Income Tax Appellate Tribunal - Mumbai
Sulzer India Ltd, Pune vs Assessee on 14 January, 2015
आयकर अपील य अ धकरण "ई" यायपीठ मुंबई म।
IN THE INCOME TAX APPELLATE TRIBUNAL "E" BENCH, MUMBAI ी जो ग दर संह, या यक सद य एवं ी संजय अरोड़ा, लेखा सद य के सम ।
BEFORE SHRI JOGINDER SINGH, JM AND SHRI SANJAY ARORA, AM आयकर अपील सं./I.T.A. Nos. 3366/Mum/2010 & 6135/Mum/2007 ( नधारण वष / Assessment Years: 2005-06 & 2004-05) Sulzer India Ltd., Addl. CIT, Range 8(3), Gate No. 304, Kondhapuri, Room No. 204, 2nd Floor, बनाम/ Pune-Nagar Road, Shirur, Aayakar Bhavan, M. K. Road, Pune-412 209 Vs. Mumbai-400 020 थायी ले खा सं . /जीआइआर सं . /PAN/GIR No. AAACS 7876 D ( नधा रती /Assessee) : (राज व / Revenue) & आयकर अपील सं./I.T.A. No. 6699/Mum/2007 ( नधारण वष / Assessment Year: 2004-05) Addl. CIT, Range 8(3), Sulzer India Ltd., Room No. 204, 2nd Floor, Gate No. 304, Kondhapuri, Aayakar Bhavan, M. K. Road, बनाम/ Pune-Nagar Road, Shirur, Mumbai-400 020 Vs. Pune-412 209 थायी ले खा सं . /जीआइआर सं . /PAN/GIR No. AAACS 7876 D (राज व / Revenue) : ( नधा रती /Assessee) नधा रती क ओर से/Assessee by : Shri Ronak G. Doshi राज व क ओर से/Revenue by : Shri Pavan Kumar Beerla सन ु वाई क तार ख / : 07.01.2015 Date of Hearing घोषणा क तार ख / : 14.01.2015 Date of Pronouncement 2 ITA Nos. 3366/M/10, 6135/M/07 & 6699/Mum/ 07 (A.Ys. 2005-06 & 2004-05) Sulzer India Ltd आदे श / O R D E R Per Sanjay Arora, A. M.:
This is a set of three Appeals, being cross appeals by the Assessee and the Revenue for the assessment year (A.Y.) 2004-05, and the assessee's appeal for A.Y. 2005-06. The issues arising being common, these were posted for and heard together, and are being accordingly disposed of per a common order. We shall take up the several issues in seriatim, referring to the relevant ground numbers of the appeals under reference:
Assessee's Appeal (6135/Mum/2007 for AY 2004-05)
2. Ground # 1 of the appeal relates to the part disallowance of depreciation on car/s, by allowing it at 20% of the written down value (WDV) of the relevant block of assets, as against the appellant's claim for the same at 40%. The basis of the Revenue's objection is that the relevant vehicles fall in the category of 'luxury cars', rather than 'commercial vehicles', on which the enhanced rate of 40%, as against the regular rate of 20%, is admissible. The car/s under reference is admittedly a passenger car/s, falling under the category of 'light motor vehicles', i.e., in terms of the Motor Vehicle Act, 1988. The assessee's claim, however, is that the relevant car/s stood purchased and first put to use for the purpose of its business during the period 01.10.1998 to 31.03.1999. Accordingly, the same is, by definition, commercial vehicle/s, vide third proviso to section 32(1)(ii) r/w Explanation thereto. Further, read with rule 5 of the Income Tax Rules, 1962 ('the Rules' hereinafter) and Old Appendix 1, applicable for the A.Ys. 2003-04 to 2005-06, to which our attention was drawn, by the ld. Authorized Representative (AR), the assessee's counsel, during hearing, it was submitted would leave one in no manner of any doubt about the correctness of the assessee's claim, further supporting his case with reference to the decision by the hon'ble jurisdictional high court in CIT vs. Birla Global Asset Finance Co. Ltd. (in ITA No. 828 of 2010 dated 08.08.2012/copy on record).
