Income Tax Appellate Tribunal - Mumbai
Skf India Ltd, Mumbai vs Addl Cit 4(3), Mumbai on 4 August, 2017
आयकर अपीलीय अिधकरण, अिधकरण मुंबई " ई" खंडपीठ Income-tax Appellate Tribunal -"E"Bench Mumbai सव ी राजे ,ले लेखा सद य एवं, राम लाल नेगी, ी याियक सद य Before S/Shri Rajendra,Accountant Member and Ram Lal Negi,Judicial Member आयकर अपील सं./I.T.A./2811/Mum/2014, िनधा रण वष /Assessment Year: 2008-09 Dy. CIT-4(3, 6th Floor M/s. SKF India Ltd.
No.649, Aayakar Bhavan 5th , Floor, MGM Building Mumbai-400 020. Vs. Netaji Subhash Road, Charni Road Mumbai-400 002.
PAN:AAACS 0684 H
(अपीलाथ /Appellant) ( यथ / Respondent)
आयकर अपील सं./I.T.A./3362/Mum/2014, िनधा रण वष /Assessment Year: 2008-09 आयकर अपील सं./I.T.A./1427/Mum/2015, िनधा रण वष /Assessment Year: 2009-10 M/s. SKF India Ltd. Dy. CIT-4(3, 6th Floor Mumbai-400 002. No.649, Aayakar Bhavan Vs. PAN:AAACS 0684 H Mumbai-400 020.
(अपीलाथ /Appellant) ( यथ / Respondent)
Revenue by: Shri Rajesh Ojha-DR
Assessee by: Shri M.D. Thakur
सुनवाई क तारीख / Date of Hearing: 31.05.2017
घोषणा क तारीख / Date of Pronouncement: 04.08.2017
आयकर अिधिनयम,1961
अिधिनयम क धारा 254(1)के
के अ
तग त आदे श
Order u/s.254(1)of the Income-tax Act,1961(Act) लेखा सद य राजे के अनुसार PER RAJENDRA, AM-
Challenging the order,dated 28.02.2014,of the CIT(A)-8,Mumbai the Assessing Officer(AO)and the assessee have filed cross appeals for the Assessment Year(AY.)2008-09. The assessee has also filed an appeal for the next AY.As the issues involved in all the appeals are almost identical, so, we are adjudicating all the appeals together.Assessee- company,engaged in the business of manu -facturing and sale of ball bearings,roller bearings and textile machinery components,filed its return of income on 27/09/2008,declaring total income of Rs.252.63 crores,for the AY.2008-09. The AO completed the assessment u/s.143 (3) of the Act, on 20/12/2011,determining the income of the assessee at Rs.254.78 crores for that AY.
The assessee has filed additional ground of appeal stating that same was legal in nature.We find that the additional ground raised by it does not require enquiry into the facts,therefore,we admit the same.
2811M/14;3362/14 & 1427/15 SKF India Ltd.
ITA/2811/Mum/2014:
3.The solitary ground of appeal, raised by the AO, is about club expenses of Rs. 20.17 lakhs.It was brought over notice that identical issue was decided by the Tribunal,while deciding the appeal for the AY.2006-07(ITA/7723/Mum/2010). We are reproducing the relevant portion of the said order of the Tribunal and it reads as under:
5. Ground no.2, relates to disallowance of club expenditure amounting to Rs.4,34,062.
6. Before us, the learned Counsel for the assessee brought to our notice the order of the Tribunal passed in assessee's own case for the earlier assessment year 1990-91, 1991-92, 1999-2000 & 2005-06 and submitted that the said issue is now covered in favour of the assessee and against the Revenue. For the sake of completeness, we peruse the order of the Tribunal in one of the above assessment years i.e., assessment year 2005-06 and find that Para-5 of the said order deals with this ground and its adjudication is given in Para-5.2 which is extracted as under:-
"5.2 Thus it is clear that the issue is covered in favour of the assessee by the decision of the Hon'ble Jurisdictional High Court in the case of Otis Elevators Co. Ltd. reported in 195 ITR 682 (Bom.) which has been followed by the Tribunal in assessee's own case for the earlier assessment years. Accordingly, respectfully following the earlier order of the Tribunal, we decide this issue in favour of the assessee and against the revenue."
7.Considering the above settled nature of the issue, we are of the opinion that the assessee's ground no.2 is required to be allowed. Accordingly, we set aside the impugned order on this issue and allow ground no.2 raised by the assessee.
Considering the above, we dismiss the Ground raised by the AO.
ITA/3362/Mumbai/2014:
4.First effective ground of appeal(GOA-1,2and additional ground)deal with disallowance of bad debts written off,amounting to Rs.9.70 lakhs,u/s.36(2)(i)of the Act.
