISE DUTY ON MANUFACTURED GOODS. ACCORDINGLY IT IS PLEADED THAT DEDUCTION SHOULD BE ALLOWED OF THE SUM OF ` 1 03 79 919/- REPRESENTING PLA BALANCES ON THE LAST DAY OF THE PRECEDING YEAR BUT ADJUSTED IN THIS YEAR. WE HAVE HEARD BOTH THE COUNSELS AND PERUSED THE RECORDS. WE ARE IN COMPLETE AGREEMENT WITH SUCH CONTENTION SINCE SUCH ADJUSTMENT AMOUNTS TO ACTUAL PAYMENT. EVEN THE LEARNED COUNSEL FOR REVENUE HAS NO OBJECTION TO SUCH CONTENTION PROVIDE D SUCH DEDUCTION WAS NOT ALLOWED IN THE PRECEDING YEA R SINCE DOUBLE DEDUCTION OF THE SAME AMOUNT CANNOT BE ALLOWED. CONSIDERING THE SAME THE ORDER OF LD . COMMISSIONER OF INCOME TAX (APPEALS) IS MODIFIED AND THE MATTER IS REMITTED TO THE FILE OF ASSESSING OFF ICER WHO SHALL ALLOW THE ALTERNATE CLAIM OF ASSESSEE AF TER VERIFICATION IF SUCH DEDUCTION WAS NOT ALLOWED IN THE PRECEDING YEAR. SINCE IT HAS BEEN HELD THAT ADVANC E PAYMENT DID NOT REPRESENT THE PAYMENT OF EXCISE DUTY THE QUESTION OF INCLUDING THE SAME IN THE CLO SING STOCK DOES NOT ARISE. THEREFORE FINDING OF LD. ITA NOS. 4441- 4444 & 4953-4954/DEL/2007 AND ITA NOS. 662-664 & 365-367/DEL/2008 11 COMMISSIONER OF INCOME TAX (APPEALS) TO THAT EFFECT IS VACATED. 30. THE ABOVE FINDING OF OURS WOULD APPLY MUTATES MUTATIS MUTANDIS WITH REFERENCE TO THE SUM OF ` 8 41 460/- AND ` 6 76 075/- REPRESENTING PLA BALANCE S OF R&D CESS ON VEHICLES AND EXCISE DUTY ON SPARE PARTS RESPECTIVELY. 9. WE FURTHER FIND ANALOGICAL ISSUE WAS CONSIDER ED BY THIS TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y. 2000-01 DATED 28.3. 2005. THE TRIBUNAL HELD AS UNDER:- 5. BOTH THE PARTIES HAVE BEEN HEARD. THIS ISSU E HAS BEEN DEALT WITH IN GREAT DETAIL BY THE TRIBUNAL FOR THE A.Y. 1999-2000 VIDE ORDER DATED 11.10.2004. THIS DECISION IS NOW REPORTED AS 92 ITD 119 (DEL). THIS ISSUE HAS BEEN DEALT BY THE TRIBUNAL IN PARAS 2 TO 51 OF THE SAID ORDER. ON SOME ASPECTS OF THE ISSUE THE ADDITIONS HAVE BEEN DELETED WHILE ON SOME ASPECTS THE MATTER HAS BEEN RESTORED BACK. IN RESPECT OF SOME ASPECTS THE ADDITION HAS BEEN CONFIRMED. ACCORDINGLY FOLLOWING THE SAID ORDER THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS) IS SET ASIDE AND THE ASSESSING OFFICER IS DIRECTED TO DELETE/MODIFY/CONFIRM THE ADDITIONS IN ACCORDANCE WITH OUR FINDINGS/ DIRECTIONS GIVEN IN THAT ORDER. 9.1 RESPECTFULLY FOLLOWING THE ABOVE PRECEDENT IN ASSESSEES OWN CASE THE ORDER OF LD. COMMISSIONER OF INCOME TAX (AP PEALS) IS SET ITA NOS. 4441- 4444 & 4953-4954/DEL/2007 AND ITA NOS. 662-664 & 365-367/DEL/2008 12 ASIDE. ASSESSING OFFICER IS DIRECTED TO DELETE/MOD IFY/CONFIRM THE ADDITION IN ACCORDANCE WITH FINDINGS GIVEN IN TH AT ORDER. 