Income Tax Appellate Tribunal - Pune
Coca Cola India Pvt. Ltd.,, Pune vs Deputy Commissioner Of Income-Tax,, ... on 29 October, 2021
आयकर अपीलीय अधधकरण "ए" न्यायपीठ पुणे में ।
IN THE INCOME TAX APPELLATE TRIBUNAL "A" BENCH, PUNE
BEFORE SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER
AND
SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER
M.A. No. 75/PUN/2019
( Arising out of ITA No. 1258/PUN/2003 )
धनधाारण वषा / Assessment Year : 1998-99
Coca Cola India Pvt. Ltd.
1107-1110, Pirangut,
Tal. Mulshi, Pune
PAN : AAACB8573G
........... आवेदक/Applicant
बनाम / V/s.
The Deputy Commissioner of Income Tax,
Circle-1(1), Pune.
......प्रत्यथी / Respondent
M.A. No. 76/PUN/2019
( Arising out of ITA Nos. 182/PUN/2004 )
धनधाारण वषा / Assessment Year : 1999-2000
Coca Cola India Pvt. Ltd.
1107-1110, Pirangut,
Tal. Mulshi, Pune
PAN : AAACB8573G
........... आवेदक/Applicant
बनाम / V/s.
The Deputy Commissioner of Income Tax,
Circle-1(1), Pune.
......प्रत्यथी / Respondent
M.A. No. 77/PUN/2019
( Arising out of ITA Nos. 610/PUN/2004 )
धनधाारण वषा / Assessment Year : 2000-01
Coca Cola India Pvt. Ltd.
1107-1110, Pirangut,
Tal. Mulshi, Pune
PAN : AAACB8573G
........... आवेदक/Applicant
2
MA Nos.75 to 81/PUN/2019
Coca-Cola India Pvt. Ltd.
बनाम / V/s.
The Deputy Commissioner of Income Tax,
Circle-1(1), Pune.
......प्रत्यथी / Respondent
M.A. No. 78/PUN/2019
( Arising out of ITA Nos. 1103/PUN/2005 )
धनधाारण वषा / Assessment Year : 2001-02
Coca Cola India Pvt. Ltd.
1107-1110, Pirangut,
Tal. Mulshi, Pune
PAN : AAACB8573G
........... आवेदक/Applicant
बनाम / V/s.
The Deputy Commissioner of Income Tax,
Circle-1(1), Pune.
......प्रत्यथी / Respondent
M.A. No. 79/PUN/2019
( Arising out of ITA Nos. 256/PUN/2007 )
धनधाारण वषा / Assessment Year : 2002-03
Coca Cola India Pvt. Ltd.
1107-1110, Pirangut,
Tal. Mulshi, Pune
PAN : AAACB8573G
........... आवेदक/Applicant
बनाम / V/s.
The Deputy Commissioner of Income Tax,
Circle-1(1), Pune.
......प्रत्यथी / Respondent
M.A. No. 80/PUN/2019
( Arising out of ITA Nos. 144/PUN/2007 )
धनधाारण वषा / Assessment Year : 2003-04
Coca Cola India Pvt. Ltd.
1107-1110, Pirangut,
Tal. Mulshi, Pune
PAN : AAACB8573G
........... आवेदक/Applicant
3
MA Nos.75 to 81/PUN/2019
Coca-Cola India Pvt. Ltd.
बनाम / V/s.
The Deputy Commissioner of Income Tax,
Circle-1(1), Pune.
......प्रत्यथी / Respondent
M.A. No. 81/PUN/2019
( Arising out of ITA Nos. 896/PUN/2008 )
धनधाारण वषा / Assessment Year : 2004-05
Coca Cola India Pvt. Ltd.
1107-1110, Pirangut,
Tal. Mulshi, Pune
PAN : AAACB8573G
........... आवेदक/Applicant
बनाम / V/s.
The Deputy Commissioner of Income Tax,
Circle-1(1), Pune.
......प्रत्यथी / Respondent
Assessee by : Shri R. Murlidhar
Revenue by : Shri Mahadevan A M Krishnan
सुनवाई की तारीख / Date of Hearing : 07.09.2021/28.09.2021
घोषणा की तारीख / Date of Pronouncement : 29.10.2021
आदेश / ORDER
PER PARTHA SARATHI CHAUDHURY, JM:
These Miscellaneous Applications filed by the assessee pertains to the assessment years 1998-99 to 2004-05 arising out of ITA No.1258/PUN/2003, ITA No.182/PUN/2004, ITA No.610/PUN/2004, ITA No.1103/PUN/2005, ITA No.256/PUN/2007, ITA No.144/PUN/2007 and ITA No.896/PUN/2008 dated 22.08.2019 for the respective assessment years accordingly.