We have perused the said decision, to find that the said reasoning to have also found favour with the hon'ble high court. When a 'commercial vehicle' has been defined 3 ITA Nos. 3366/M/10, 6135/M/07 & 6699/Mum/ 07 (A.Ys. 2005-06 & 2004-05) Sulzer India Ltd under the Act as well as the Rules, which definition is satisfied by the vehicle/s under reference, we are unable to see as to how the claim could be denied by importing a presumed meaning or condition with regard to the user thereof. In view of the same, subject to the verification and consequent finding with regard to the date of purchase and put to use of the car/s under reference, qua which we observe no finding by the authorities below, we allow the assessee's claim. We decide accordingly.
3. Ground # 2 is with regard to the disallowance of club membership fees (Rs.50,000/-) and club expenses (Rs.7,868/-). The same stands disallowed for want of satisfaction of the condition of section 37(1), i.e., of being incurred wholly and exclusively for the purpose of the assessee's business. The assessee has before us relied on a number of decisions, including by the tribunal in its' own case for A.Y. 2003-04 (at pgs.43-45 of the compilation). The membership, as clarified, upon being queried by the Bench during hearing, is only in the name of the assessee-company. We are, therefore, unable to see as to how the same can be considered as for or toward a personal benefit of the directors of the company, who would ostensibly be utilizing the membership for and on behalf of the company; the onus to exhibit the same though is only on the assessee. We are conscious that the club facilities could also, and may well be used for availing the different services, including for entertainment or as a platform for social interaction, by the directors or officers of the company, so that the expenses attributed to such user would be, or could contended to be, a non-business purpose of the assessee-company. The expenditure on such user would qualify as a perquisite in the hands of the individual directors/employees, being only in pursuance of a benefit extended to them, in whole or in part, by it. No disallowance in the hands of the assessee-company would thus ensue even on a user of the club membership by the concerned person/s for their personal purposes. The same is accordingly deleted.
4. Ground # 3 is in respect of part disallowance of the remuneration paid to the Managing Director of the assessee-company, Shri S. S. Nandkarni, in excess of the 4 ITA Nos. 3366/M/10, 6135/M/07 & 6699/Mum/ 07 (A.Ys. 2005-06 & 2004-05) Sulzer India Ltd provisions of the company law; the assessee being a public company in which the public is substantially interested, so that the managerial remuneration was required to be approved by the Central Government. The same, though applied for, being pending as at the close of the year, or even at the time of framing the assessment, the excess, i.e., with reference to what was being paid to him as stood approved earlier, i.e., Rs.6,84,609/-, stood disallowed, and confirmed by the ld. CIT(A) on the same basis, relying on the decision by the apex court in CIT vs. Amalgamation (P.) Ltd. [1997] 226 ITR 188 (SC). It was explained to us during hearing that the company's application has since been disposed of by the Department of company affairs in the concerned Ministry of the Government of India, rejecting the assessee's claim for enhanced compensation. The same being communicated during the previous year relevant to A.Y. 2008-09, the entire excess remuneration stood written back by the assessee in its accounts and, accordingly, assessed as income u/s.41(1) of the Act. A copy of the appellate order dated 01.10.2012 for that year was also placed on record to substantiate the same.