During the assessment proceedings,the AO found that the assessee had written off and claimed deduction of Rs. 27.79 lakhs as bad debts in computation of income,that the bad debts written off pertained to its trade debtors.The AO directed the assessee to file explanation in that regard.Vide its letters dated 14/10/2011and 05/12/2011,the assessee submitted that it would create a provision for doubtful debts every year and would write them off by utilising the provision for doubtful debts so created,that the provision for doubtful debts would be added back in the computation of income,that the bad debts written off would be claimed separately in the computation of income.It submitted a detailed list of bad debts written off.In respect of bad debts of Rs.14.13 lakhs the assessee furnished the details of 2 2811M/14;3362/14 & 1427/15 SKF India Ltd.
invoices pertaining to such debts(offered as income in the earlier years).For the balance amount of Rs.13.47 lakhs,it submitted invoice details and the reason for write-off.However, the AO was not satisfied with the explanation offered by the assessee. He held that assessee had failed to establish that remaining bad debts of Rs. 13.47 lakhs had been taken into account in computing the income for the previous year, as required u/s.36 (2).Finally, he made a disallowance of Rs.13,47,779/-under the head bad debts disallowed.
5.Aggrieved by the order of the AO, the assessee preferred an appeal before the First Appellate Authority(FAA)and made elaborate submissions. It also filed additional evidences before him. The FAA admitted the additional evidences as per the provisions of rule 46A(4) of the Income Tax Rules,1962 and called for a remand report from the AO.After considering the available material,the FAA held that the assessee was able to produce the invoice amount for write-off of the amount aggregating to Rs.3.77 lakhs,that for the remaining amount it had not produced any evidence,that it was the duty of the assessee to establish that bad debts written off were in accordance with the provisions of law.He directed the AO to restrict the disallowance accordingly.In the result, the FAA confirmed the addition of Rs.9,70, 126/-.
6.During the course of hearing before us,the Authorised Representative(AR)contended that assessee was following the same method for last so many years,that the disputed amount represented trade debtors,that claim made by the assessee should have been allowed as per the provisions of section 28 of the Act,that the assessee was maintaining proper books of accounts, that the bad debts written off constituted 0.016% of the revenue,that the amount of Rs. 27.79 lakhs was accounted for as sales revenue in the past and was duly offered to tax. He referred to the case of Dwarika Industrial Development and Chains Private Ltd (325 ITR
211),Harshad J Choksi(25taxmann.com.567) and Indian Technologies(P)Ltd. (78taxmann.com.232).
The Departmental Representative(DR) supported the order of the FAA.
7.We have heard the rival submissions and perused the material before us.We find identical issue has been dealt by the Tribunal,while deciding the appeal for the AY.2006-07(supra).We are reproducing paragraphs 8-12 of the order and same reads as under:
"8.Ground no.3,relates to disallowance of bad and doubtful debt written of amounting to Rs. 61, 00, 460.
9.Before us, the learned Counsel for the assessee narrated the facts leading to the write off of the bad and doubtful debt and submitted that such write of is now allowed 3 2811M/14;3362/14 & 1427/15 SKF India Ltd.
by virtue of the judgment of the Hon'ble Supreme Court in TRF Ltd. v/s CIT, [2010] 323 ITR 397 (SC), and many others. Further, he also mentioned that the bad and doubtful debts were ultimately written off in the Profit & Loss account as per the method of accounting consistently followed over the years. The learned Counsel supported the above statement by following written submissions.
"The appellant creates provision for bad and doubtful debts which is disallowed in computation of income.Refer computation of income for AY.s 2003-04,2004-05,2005-06 and 2006-07. The appellant had written off bad debts by debiting the provision account created in earlier years and making credit to relevant debtor account. For method of account of bad debts and reconciliation for provision for bad debts refer letter to CIT(A) dated 4 August 2010. The method followed by the appellant ultimately results in debiting bad debts written off to P&L Account. These bad debts are claimed separately by the appellant in computation of income. Refer computation of income for AY.s 2003-04, 2004- 05, 2005-06 and 2006-07. Provision created earlier is disallowed and therefore claim of bad debts does not result in double deduction.In case the appellant had written off the bad debts by debiting it to profit and loss account, provision created for bad and doubtful debts created in earlier years will have to be reversed. The impact on profit and loss account and computation of total income in both cases is depicted in separate statement. It is evidence from the statement that the impact on profit and loss account and computation of income of any of the method followed (as per the appellant or that as per the CIT(A)) is same."
10.Finally,the assessee relied on the decision of the Tribunal, Mumbai Benches, rendered in Arrow Coated Products Ltd. v/s ACIT, 22 Taxman.com 31 (Mum.). He also furnished statement showing impact on Profit & Loss account and computation of income on different methods of write-off of bad and doubtful debts.