2. The assessee through these Miscellaneous Applications has invited the jurisdiction of Tribunal as envisaged u/s.254(2) of the Income Tax Act, 1961 4 MA Nos.75 to 81/PUN/2019 Coca-Cola India Pvt. Ltd.
(hereinafter referred to as „the Act‟) and submitted that in the above referred order of the Tribunal dated 22.08.2019, there has crept in mistake apparent from record which needs to be rectified in these Miscellaneous Applications.
3. The Ld. Counsel for the assessee also submitted that since the disputed issues are common in all these Miscellaneous Applications in respect of mistake apparent from record which has crept in, he would like to take up MA No.75/PUN/2019 for the assessment year 1998-99 as the lead case.
4. That opening his arguments, the Ld. Counsel for the assessee submitted that the Tribunal in the impugned order dated 22.08.2019 had recorded that the Ld. CIT(Appeals) has disallowed service charges for want of vouchers and also that through the nature of transactions the benefit has accrued to the third parties/bottlers when, in fact, the Ld. CIT(Appeals) has disallowed because of it benefitting the third parties only and no question arose before him for want of filing of vouchers/details in respect thereof. Meaning thereby, the issue of disallowance of service charges for want of vouchers was not at all the subject matter of dispute between the assessee and the Department. Therefore, it was also not subject matter of dispute for adjudication before the Tribunal. The Tribunal in its impugned order (supra.) at Page 58, Para 55 has observed as follows :
"55. Another fact which was noted was that cost incurred by CCI Inc was not monitored at any level by the assessee company. The vouchers were maintained by said concern at Delhi only and the payments were made without verifying anything but on the basis of debit notes. The Finance Manager of assessee company also stated that only debit notes for 9 months were with the assessee company and nothing further was taken by assessee company. On this ground, the CIT(A) was of the view that service charges were not incurred wholly and exclusively for the purpose of business of assessee company on two accounts i.e. non furnishing of details and also CCI Inc by its very genesis was required to take care of interest of parent company as well as bottling units/entities including HCCBPL............."5
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5. That further, at Page 60, Para 58 of the impugned order (supra.), the Tribunal has held and observed as follows :
"58. ........................ The CIT(A) acknowledged that CCI Inc to provide services to assessee, as the assessee did not have human resources and administrative infrastructure and these services had actually being provided, but he held that the entire expenditure was not for the business of assessee as the assessee had failed to file the details / vouchers and also services were being provided to bottlers and other group companies. The breakup of expenses (headwise) was filed before the CIT(A) as per letter dated 21.02.2002 and the CIT(A) in final analysis disallowed 25% of service charges in assessment year 1998-
99."
6. The Ld. Counsel for the assessee further submitted that prima-facie, the Tribunal has come to a finding that the Ld. CIT(Appeals) has disallowed services charges for non-furnishing of details/vouchers and also that services were being provided to the bottlers and other third parties who were in turn getting benefitted. The Ld. Counsel for the assessee further submitted that this finding of fact that the Ld. CIT(Appeals) had disallowed service charges also for want of filing of details/vouchers by the assessee is an erroneous finding of facts. That in fact, the Ld. CIT(Appeals) from Para 8 onwards of his order for the assessment year 1998-99 in the case of the assessee has specifically analyzed the facts after examination of vouchers submitted by the assessee company with regard to claim of service charges which is very much evident from the said Paras of the Ld. CIT(Appeals)‟s order on record. Thereafter, the Ld. CIT(Appeals) at Para 10 of his order commented that "A close examination of the information gathered as a result of appellant's enquiry during the appellate proceedings.................". Therefore, such close examination was conducted by the Ld. CIT(Appeals) in view of the detailed vouchers in respect of service charges payment which was placed before him.
7. Thereafter, the Ld. CIT(Appeals) at Para 10.1 of his order stated, it is correct that service charges expenditures were incurred by the assessee but 6 MA Nos.75 to 81/PUN/2019 Coca-Cola India Pvt. Ltd.
wholly it cannot be allowed since benefit also accrued to the bottlers/third parties also. At Para 10.11, the Ld. CIT(Appeals) has held that 25% of service charges should be disallowed as services have been rendered to other parties than the assessee and mainly to the Coca-Cola entities.
8. The Ld. Counsel for the assessee therefore, submitted that disallowance by the Ld. CIT(Appeals) on the ground of service charges expenses was not done for want of filing of details/vouchers but it was done for the fact that benefit accrued to the bottlers/third parties also. That further, the Ld. Counsel for the assesse also submitted that this impugned order of the Tribunal (supra.) against which these Miscellaneous Applications have been filed is actually second round of litigation whereas in the first round, the Tribunal has sent the matter back to the file of the Assessing Officer to determine the service charges expenditure and re-adjudicate the matter. That against this decision of the Tribunal, the assessee had gone before the Hon‟ble Jurisdictional High Court availing its Writ jurisdiction. Meanwhile, the Assessing Officer had passed the consequential order and he has accepted the fact that the relevant details were provided by the assessee to the Department on these expenditures.