We have perused the said order; the relevant discussion being at paras 4 to 4.3 (pgs. 7-9) of the said order, whereby the assessee, though appealing against the addition of the write back u/s. 41(1), conceded to the inclusion of the entire sum of Rs.46,05,928/- before the first appellate authority, i.e., for being taxed in its hands for that year, in view of the order by the tribunal in its case for A.Y. 2002-03 dated 11.02.2009 confirming the disallowance of the enhanced compensation. The primary facts are, thus, not in dispute. Not only is the assessee's claim in conformity with the view taken by the tribunal in its case for A.Y. 2002-03, the same is also in keeping with the law in the matter. The decision in the case of Amalgamation (P.) Ltd. (supra), relied upon by the ld. CIT(A), would have no application in-as-much as the Revenue has not impugned the commercial expediency or the assessee's obligation under the terms and conditions of the payment. So, however, to the extent the same was required by law to be approved by the competent authority (Central Government), and which has subsequently been not, the payment to that extent cannot be said to in pursuance to a valid contract in-as-much as the law would 5 ITA Nos. 3366/M/10, 6135/M/07 & 6699/Mum/ 07 (A.Ys. 2005-06 & 2004-05) Sulzer India Ltd prevail, being even otherwise against public policy. The excess claim would have, therefore, to be allowed in the year of its claim/payment, on the basis of the provision, while the amount found in excess liable for inclusion as a part of the income on being so found. The same though thus does not fall strictly within the purview of section 41(1) in- as-much as, as it appears, there has been no remission or cessation of liability, with we not observing any finding by the authorities below, would stand to be considered as income on general principles, i.e., as a provision for an expenditure written back on being found to have been made in excess. We are though, we may add, not in agreement with the assessee that not so doing would result in double taxation. Each assessment year is an independent unit of assessment, so that the taxing of an income in a year other than for which it is liable to be taxed, would not result in it being not taxed in the right year. We decide accordingly, and the assessee succeeds.
5. Ground # 4 challenges the computation of the profit on export of the trading goods. While the turnover (Rs.89,18,106/-) of such goods and the direct cost thereof (Rs.87,81,904/-) are not in dispute, it is the indirect cost in relation to the said turnover which is the bone of the contention between the parties. While the assessee contends of nil indirect cost; the transaction/s being by way of high-sea sales, yielding low or meager profit of Rs.1.36 lacs (or at 1.53% of the turnover), in the view of the Revenue the indirect costs would have to be necessarily imputed, working out the same on a proportionate basis, i.e., in the ratio of the relevant turnover to the assessee's total turnover for the year (Rs.6143.66 lacs), at Rs.20.08 lacs, so that no deduction u/s.80HHC would in effect ensue. The ld. CIT(A) confirmed the view of the Assessing Officer (A.O.) in-as-much as it was inconceivable that there were no indirect costs associated with the transaction/s. It could be nobody's case that the same was executed without incurring any expenditure. The same is only a part of the assessee's normal business undertaking, and man power and other facilities of the company would definitely be utilized toward the same. The only course, therefore, left open to the A.O. in his view was to estimate the 6 ITA Nos. 3366/M/10, 6135/M/07 & 6699/Mum/ 07 (A.Ys. 2005-06 & 2004-05) Sulzer India Ltd expenditure, and which stood done by him reasonably by allocating the same in the proportion of the relevant turnovers.
6. We have heard the parties, and perused the material on record. The transaction/s is without doubt of export of trading goods, with a defined export turnover. Once this is so, how we wonder the fact that it is by way of high sea sales, yielding a low profit margin, could at all be a relevant consideration. The question of gross margin earned, reckoned after deducting direct costs, could even otherwise not be a valid consideration for arriving at the quantum of the indirect costs. As explained by the ld. CIT(A), and even as observed by the Bench during hearing, the relevant trading transaction/s could only be executed by and through the agency and deployment of the assessee's organizational resources and, consequently, incurring costs. In fact, the indirect costs, which is negatively defined per Explanation (e) below section 80-HHC(3) to exclude direct costs, which have in fact been by the A.O., including only the employee, selling and administration, and finance cost, is to be, in terms of the said Explanation, computed in the ratio of export turnover to the total turnover, and which terms are themselves defined under Explanation (b) and (ba) to the section. The Revenue's case is, accordingly, upheld in principle. So, however, without doubt, the indirect costs ought to have some nexus with