10. ANOTHER ISSUE RAISED FOR A.Y. 1994-95 96-97 97-98 AND 98-99 IS WHETHER THE LD. COMMISSIONER OF INCOME TAX (APPE ALS) WAS JUSTIFIED IN DELETING THE ADDITION OF ` 2 22 16 412/- ` 2 11 10 634/- ` 5 00 64 476/- & 11 61 41 582/- RESPECTIVELY MADE B Y THE ASSESSING OFFICER ON ACCOUNT OF WARRANTY PROVISION IGNORING THAT ASSESSEE FAILED TO ESTABLISH THAT IT ADOPTED SCIENTIFIC BASIS FOR CLAIMING WARRANTY PROVISION. 10.1 ON THIS ISSUE ASSESSING OFFICER NOTED THAT IT AT ON THIS HAS GIVEN A FINDING IN ITS ORDER THAT WARRANTY EXPENSES ARE ALLOWED ON ACCRUAL BASIS IF THE CLAIM OF THE ASSESSEE IS BASED ON SCIEN TIFIC BASIS. THE ITAT HAS BASED ITS DECISION ON THE DECISION TAKEN BY THE TRIBUNAL IN THE ASSESSEES OWN CASE FOR THE A.Y. 1999-2000. IN VIE W OF THE ABOVE DIRECTIONS OF THE ITAT THE ASSESSEE WAS ASKED TO FU RNISH A REPLY ESTABLISHING THAT THE CLAIM OF WARRANTY EXPENSES IS BASED ON SCIENTIFIC METHOD DETAILED METHOD OF WORKING OUT THE WARRANTY EXPENSES ALONGWITH JUSTIFICATION AND EXPLANATION THAT THE METH OD ADOPTED IS SCIENTIFIC. CONSIDERING THE ASSESSEE REPLY ASSES SING OFFICER NOTED THAT ASSESSEE HAS STATED IN HIS REPLY THAT IT IS CO NSISTENTLY FOLLOWING THE SAME METHOD FOR WORKING OUT THE WARRANTY EXPENSES F ROM A.Y. 94-95 ONWARDS. THE SAME ISSUE HAS ALSO BEEN DEALT WITH IN DEALT WITH IN DETAIL IN THE ORDER GIVING EFFECT TO THE ITATS ORD ER FOR A.Y. 1999-2000 IN WHICH ASSESSING OFFICER HAS STATED THAT ASSESSE E HAS MADE PROVISIONS FOR WHICH THERE IS NO CONSISTENT SCIENTI FIC BASIS. FOLLOWING THIS DECISION ASSESSING OFFICER HELD THAT THERE I S NO CONSISTENT SCIENTIFIC BASIS ADOPTED BY THE ASSESSEE FOR WORKIN G OUT THE WARRANTY ITA NOS. 4441- 4444 & 4953-4954/DEL/2007 AND ITA NOS. 662-664 & 365-367/DEL/2008 13 EXPENSES CLAIMED. HENCE ` 2 22 16 412/- CLAIMED ON ACCOUNT OF WARRANTY EXPENSES ARE DISALLOWED AND ADDED BACK TO THE INCOME. 10.1 UPON ASSESSEE APPEAL LD. COMMISSIONER OF INCOME TAX (APPEALS) NOTED THAT THE SAID ISSUE HAD COME UP BEFORE HIM IN ASSESSEES OWN CASE FOR A.Y. 1999-2000 IN APPEAL NO. 55/06-07. IN THAT CASE IN HIS ORDER DATED 28/12/2006 HE HELD THAT THE BASIS OF COMPUTING THE WARRANTY EXPENDITURE ON ACCRUAL BASIS ADOPTED BY T HE ASSESSEE WAS A SCIENTIFIC BASIS AND WOULD MEET THE DEMANDS OF THE MERCANTILE SYSTEM OF ACCOUNTING. THEREFORE HE HAD ALLOWED THAT CLAIM. LD. COMMISSIONER OF INCOME TAX (APPEALS) FOUND IN THIS YEAR ALSO THE FACTS ARE SIMILAR AND THE BASIS OF CALCULATING THE W ARRANTY EXPENDITURE IS THE SAME. THEREFORE FOLLOWING THE DECISION F OR A.Y. 1999-2000 HE ALLOWED THE EXPENDITURE IN THIS YEAR. 10.2 AGAINST THIS ORDER THE REVENUE IS IN APPEAL BE FORE US. 10.3 WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. 