9. Demonstrating these facts, the Ld. Counsel for the assessee took us through the consequential order for assessment year 1998-99 dated 30.12.2011 wherein at Para 2.9 of the said order, the Assessing Officer analyzed with categorical findings that "the CIT(Appeal) has verified the vouchers regarding the service charges incurred by the assessee. The verification of the expenditures have been elaborately discussed in Para 8 of his order. In the said Para 8 of the CIT(Appeal) order, the CIT(Appeal) has examined the vouchers submitted by CCI Inc. with regard to service charges. 7
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The CIT(Appeal) has even mentioned some of the instances along with the voucher numbers where it was found that the expenditures pertaining to those vouchers were not for the business of the assessee.............". Thus, based on this verification of the documentary evidences, the CIT(Appeal) has reached to the conclusion......................".
10. That further, at Para 2.9, again the Assessing Officer states that "the above conclusion of CIT(A) is based on the verification of the documentary evidences related to the service charges. The CIT(A) had adjudicated the issue and enhanced the disallowance after the verification of the documentary evidences and after establishing that services are not entirely for the purpose of the business of assessee." Thereafter, the Ld. Counsel for the assesse submitted that non furnishing of details/vouchers for determination of the service charges expenses in respect of the assessee was not at all the subject matter of dispute at all from the very first found of litigation and that as was demonstrated, the Ld. CIT(Appeals) has disallowed 25% of service charges for the assessment year 1998-99 not for want of vouchers/details but for the fact that benefit accrued to the third parties/bottlers in respect of the transaction related to service charges expenses. But on the contrary, the Tribunal vide Para 68 of the impugned order (supra.) has observed and held as follows:
"68. In such scenario, both the Assessing Officer and CIT(A) had repeatedly asked the assessee to justify its claim of service charges by producing supporting vouchers but except the vouchers for two months in each of the years, wherein in assessment year 1998-99 the said vouchers were produced before the CIT(A) and in assessment year 1999- 2000 it was produced before both the Assessing Officer and CIT(A), no other details / supports were filed."
11. That further, at Para 128 of the impugned order (supra.), the Tribunal has held as follows:
8
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"128................... The assessee has failed to produce necessary evidence and has failed to establish its case of cost being attributable to carrying on of its business, which costs with markup had to be reimbursed by the assessee to CCI Inc. Further, under the garb of reimbursement of expenses, the assessee could not claim the amounts as deductible merely because CCI Inc had raised the claim. Each and every item of the said expenditure, needed to be proved was for the benefit of assessee's business. In the paras above, we have elaborately discussed various aspects relating to different years and have come to a finding that the assessee has failed to discharge the onus cast upon it. Since the proceedings relate to years starting from assessment year 1998-99 and in the totality of the present facts and circumstances, we hold that disallowance of expenses merits to be upheld in the hands of assessee, as the assessee has failed to discharge the onus cast upon it to furnish the details with support to establish that entire claim of expenditure had been laid out wholly and exclusively for the purpose of business...................."
Therefore, the Tribunal in the said impugned order (supra.) had upheld the addition on service charges expenses for the reason, the assessee was not able to establish that such expenses were wholly and exclusively for the purpose of business and that the assessee was also not able to justify those expenses through documentary evidences.
12. The Ld. Counsel for the assessee vehemently contended that when in the first round of litigation, it has been categorically brought out in the consequential order by the Assessing Officer that the Ld. CIT(Appeal) has examined all the details/vouchers filed before him by the assessee while adjudicating the issue of service charges expenses and that also the Ld. CIT(Appeal) has given specific findings on verification and examination of the vouchers/details filed before him and then has arrived at a decision, in such scenario, the findings arrived at by the Tribunal in its impugned order (supra.) that the disallowance made by the Ld. CIT(Appeal) was for want of filing details/vouchers, is therefore, erroneous and hence, „mistake apparent from record‟.
13. At this point of time, the Ld. Counsel for the assessee also reiterated his submission stating that in the first round of litigation after the matter was 9 MA Nos.75 to 81/PUN/2019 Coca-Cola India Pvt. Ltd.
restored to the file of the Assessing Officer, when the assessee had gone before the Hon‟ble Jurisdictional High Court in Writ Petition No.2650 of 2014 dated 14th August, 2014 in respect of the assessment year 1998-99 to 2004- 05, in that order, the Hon‟ble Jurisdictional High Court has taken a note on the dispute in relation to disallowance of service charges expenses wherein the assessee/petitioner had submitted before the Tribunal in that first round that the matter may be decided on the basis of available materials on record and submissions made by the assessee before the Bench. However, the assessee/ petitioner received final order from the Tribunal and therein, the Tribunal has observed that there was no record and factual data before the Assessing Officer and therefore, without making any reference to the record before the Ld. CIT(Appeals), the Tribunal had remanded the matter back to the file of Assessing Officer. Thereafter, the assessee filed Miscellaneous Applications wherein the assessee contended that the Tribunal should have decided the issue on the available material and there is no warrant to remand the case. This Miscellaneous Application was rejected by the Tribunal. It was in this background, that the said Writ Petition was filed questioning the order of the Tribunal.