the assessee's relevant activity, the export of traded goods in the instant case, which is the import of the several decisions by the tribunal relied upon. The assessee contends that no interest cost stands incurred as the export proceeds were received prior to the payment of the purchase cost (of the trading goods) (refer para 7.2 of the impugned order). There is though no finding to that effect by the authorities below. The A.O. shall, while giving appeal effect to our order, verify this aspect of the matter. If, where and to the extent so, interest cost, incurred at an aggregate of Rs.61.37 lacs, shall stand to be excluded in computing the indirect costs. Further on, the apex court vide its' decisions, as in the case of ACG Associated Capsules (P.) Ltd. vs. CIT [2012] 343 ITR 89 (SC) and Hero Exports vs. CIT [2007] 295 ITR 454 (SC), has since clarified that in-as-much as the export incentives and other incomes, required to be excluded under Explanation (baa) to 7 ITA Nos. 3366/M/10, 6135/M/07 & 6699/Mum/ 07 (A.Ys. 2005-06 & 2004-05) Sulzer India Ltd the provision, is at 90% of such income, 10% thereof stands imputed as their cost, so that the said cost, attributed to the export incentives and other income (i.e., at 10% thereof) would stand to be excluded in arriving at the indirect costs attributable to the assessee's exports, whether of trading or manufactured goods, for computing the deduction u/s.80- HHC. The same would also therefore require being given effect to. As, however, we have directed for the exclusion of the interest cost, which would also stand to be included in the statutorily imputed cost of 10%, the same would have to be proportionately reduced, i.e., in the ratio of the finance cost to the total indirect cost, which we observe at 4.4%, so as to eschew allowance of double benefit to the assessee. We decide accordingly, and the assessee gets partial relief.
7. Ground # 5 of the assessee's appeal as well as grounds # 3 & 4 of the Revenue's appeal, relate to the treatment of scrap sales (Rs.57,20,053/-) in computing the deduction u/s.80-HHC. While the A.O. reduces the same from the 'profits of the business' under Explanation (baa) (to the provision) as well as includes the same in the 'total turnover', the ld. CIT(A) directed for its non-exclusion in computing the profits of the business. Aggrieved, the assessee is in appeal, seeking a direction for exclusion from the total turnover, while the Revenue seeks restoration of the A.O.'s stand. As clarified by the apex court per its decision in the case of CIT vs. Punjab Stainless Steel Industries [2014] 364 ITR 144 (SC), scrap sales is not a part of the turnover of either the trading or the manufactured goods, so that the same was accordingly held for exclusion in computing both the export and total turnover. If all accountants, auditors, businessmen, manufacturers, etc. are normally interpreting the term 'turnover' as the sale proceeds of the commodity in which the business unit is dealing, there was, in its view, no reason to take a different view in the matter, also taking into account the intent behind the enactment of section 80-HHC, i.e., to bring foreign exchange to the country.
The only issue, therefore, that survives for our consideration is whether the amount of scrap sale is to be excluded in computing the 'profits of the business' under Explanation (baa). We find no basis for the same. The exclusion of incomes in computing 8 ITA Nos. 3366/M/10, 6135/M/07 & 6699/Mum/ 07 (A.Ys. 2005-06 & 2004-05) Sulzer India Ltd the 'profits of business' stands specified in Explanation (baa) to the section, defining the said term. It provides for exclusion of receipts of incomes by way of export incentives, brokerage, commission, interest, rent, charges, etc., i.e., which are inoperational or incidental or independent, i.e., independent of the assessee's turnover/operations. The defining clause employs the word 'means'. When the statute defines a word to mean such and such, the definition is prima facie restrictive and exhaustive (refer: Vanguard Fire & General Insurance Co. Ltd. vs. Fraser & Ros, AIR [1960] SC 971, p.975; CIT vs. Kajaria Ceramics Ltd. AIR [2005] SC 2968 (p.65,66). The law in the matter is in fact well settled, and for which we may refer to the decision in the case of ACG Associated Capsules (P.) Ltd. (supra); CIT vs. K. Ravindranathan Nair [2007] 295 ITR 228 (SC); and CIT vs. Lakshmi Machine Works [2007] 290 ITR 667 (SC). The receipt by way of sale of scrap is certainly not an income of such nature. On the contrary, it, generated in and through the manufacturing operations, arises directly out of the assessee's principal operations of production, giving rise to turnover of manufactured goods. The same, goes as it does to abate the cost of raw material out of which the same is generated, can, therefore, be conceptually considered as toward a reduction in the raw material or production cost. The same, therefore, would not warrant being excluded in computing the profits of the business under Explanation (baa) to section 80-HHC. We decide accordingly, and both the assessee and the Revenue get partial relief.