10.4 LD. DEPARTMENTAL REPRESENTATIVE RELIED UPON TH E ASSESSING OFFICER S ORDER. LD. COUNSEL OF THE ASSESSEE SUB MITTED THAT ASSESSEE IS FOLLOWING THE CONSISTENT PROVISION FOR CALCULA TING WARRANTY EXPENSES ON ACCRUAL BASIS. HE CLAIMED THAT ASSESSING OFF ICERS THEMSELVES IN THE ASSESSMENT ORDERS PASSED U/S 143(3) OF THE IT FOR A.Y. 2000-01 TO 05-06 HAVE ALLOWED THE WARRANTY EXPENSES ON ACCRUAL BASIS. THUS ON A PRINCIPLE OF CONSISTENCY THE REVENUE CANNOT BE A LLOWED TO TAKE A DIFFERENT STAND IN THE INSTANT YEAR. HE FURTHER SUBMITTED THAT THIS ISSUE IS ALSO COVERED IN FAVOUR OF THE ASSESSEE BY THE JUDGEMENTS OF THE JURISDICTIONAL HIGH COURT IN C.I.T. VS. SONY IN DIA P LTD. (2007) 160 TAXMAN 397 (DELHI); C.I.T. VS. VINITEC CORPORATION LTD. 92005) 278 ITR 337 (DELHI) AND C.I.T. VS. HEWLETT PACKARD INDIA (P) LTD. : 173 TAXMAN ITA NOS. 4441- 4444 & 4953-4954/DEL/2007 AND ITA NOS. 662-664 & 365-367/DEL/2008 14 162 (DELHI) AND ALSO IN HONDA SIEL CARS INDIA LTD. V S. ACIT 109 ITD 1 (DEL.). HE ALSO CLAIMED THAT THIS ISSUE IS ALSO COV ERED BY THE DECISION OF THE HONBLE APEX COURT IN THE CASE OF ROTORK CO NTROLS INDIA LTD. 314 ITR 62. 10.5 WE NOTE THAT HONBLE APEX COURT IN THE CASE O F ROTORK CONTROLS INDIA LTD. VS. C.I.T. 314 ITR 62 (SC) HAS UPHELD TH E PROVISION OF WARRANTY AND CONCLUDED AS UNDER:- A PROVISION IS A LIABILITY WHICH CAN BE MEASURED O NLY BY USING A SUBSTANTIAL DEGREE OF ESTIMATION. A PROVISIO N IS RECOGNIZED WHEN : (A) AN ENTERPRISE HAS A PRESENT O BLIGATION AS A RESULT OF A PAST EVENT; (B) IT IS PROBABLE THA T AN OUTFLOW OF RESOURCES WILL BE REQUIRED TO SETTLE THE OBLIGA TION AND (C) A RELIABLE ESTIMATE CAN BE MADE OF THE AMOUNT OF THE OBLIGATION. IF THESE CONDITIONS ARE NOT MET NO PR OVISION CAN BE RECOGNIZED. THE PRINCIPLE IS THAT IF THE HISTORICAL TREND INDIC ATES THAT A LARGE NUMBER OF SOPHISTICATED GOOD WERE BEING MANUFACTURED IN THE PAST AND THE FACTS SHOW THAT DEF ECTS EXISTED IN SOME OF THE ITEMS MANUFACTURED AND SOL D THEN PROVISION MADE FOR WARRANTY IN RESPECT OF SUCH SOPHISTICATED GOODS WOULD BE ENTITLED TO DEDUCTION FROM THE GROSS RECEIPTS UNDER SECTION 37. 10.6 WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS AN D PERUSED THE RECORDS. WE NOTE THAT LD. COMMISSIONER OF INCOME TA X (APPEALS) HAS GIVEN A CLEAR FINDING THAT THE METHOD FOR COMPUTING WARRANTY EXPENDITURE IS ON SCIENTIFIC BASIS. THE ASSESSING OFFICER HAS NOT BROUGHT ANYTHING ON RECORD TO PROVE THAT THE SAME IS NOT OF SCIENTIFIC ITA NOS. 4441- 4444 & 4953-4954/DEL/2007 AND ITA NOS. 662-664 & 365-367/DEL/2008 15 BASIS. MOREOVER IN VIEW OF AFORESAID CASE LAWS IN CLUDING THAT OF HONBLE APEX COURT WE DO NO FIND ANY INFIRMITY OR I LLEGALITY IN THE ORDER OF THE CIT AND ACCORDINGLY WE UPHOLD THE SAME. 11. ANOTHER ISSUE RAISED FOR A.YRS.. 94-95 96-97 98-99 IS THAT LD. COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN NOT AP PRECIATING THAT SECTION 234D IS PROCEDURAL LAW AND IS APPLICABLE TO THE COMPUTATION OF INTEREST U/S 234D AS TO THE PERIOD FALLING AFTER 1.6 .2003 NOTWITHSTANDING THE ASSESSMENT YEAR INVOLVED. 