14. In the Writ Petition order (supra.), the Hon‟ble Jurisdictional High Court at Para 13 has held and observed as follows:
"13........ In fact, in Para-76, the Tribunal observed that as regards service charges undoubtedly the assessee has not furnished the full details before the Assessing Officer except the copy of the service agreement and the debit notes. This finding was erroneous and apparently because there was voluminous record before the Commissioner and which included a report of the remand by the Commissioner to the Assessing Officer. If the Assessing Officer had to submit a report after such remand and for scrutiny of the relevant documents, then, definitely the finding of the Tribunal that the Assessing Officer did not have the full details is incorrect. Alternatively and without prejudice, even if, there were not full details before the Assessing Officer they were definitely available before the Commissioner of Income Tax (Appeals)............."10
MA Nos.75 to 81/PUN/2019 Coca-Cola India Pvt. Ltd.
That also at Para 17 in the finding part of the Writ Petition (supra.), the Hon‟ble High Court has given categorical findings that before the Tribunal, there was adequate and enough material on record to deal with and decide the assessee‟s claim in relation to service charges expenses.
15. That therefore, through all these arguments and demonstration of documentary evidences, the Ld. Counsel for the assessee submitted that on the issue of service charges expenses disallowance, was made by the Ld. CIT(Appeals) only on the finding that benefit may have accrued also to the bottlers/third parties in the said transaction. But there was no disallowance made by the Ld. CIT(Appeals) for want of any details/vouchers and that at the very outset, this was not a matter of dispute between the assessee and the Department. The Tribunal suo-moto had observed that there has been disallowance of service charges expenses for want of filing of details/vouchers and that the benefit has accrued to the third parties. The Ld. Counsel for the assessee vehemently submitted that the first finding is itself erroneous and this is the main grievance of the assessee that mistake apparent from record has crept in the impugned order of the Tribunal (supra.).
16. That on the other part of the decision of the Tribunal (supra.) that benefit has accrued to the third parties, the assessee has not disputed.
17. Thereafter, the Ld. Counsel for the assessee stated, it is settled position of law that the findings of judgment has to be read in totality whether it is erroneous or not, has to be viewed from entirety of the judgment and since, the finding of the Tribunal in respect of the issue of the disallowance of service charges expenses for want of vouchers/details is not a correct observation and therefore, the said issue has to be recalled. For this proposition, the Ld. Counsel for the assessee has relied on the decision of the 11 MA Nos.75 to 81/PUN/2019 Coca-Cola India Pvt. Ltd.
Hon‟ble Supreme Court in the case of CIT Vs. Daulat Ram Rawatmull (1973) 87 ITR 349 (SC) wherein it has been held that "when a Court of fact acts on material partly relevant and partly irrelevant, it is impossible to say to what extent the mind of the Court was affected by the irrelevant material used by it in arriving at its finding. Such a finding is vitiated because of the use of inadmissible material......'.
The said decision was referred by the Tribunal in Third Member decision in MA No.583/MUM/2012 arising out of ITA No.5070/Mum/2011 for the assessment year 2006-07 in the case of M/s. Amzel Limited Vs. ACIT, Mumbai dated 05.11.2013 and therein, the Tribunal has held that even if the Tribunal in its order is influenced partly by incorrect fact that will constitutes the entire decision of the Tribunal suffering from mistake apparent from record.
18. The Ld. Counsel for the assessee made the second limb of his argument that there is another aspect in the impugned order of the Tribunal (supra.) for which the mistake apparent from record has crept in.
19. That for the assessment year 1997-98, the Tribunal has allowed the issue of service charges expenses in favour of the assessee but while having identical set of facts and circumstances for the assessment year 1998-99 also, the Tribunal in its impugned order (supra.) disallowed the same issue of service charges expenses by observing at Para 96 that as compared to assessment year 1997-98, there is a substantial difference of fact for the assessment year 1998-99 and hence, the order of the Tribunal for 1997-98 will not be applicable to the facts for the assessment year 1998-99. 12
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20. On this aspect, it was submitted by the Ld. Counsel for the assessee that during the assessment year 1997-98, the assessee was doing two businesses (i) that of Concentrate Manufacturer and (ii) that of bottler. In the subsequent year i.e. assessment year 1998-99, the assessee was only doing the business of Concentrate Manufacturer whereas the business of bottler had been sold off. The Tribunal in its order for the assessment year 1997-98 in assessee own case in ITA No.1257/PN/2003 dated 30.06.2008 had held and recognized the fact that the assessee being Concentrate Manufacturer benefits also the third parties i.e. bottler and that even for assessment year 1998-99 when the assessee continues to be Manufacturer of Concentrate, in such scenario, the facts are identical and therefore, the Tribunal should have followed its own order for the assessment year 1997-98.