8. The sixth ground of the assessee's appeal, again, concerns the computation of 'profit of business' u/s.80-HHC. The bone of contention between the parties is in respect of four items, being commission, interest, duty draw back and sales-tax set off. We shall take up each of them separately:
i) Interest income (Rs.62,43,250/-):
The assessee's case is toward the exclusion of interest on net basis; there being interest payment/s as well, as against on gross basis by the A.O. The Revenue's case, on the other hand, is that the said income, being on FDRs with bank/s, assessed/assessable as 'income from other sources', and not as 'business income', is therefore liable for exclusion on gross basis.
9 ITA Nos. 3366/M/10, 6135/M/07 & 6699/Mum/ 07(A.Ys. 2005-06 & 2004-05) Sulzer India Ltd The dispute thus is not for the exclusion or otherwise of the interest income per se, on which there is agreement in principle, but on the quantum of such exclusion; the assessee contending of only the net interest, i.e., net of interest paid, as representing the income earned. The same is by now well settled (refer: ACG Associated Capsules (P.) Ltd. (supra)). So, however, the netting could only be on the basis of an established nexus between the borrowings, on which the interest is paid, and that parked in the bank FDRs, yielding interest, whether the same is assessed or assessable as income from other sources u/s.56 or u/s.28. The onus for the same is clearly on the assessee. Further, where so, toward which the A.O. shall after allowing the assessee an opportunity to state its case, issue a finding. Only the interest paid is to be excluded and no further limitation, in-as-much as the statute provides for exclusion @ 90%, deeming 10% as implied cost, would be made, even as observed by the Bench during hearing. The matter is accordingly restored back to the file of the A.O. for the purpose. We decide accordingly.
ii) Commission (Rs.78,32,378/-) &
iii) Duty draw back (Rs.60,23,856/-):
No improvement in its case stood made before us by the assessee, while the law in the matter is well settled. We accordingly find no infirmity in the direction by the ld. CIT(A) to exclude 90% of the said receipts in computing the 'profits of the business' under Explanation (baa) to section 80-HHC. We decide accordingly.
iv) Sales tax set off (Rs.24,03,579/-):
The same, as explained to us, is on account of the claim for refund of sales tax, preferred during an earlier year. Sales tax was paid on the purchase of goods, utilized toward exports. No liability to sales tax arising on the said purchases; the same stood refunded. Placing reliance on the decision in the case of ACG Associated Capsules (P.) Ltd. (supra); Alfa Laval India Ltd. vs. Dy. CIT [2004] 266 ITR 418 (Bom), since confirmed by the apex court vide its decision reported at [2007] 295 ITR 457 (SC), it was contended that the same is not liable for exclusion while calculating the profits in business u/s. 80-HHC. The ld. Departmental Representative (DR), on the other hand, would submit that the claim is a prior period income in- as-much as the same only represents receipt of a claim lodged during an earlier year. Accordingly, the same does not represent an operational income for the current year.10 ITA Nos. 3366/M/10, 6135/M/07 & 6699/Mum/ 07
(A.Ys. 2005-06 & 2004-05) Sulzer India Ltd
9. We have heard the parties, and perused the decisions by the hon'ble jurisdictional high court as well as the apex court. The basis of the said decisions is that the sales tax refund forms part of the operational income and, therefore, liable to be assessed as part of the assessee's business income u/s.28 and not as 'income from other sources' u/s.56. Admittedly, however, no income has been offered by the assessee for the year of lodging the claim for sales tax refund, being clarified during hearing by the ld. AR himself. The same, therefore, relates to the transactions of the purchase and sale (by way of exports) during earlier years. The same is thus for the current year only a prior period income and, accordingly, though assessable as business income, cannot be considered as relatable to the export income for the current year. The same, therefore, is liable for exclusion. Our decision, it may be clarified, is not inconsistent with the decisions, as in the case of Alfa Laval India Ltd. (supra), holding the said income as not an independent income, but as a part of the operational income of the assessee, so that the said decisions are distinguishable on facts and, accordingly, would be of no moment in the facts and circumstances of the present case. We decide accordingly.