11.1 UPON ASSESSING OFFICERS ACTION OF LEVYING I NTEREST U/S 234D THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS REFERRE D THE DECISION OF THE DELHI TRIBUNAL IN THE CASE OF M/S GLAXO SMITHKLI NE ASIA (P) LTD. VS. ACIT 97 (TTJ) (TDEL) AND OTHER SIMILAR CASES. HE FOUND THAT TRIBUNAL HELD THAT THE LAW DEALING WITH THE IMPOSITION OF INT EREST U/S 234D IS SUBSTANTIVE LAW AND NOT PROCEDURAL LAW AND HENCE INTEREST UNDER THIS SECTION CANNOT BE CHARGED IN RESPECT OF ASSESSMENT YEARS PRIOR TO THE COMING INTO FORCE OF SECTION 234D I.E. 1.6.2003. HEN CE HE DIRECTED THAT INTEREST U/S 234D WOULD NOT BE CHARGEABLE. 11.2 AGAINST THIS ORDER THE REVENUE IS IN APPEAL BE FORE US. 11.3 WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. LD. COUNSEL OF THE ASSESSEE PLACED RELIANCE IN THIS REG ARD ON THE SPECIAL BENCH DECISION OF THE TRIBUNAL IN CASE OF ITO VS. E KTA PROMOTERS P LTD. 113 ITD 719. HE FURTHER REFERRED TO THE HONBLE JUR ISDICTIONAL HIGH COURT DECISION DATED 30.8.2010 IN THE BUNCH OF CASE S IN ITA NO. 491/2008 AND ANR. ONE OF THE ISSUE IN RESPECT O F INTEREST U/S 234D WAS RAISED BY THE REVENUE. THE HONBLE HIGH COURT OBSERVED THAT TRIBUNAL WAS OF THE OPINION THAT SECTION 234D WAS A PPLICABLE ONLY FROM THE ASSESSMENT YEAR 2004-05 ONWARDS AND NOT IN THE EARLIER ITA NOS. 4441- 4444 & 4953-4954/DEL/2007 AND ITA NOS. 662-664 & 365-367/DEL/2008 16 ASSESSMENT YEARS AND THEREFORE NO INTEREST UNDER TH AT PROVISION COULD BE LEVIED FOR THE PERIOD PRIOR TO THE ASSESSMENT YE AR 2004-05. FOR THIS PURPOSE THE TRIBUNAL HAS RELIED UPON ITS OWN JUDGE MENT RENDERED BY A SPECIAL BENCH OF THE ITAT IN THE CASE OF ITO VS. EK TA PROMOTERS PVT. LTD. 305 IT (1) ITAT. CONSIDERING THE ABOVE THE HONBLE JURISDICTIONAL HIGH COURT HAS OBSERVED THAT TRIBUNAL WAS RIGHT IN DELETING THE INTEREST UNDER SECTION 234D OF THE ACT FOR THE PERIOD PRIOR T O THE ASSESSMENT YEAR 2004-05. 11.4 RESPECTFULLY FOLLOWING THE AFORESAID PRECEDEN T WE UPHOLD THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) ON THIS ISSUE AND DECIDE THE ISSUE IN FAVOUR OF THE ASSESSEE. 12. IN THE RESULT THE APPEALS FILED BY THE ASSESS EE BEING ITA NO. 4441 4442 4443 & 4444/DEL/2007 & ITA NO. 662 6 63 & 664/DEL/2008 ARE PARTLY ALLOWED FOR STATISTICAL PURP OSES AND REVENUE APPEALS BEING ITA NO. 4953 & 4954/DEL/2007 AND ITA NO. 365 366 & 367/DEL/2008 ARE PARTLY ALLOWED FOR STATISTICAL PU RPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 29/10/2010. SD/- SD/- [RAJPAL YADAV] [SHAMIM YAHYA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATE 29/10/2010 SRB COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR ITAT TRUE COPY BY ORDER DEPUTY REGISTRAR ITAT DELHI BENCHES