21. The Ld. Counsel for the assessee further submitted that in respect of the fact that when there is no dispute between the assessee and the Department in respect of furnishing of evidences/details in respect of service charges expenses, in such scenario, upholding of addition by the Tribunal on this ground is in effect that the Tribunal has not confined itself to the subject matter of appeal i.e. grounds of appeal. The Ld. Counsel for the assessee relied on the judgment of the Hon‟ble Bombay High Court in the case of Pokhraj Hirachand Vs. CIT, 49 ITR 293 (Bom.) wherein it was laid down that the ITAT has to confine itself to the subject matter of appeal i.e. grounds of appeal. Unfortunately, the Tribunal while passing the impugned order (supra.) had completely lost sight of this judgment and it has instead relied on a judgment of the Hon‟ble Karnataka High Court in Fidelty Business Services Vs. ACIT, 257 Taxman 266 (Kar.) where a view contrary view has been taken as compared to the view of the Hon‟ble Bombay, Gujarat and 13 MA Nos.75 to 81/PUN/2019 Coca-Cola India Pvt. Ltd.
Calcutta High Courts. The said judgment of the Hon‟ble Karnataka High Court (supra.) was never put to the assessee to explain or distinguish it.
22. The Ld. Counsel for the assessee further submitted that the decision of Pokhraj Hirachand Vs. CIT (supra.) was also not dealt with or discussed at all by the Tribunal in the impugned order (supra.) and the assessee relied on the judgments in the case of Honda Siel Vs. CIT, 165 Taxman 307 (SC), Reliance Infrastructure vs. DCIT, 76 Taxmann.com 238 (Bom.), DSP Investment Vs. ACIT, ITA No.2342 of 2013 (Bom. HC) wherein the law laid down is that omission to deal with a cited judgment is a mistake apparent from the record.
23. Another aspect of the argument put forth by the Ld. Counsel for the assessee was in respect of depreciation and here, the issue was that the Revenue, specifically the Ld. CIT(Appeals) has disallowed depreciation stating that the coolers/freezers with the brand name of Coca-Cola which the assessee had supplied to various retailers that was not used exclusively and wholly for the purposes of business of the assessee. Meaning thereby, the Revenue has accepted the ownership of these coolers/freezers in the hands of the assessee and on the depreciation part, it was observed that the purpose for which, it was provided to various retailers, that was not wholly and exclusively for the purpose of business of the assessee and therefore, such depreciation was not allowed, whereas, the Tribunal in its impugned order (supra.) had asked the assessee to establish its ownership of those coolers/freezers and then argue on the aspect of depreciation.
24. The Ld. Counsel for the assessee submitted that this issue arose from assessment year 2000-01 and the Assessing Officer in the assessment order has categorically noted that the assessee is the owner of the coolers. He 14 MA Nos.75 to 81/PUN/2019 Coca-Cola India Pvt. Ltd.
rejected the claim of depreciation u/s.32 of the Act solely on the ground that the coolers were used in the premises of the retail outlets for storing the beverages (produced by the bottlers from the concentrate supplied by the assessee) and this cannot be regarded as a „user‟ for the business of the assessee. The Ld. CIT(Appeals) vide Para 5.2 of his order dated 15.03.2004 for the assessment year 2000-01 that there is an agreement with bottlers but confirmed the disallowance on the ground that these assets do not generate the sale of concentrate. The Department was not in appeal on this issue before the Tribunal. The Tribunal in its impugned order (supra.) at Page 116, Para 139 has held that even if the lower authorities has not disputed the ownership of the coolers, the assesse was required to prove the ownership before it.
25. The Ld. Counsel further submitted that for the first time in 18 years, the ownership of the coolers by the assessee was being questioned when the issue of ownership was already accepted by the Department and the subject matter of dispute before the Tribunal was only to adjudicate the issue of depreciation. He relied on the decision of the Hon‟ble Jurisdictional High Court in the case of Pokhraj Hirachand Vs. CIT (supra.) where the law laid down was that the ITAT has to confine itself to the subject matter of the appeal i.e. grounds of appeal and in this case, the Tribunal in its order has refused to accept the ownership of the coolers in the hands of the assessee which really goes beyond the scope of the subject matter of dispute which is not allowable as per the said decision of the Hon‟ble Jurisdictional High Court (supra.), hence, also mistake apparent from record has crept in on this count as well.