10. The last and the seventh ground of the assessee's appeal relates to the levy of interest u/ss. 234B, 234C and 234D of the Act. The same was argued before us as consequential to the other grounds. We, therefore, find no ground for interference, and the same is accordingly dismissed. We decide accordingly.
Revenue's Appeal (6699/Mum/2007 for A.Y. 2004-05)
11. Ground # 1 of the Revenue's appeal contests the direction by the ld. CIT(A) to delete the addition for Rs.1,18,65,977/- on account of Modvat element added to the closing stock. It was the admitted position before us that the matter stands since decided against the assessee by the tribunal in its own case for A.Y. 2003-04 (placed at pgs.33-51 of the compilation). Further, even as it set aside the order of the ld. CIT(A), accepting the Revenue's case, restored the matter back to the file of the A.O. to examine the correctness of the calculations and computation of closing stock as being strictly in 11 ITA Nos. 3366/M/10, 6135/M/07 & 6699/Mum/ 07 (A.Ys. 2005-06 & 2004-05) Sulzer India Ltd accordance with the provisions of section 145A. The ld. AR would before us make a similar claim, i.e., that no variance to the profit as disclosed by the assessee's operating statement for the year, prepared on exclusive basis, would arise on a proper computation of the profits u/s.145A. The inclusion of the taxes, levies, etc. incident on the purchase and sale of goods would not only be on the closing stock, but on the opening stock, purchases and sales as well. The assessee's claim is unexceptional, so that we observe no dispute in principle, which could thus only be with regard to its application. No prima facie case, disputing the same, has however been made before us. We, nevertheless, in the interest of justice and in keeping with the decision by the tribunal in the assessee's case for the immediately preceding year, restore the matter back to the file of the A.O. The onus to exhibit that the profit, on a proper application of section 145A, works to the same amount as disclosed by the assessee's accounts, prepared on exclusive basis, is strictly on the assessee, who so contends. The A.O., on his part, where and to the extent in disagreement; the law in the matter being well settled, so that the non obstante clause of section 145A would prevail, and equally on all the four principal components of the trading/manufacturing account, viz. opening and the closing stock of the inventories as well as the purchase and sale of goods, shall do so by issuing a specific findings of fact by a speaking order. Reference for the purpose be made to the decision by the tribunal in the case of Hercules Pigment Industry vs. ITO [2014] 146 ITD 31 (Mum). We decide accordingly.