15
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26. Per contra, the Ld. DR supported the impugned order of the Tribunal and submitted that it is a well-reasoned order and that there is no „mistake apparent from record‟ in the findings of the Tribunal. The Ld. DR further submitted that what the assessee trying to do is to review the Tribunal‟s order in the grab of filing these Miscellaneous Applications contending „mistake apparent from record‟. The Ld. DR has also filed detailed written submissions and has relied on the decision of the Hon‟ble Bombay High Court in the case of CIT Vs. Ramesh Electric & Trading Company reported as (1994) 77 Taxman 43 (Bom.) wherein it has been held by the Hon‟ble Jurisdictional High Court that "the appellate Tribunal does not have any power to review its own orders under the provisions of the Income Tax Act, 1961. The only power which the Tribunal possesses is to rectify any mistake in its own order which is apparent from the record. This is merely a power of amending its order. The power of rectification under section 254(2) can be exercised only where the mistake is apparent from the record and not a mistake which is required to be established by arguments and a long drawn process of reasoning on points on which there might conceivably be two opinions."
27. The Ld. DR once again brought to our notice Para 132 onwards of the impugned order of the Tribunal where the issue of depreciation on coolers have been discussed starting from assessment year 2000-01. It was argued by the Ld. DR that while deciding the issue of depreciation on coolers, the Tribunal has given reasons for its findings and that the Tribunal had denied the depreciation not only for want of ownership of those coolers by the assessee which they were not able to establish before the Tribunal but also, for the fact that the assets were not used for the purpose of business of the assessee. Therefore, there is no mistake apparent from record in the order of the Tribunal on this issue.
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28. Similarly, on the issue of „disallowance of service charges expenses‟, the Ld. DR read out from Para 128 onwards of the impugned order of the Tribunal and he submitted that the disallowance of expenses on this count was upheld in the hands of the assessee as the assessee had failed to discharge onus cast upon it to furnish details with support to establish the entire claim of expenditure laid out wholly and exclusively for the purpose of business. Accordingly, the Tribunal had upheld the disallowance of services charges expenses @ 40% debited by the assessee and also out of reimbursement of expenses claimed from assessment year 2000-01. The Ld. DR conceded that a part of the findings of the Tribunal was based on non- furnishing of documentary evidences before the Sub-ordinate Authorities and the other part was that the benefit had accrued to the third parties, therefore it was not wholly and exclusively for the purpose of the business of the assessee.
29. The Ld. DR also conceded that the enhancement of addition on service charges @ 40% from 25% which was upheld for the assessment year 1998- 99, there was no basis given for such enhancement of addition in the impugned order of the Tribunal. Barring these deficiencies, the Ld. DR submitted that it is a well-reasoned order rendered by the Tribunal wherein the Tribunal has examined the scope and extent of benefit that accrued to the third parties in the transaction of service charges expenses made by the assessee. That as regards depreciation on coolers the Tribunal had upheld the order of the Ld. CIT(Appeal) with a categorical finding that the coolers (assets) were not used for purposes of business of the assessee and that the twin conditions of Section 32 of the Act were not fulfilled. Therefore, there is no mistake apparent from record in the impugned order of the Tribunal. 17
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30. We have heard the rival contentions, analyzed the facts and circumstances and considered the judicial pronouncements placed on record. We have also considered the submissions of the parties herein. There are two issues emerging out of these Miscellaneous Applications filed by the assessee arising out of ITA No.1258/PUN/2003, ITA No.182/PUN/2004, ITA No.610/PUN/2004, ITA No.1103/PUN/2005, ITA No.256/PUN/2007, ITA No.144/PUN/2007 and ITA No.896/PUN/2008 dated 22.08.2019 for the respective assessment years as alleged by the assessee that on these two issues, there has crept in mistake apparent from record calling for adjudication of the Tribunal u/s.254(2) of the Act. These issues are (i) disallowance on service charges expenses & (ii) depreciation on coolers.
31. The issue of „service charges expenses‟ has been first determined by the Ld. CIT(Appeal) in the assessment year 1998-99 and it continues to exist till assessment year 2004-05. On the other hand, issue of „depreciation on coolers‟ has been raised from assessment year 2000-01 up to assessment year 2004-05.
32. That on perusal of the Ld. CIT(Appeals)‟s order for the assessment year 1998-99 on the issue of service charges expenses which basically has laid the foundation of adjudication on this issue, it is seen at Para 8, the Ld. CIT(Appeal) has considered as follows :
"Facts emerging from the examination of vouchers submitted by the CCI Inc. with regard to the claim of service charges."
Thereafter, Para 8.1 onwards, the Ld. CIT(Appeal) has examined the vouchers/details submitted with regard to claim of service charges expenses. Therefore, non-furnishing of documentary evidences or vouchers/details in respect of „service charges expenses‟ was not at all a point of dispute between 18 MA Nos.75 to 81/PUN/2019 Coca-Cola India Pvt. Ltd.
the assessee vis-à-vis the Department. Thereafter, vide Para 10.1, the Ld. CIT(Appeal) observed as follows:
"10.1 The first decision that could be arrived at is that CCI Inc. does provide services to the appellant as the appellant company does not have human resources and administrative infrastructure and these services have actually been provided by CCI Inc., Indian branch. However, it is not true that the entire expenditure of Indian Branch of CCI Inc. is for the business of the appellant and therefore, amounts paid by the appellant to CCI Inc. by way of reimbursement of the said expenditure does not deserve to be allowed in full in the hands of the appellant ( in-contrast to the submission of the appellant on Page 1 of the submission dated 03.03.2003).
33. It is evident, therefore, from the observation of the Ld. CIT(Appeal) that he has given categorical findings that CCI Inc. does provide services to the assessee i.e. Coca Cola India Pvt. Ltd. as the assessee company does not have human resources and administrative infrastructure and these services were actually provided by CCI Inc., Indian Branch. Thereafter, the Ld. CIT(Appeal) opined that however, it is not true that the entire expenditure of Indian Branch of CCI Inc. is for the business of the assessee and therefore, amounts paid by the assessee to CCI Inc. by way of reimbursement of the said expenditure does not deserve to be allowed in full in the hands of the assessee. Thereafter, the Ld. CIT(Appeal) vide Para 10.11 has held as follows:
"10.11 I have considered all these facts and issues along with break up of expenses given by the appellant as per letter dated 21.02.2002. Looking into all these orders and the evidence collected after enquiry with the appellant during the appellate proceedings, I have to hold that 25% of service charges are not of allowable nature as services have been rendered to other than the appellant and mainly to the Coca Cola entities as per service agreements with them and to the bottlers and their suppliers as per letters submitted to RBI in 1994 itself."
34. Therefore, it is evident, nowhere the Ld. CIT(Appeal) has held the service charges is not allowable for want of furnishing of documentary evidences etc. The only reason for disallowing 25% of service charges expenses is that benefit must have accrued to other parties than the assessee 19 MA Nos.75 to 81/PUN/2019 Coca-Cola India Pvt. Ltd.
i.e. third parties/bottlers. However, when we look into the impugned order of the Tribunal at Para 128, the Tribunal upheld the disallowance of expenses on service charges in the hands of the assessee on the ground that assessee had failed to discharge the onus cast upon it to furnish the details with support to establish that entire claim of expenditure had been laid out wholly and exclusively for the purpose of business. Meaning thereby, the Tribunal has arrived at a finding of fact that the disallowance made by the Ld. CIT(Appeal) was for want of vouchers/details which is actually not the case as per facts on records. The Tribunal has also upheld the disallowance on the ground that benefit has accrued to the third parties and this part of the findings is correct finding of fact which has not been disputed by the assessee either in these Miscellaneous Applications.
35. However, we take guidance from the decision of the Hon‟ble Supreme Court in the case of CIT Vs. Daulat Ram Rawatmull (supra.) wherein it has been held that "when a Court of fact acts on material partly relevant and partly irrelevant, it is impossible to say to what extent the mind of the Court was affected by the irrelevant material used by it in arriving at its finding. Such a finding is vitiated because of the use of inadmissible material......'. The said decision was also referred by the Tribunal in the Third Member decision in the case of M/s. Amzel Limited vs. ACIT (supra.) and therein the Tribunal has held that even if the Tribunal in its order is influenced partly by incorrect fact that will constitute the entire decision of the Tribunal suffering from mistake apparent from record.
36. In this issue of „service charges expenses‟, we have examined that one part of finding by the Tribunal is incorrect to the extent that Sub-ordinate Authorities has not disallowed the „service charges expenses‟ for want of 20 MA Nos.75 to 81/PUN/2019 Coca-Cola India Pvt. Ltd.
vouchers/details etc. The other part of finding of the Tribunal wherein it has held that benefit may have accrued to the third parties and hence the disallowance, though it is correct but because of wrong finding of fact on the issue of non-filing of documentary evidences/vouchers, mistake apparent from record has crept in while deciding this issue which makes the entire findings on this issue as incorrect and such findings is thus vitiated. When we had asked the Ld. DR regarding the basis for enhancement of disallowance at 40% from 25% of service charges as evident from the impugned order of the Tribunal vide Para 128 and to this query, the Ld. DR fairly conceded that there has been no basis given for such enhancement of disallowance at 40% of the service charges. On this count also, a mistake apparent from record has crept in the findings of the Tribunal on the issue of service charges expenses.