12. The second ground of the Revenue's appeal as well as ground # 1 of the assessee's appeal for A.Y. 2005-06 relates to the disallowance of the provision for warranty. Again, even as admitted by the parties before us, there is no dispute in principle, so that the assessee is entitled to its claim for provision, made on a scientific and reasonable basis, and toward which reference may be made to the decisions by the apex court in the case of Rotork Controls India (P) Ltd. vs. CIT [2009] 314 ITR 62 (SC) and Bharat Earth Movers vs. CIT [2000] 245 ITR 428 (SC). The provision made and utilized for the year under reference and the two earlier years is as under:
12 ITA Nos. 3366/M/10, 6135/M/07 & 6699/Mum/ 07(A.Ys. 2005-06 & 2004-05) Sulzer India Ltd (Amt. in lacs) A.Y. Provision Provision Excess Ratio made utilized provision 2003-04 48.23 4.26 43.97 91.16% 2004-05 57.29 19.98 37.31 65.12% 2005-06 68.65 14.98 53.67 78.18% Tabulating the said figures, it stands contended by the ld. CIT(A) that the assessee is from year to year making the provision for warranty on sales far in excess of that required, i.e., to meet the warranty expenditure toward the servicing/replacement of goods so as to comply with the conditions of sale, so as to be considered as on a scientific/reasonable basis. The assessee before us did not dispute the said figures, though would vehemently oppose the Revenue's stand in view of its claim having been accepted by the tribunal for the earlier years. How would that, we wonder, be of moment, when the assessee's own accounts disclose the relevant provision to be far in excess to what needs to be provided toward the actual cost. Even if the assessee adopts the same basis for making the provision, i.e., that it did for the earlier years, if on account of technical or other factors, the warranty claims have declined considerably, it would be a sufficient ground to restrict or lower its charge to the operating statement by way of provision. The same, it is to be appreciated, only a provision, toward costs, in respect of sales for the year, which are likely to be incurred in future in complying with the terms and conditions of the sale and, therefore, provided for on an estimated basis. The same, therefore, would have to be determined on empirical basis. The assessee, it was explained by the ld. AR, is in fact making the provision only on the basis of the actual utilization (warranty claims received) to sales, as factually obtaining for the preceding three years. Further, it was explained that while the provision upto A.Y. 2004-05 was made on a single product, i.e., supply of equipment used in refinery, it has since increased to two items. Be that as it may, the claim for provision, to be admissible, has to be on a rational /scientific basis, so that its reasonability is of essence. The Revenue has also, on its part, disallowed the entire claim, rather than only of that which it considers as in excess of a reasonable estimate.13 ITA Nos. 3366/M/10, 6135/M/07 & 6699/Mum/ 07
(A.Ys. 2005-06 & 2004-05) Sulzer India Ltd Under the circumstances, we only consider it fit and proper to restore this matter as well as with regard to the disallowance of provision for after sales cost on sales, which forms the subject matter of the assessee's appeal for A.Y. 2005-06, vide ground no.2, back to the file of the A.O. for enabling the assessee to present its case in the matter. The matter, we may clarify once again, is purely factual, with there being no dispute with regard to the proposition, i.e., in principle, so that it is only the case of proper application of the same. The A.O., where and to the extent in disagreement with the assessee's claim/s, shall issue proper findings, adjudicating the matter per a speaking order. We decide accordingly.
13. Grounds 3 & 4 of the Revenue's appeal stand already disposed of vide para 7 of this order.
14. The assessee's appeal (in ITA No. 3366/Mum/2010) for A.Y. 2005-06 stands adjudicated vide para 12 of this order.
15. In the result, the assessee's appeal for A.Y. 2004-05 is partly allowed, while the Revenue's appeal for A.Y. 2004-05 and the assessee's appeal for A.Y. 2005-06 are allowed for statistical purposes.
Order pronounced in the open court on January 14, 2015
Sd/- Sd/-
(Joginder Singh) (Sanjay Arora)
या यक सद य / Judicial Member लेखा सद य / Accountant Member
मुंबई Mumbai; दनांक Dated : 14.01.2015
व. न.स./Roshani, Sr. PS
14
ITA Nos. 3366/M/10, 6135/M/07 & 6699/Mum/ 07
(A.Ys. 2005-06 & 2004-05)
Sulzer India Ltd
आदे श क त ल प अ े षत/Copy of the Order forwarded to :
1. अपीलाथ / The Appellant
2. यथ / The Respondent
3. आयकर आयु त(अपील) / The CIT(A)
4. आयकर आयु त / CIT - concerned
5. वभागीय त न ध, आयकर अपील य अ धकरण, मुंबई / DR, ITAT, Mumbai
6. गाड फाईल / Guard File
आदे शानस
ु ार/ BY ORDER,
उप/सहायक पंजीकार (Dy./Asstt. Registrar)
आयकर अपील य अ धकरण, मंब
ु ई / ITAT, Mumbai