37. Therefore, we are of the considered view that there is a mistake apparent from record which has crept in the impugned order of the Tribunal while deciding the issue of „service charges expenses‟ and hence, the grounds only pertaining to „service charges expenses‟ for the relevant assessment years involved is recalled for fresh adjudication.
38. That on the other issue of „depreciation on coolers‟, the Tribunal in the impugned order at Para 133 of the order has noticed that both the Assessing Officer and the Ld. CIT(Appeal) in the first round of proceedings have denied the depreciation on the ground that though the assessee was owner of coolers but coolers were provided either to the bottlers or the retailers who were engaged in the business of sale of beverages i.e. soft drinks. In other words, coolers were used by the parties and not by the assessee. From this observation of the Tribunal, it is clear that ownership of coolers in the hands 21 MA Nos.75 to 81/PUN/2019 Coca-Cola India Pvt. Ltd.
of the assessee was already accepted by the Department. However, the Tribunal on analyzing Section 32 of the Act and its pre-conditions at Para 138 opined that the section 32 of the Act provides that the depreciation on the assets can be claimed by a person who owns the asset and uses the said asset for its business. Thereafter, the Tribunal suo-moto had gone into establishing whether the assessee was owner of the coolers or not and asking the assessee to justify their ownership over the coolers which as a matter of fact was never a point of dispute for adjudication. The other part of the discussion whether the said assets i.e. coolers were used for the purpose of business of the assessee, the Tribunal has given its justification for its findings and that part is not disputed by the assessee. That the finding of the Tribunal, once again asking the assessee to establish its ownership on the coolers which was already accepted by the Department was in fact going beyond the scope of grounds of appeal filed before the Tribunal and hence, travelling beyond the jurisdiction as held by the Hon‟ble Jurisdictional High Court in the case of Pokhraj Hirachand Vs. CIT (supra.) wherein it was held that the ITAT has to confine itself to the subject matter of appeal i.e. grounds of appeal. Therefore, mistake apparent from record has crept in while deciding the issue of depreciation on coolers. That further, when we observe that a part finding of the Tribunal whether such business assets were used for the purpose of business of the assessee, the Tribunal has given its own analysis, though this part is not disputed by the assessee but because of the fact that on the issue of establishing ownership, the Tribunal has exceeded its jurisdiction, in such scenario, therefore, taking guidance from the decision of the Hon‟ble Supreme Court in the case of CIT Vs. Daulat Ram Rawatmull (supra.), the entire findings on this issue gets vitiated and has to be held as incorrect. Therefore, in our considered view, mistake apparent from record 22 MA Nos.75 to 81/PUN/2019 Coca-Cola India Pvt. Ltd.
has crept in while deciding the issue of depreciation on coolers and therefore, grounds pertaining to depreciation on coolers for the relevant assessment years involved is recalled for fresh adjudication.
39. That except for grounds pertaining to the issue of „service charges expenses‟ and „depreciation on coolers‟ which are recalled, rest of the order of the Tribunal dated 22.08.2019 remains unaltered.
40. The Registry is directed to list the appeal for hearing in due course of time and issue notice accordingly.
41. In the result, Miscellaneous Applications filed by the assessee are partly allowed.
Order pronounced on 29th day of October, 2021.
Sd/- Sd/-
INTURI RAMA RAO PARTHA SARATHI CHAUDHURY
ACCOUNTANT MEMBER JUDICIAL MEMBER
पुणे / Pune; ददनाांक / Dated : 29th October, 2021.
SB
आदेश की प्रधतधलधप अग्रेधषत / Copy of the Order forwarded to :
1. अपीलाथी / The Appellant.
2. प्रत्यथी / The Respondent.
3. The CIT(A)-1, Pune.
4. The CIT-1, Pune.
5. धवभागीय प्रधतधनधध, आयकर अपीलीय अधधकरण, " ए" बेंच, पुणे / DR, ITAT, "A" Bench, Pune.
6. गार्ा फ़ाइल / Guard File.
आदेशानुसार / BY ORDER, // True Copy // धनजी सधचव / Private Secretary आयकर अपीलीय अधधकरण, पुणे / ITAT, Pune.
23MA Nos.75 to 81/PUN/2019 Coca-Cola India Pvt. Ltd.
Date 1 Draft dictated on 07.09.2021 Sr.PS/PS /28.09.2021 2 Draft placed before author 28.10.2021 Sr.PS/PS 3 Draft proposed and placed JM/AM before the second Member 4 Draft discussed/approved by AM/JM second Member 5 Approved draft comes to the Sr.PS/PS Sr. PS/PS 6 Kept for pronouncement on Sr.PS/PS 7 Date of uploading of order Sr.PS/PS 8 File sent to Bench Clerk Sr.PS/PS 9 Date on which the file goes to the Head Clerk 10 Date on which file goes to the A.R 11 Date of dispatch of order