11. The learned Departmental Representative dutifully relied on the orders of the Revenue authorities.
12. We have heard both the parties and perused the material available on record. We have noticed that there is a need for examining the statement of the assessee's write- off on the Profit & Loss account for verification by the Assessing Officer. It is also noticed that the decision of the Tribunal in Arrow Coated Products Ltd. (supra) was delivered subsequent time and the same was not available before the Revenue authorities at the relevant point of time. We, accordingly, remand this issue to the file of the Assessing Officer for verification and allowing the claim of the assessee after applying the decision of the Tribunal, Mumbai Bench, in Arrow Coated Products Ltd. (supra). Consequently, we set aside the impugned order passed by the learned Commissioner (Appeals) and allow the ground raised by the assessee for statistical purposes."
Respectfully following the above order,we direct the AO to carry out verification is directed in the order for the AY.2006-07 by the Tribunal.First effective ground of appeal is allowed in favour of the assessee,in part.
8.Second effective ground of appeal(GOA-3 to 6)deal with disallowance on account of un- reconciled AIR data,amounting to Rs.70.85 lakhs.During the assessment proceedings,the AO find that the assessee had recorded a service income of Rs.6.74 crores, that there was 4 2811M/14;3362/14 & 1427/15 SKF India Ltd.
difference in the income shown by it and the transactions appearing in the AIR/ITS, amounting two Rs. 3.05 crores.The AO directed the assessee to reconcile the differences.The assessee was able to reconcile the difference of Rs. 2.12 crores.Therefore,the AO made an addition of Rs. 1.10 crores to the income of the assessee.
9.During the appellate proceedings,before the FAA,the assessee filed additional evidences for an amount of Rs. 62.40 lakhs and Rs. 4.79 lakhs vide its letters dated 22/08/2012 and 08/10/2013 respectively.In the remand proceedings,the AO allowed a sum of Rs.39.66 lakhs. After consider -ing the available material,the FAA directed the AO to restrict the disallowance to Rs.70,85,540/- (Rs.1,10,52,398/- (-) Rs. 39, 66, 855/-).
10.Before us,the AR argued that the ITS/AIR data provided by the AO reflected only names of the party addresses and amounts,that it had requested the AO to supply additional details of payments made like invoice numbers,dates,cheque numbers,that the AO did not furnish the details to enable the assessee to reconcile the differences,that the service income of Rs. 6.74 crores exceeded the amount of service income as per the ITS of Rs. 3.05 crores, that non- reconciliation of AIR should not lead to an addition to the income of the assessee,that it was for the AO to establish that assessee had received further amounts that were not recorded in the books of accounts,that the AO had to produce some evidence in that regard,that the assessee could not be required to prove a negative.He relied upon the case of S Ganesh(ITA/527/ Mum/ 2010)that was upheld by the honorable Bombay High Court in ITA No. 1930 of 2011. He also placed reliance on six other cases decided by the Tribunal in that regard. He informed that identical issue had been dealt with by the Tribunal while deciding the appeals for the AY.2007-08(ITA/1666/Mum/2012,dated 22/05/2015)and for theAY.2011- 12(ITA/1420/Mum/2016,dated 16/ 09/2016).The DR left the issue to the discretion of the Tribunal.
11.We find that while deciding the appeal for the AY. 2007-08(supra),the Tribunal has dealt with the issue as under:
"18. Ground no.3, relates to disallowance on account of alleged unreconciled ITS data amounting to Rs. 12,99,690.
19. In this regard, the learned Counsel for the assessee submitted that AIR data amounting to Rs. 65,93,498,the assessee successfully reconciled to the extent of Rs. 52,93,803 that constitute 80% of the entire transaction. Regarding the balance of Rs. 12,99,690, the Assessing Officer did not provide the necessary details to enable the assessee to reconcile the same. It is a settled issue that merely non- reconciliation of the AIR data and does not lead to sustainable addition in the assessment. In our 5 2811M/14;3362/14 & 1427/15 SKF India Ltd.
opinion, there is a need for remanding this issue to the file of the Assessing Officer. Consequently, we set aside the impugned order passed by the learned CIT(A) on this issue and restore the issue back to his file with a direction to furnish requisite specific information to the assessee calling for reconciliation. Normally,the AIR data is generic as well as general in nature. The Assessing Officer is required to first examine the specific of the transaction that require reconciliation. Thus, ground no.3, is allowed for statistical purposes."
Respectfully following the above,we restore back the issue to the file of the AO for fresh adjudication,who will follow the directions of the Tribunal given for the AY.2007- 08(supra).Second effective ground of appeal is partly allowed.
12.Seventh ground of appeal is about short credit of TDS. The AR stated that original certificates for an amount of Rs.2.65 lakhs were submitted vide letters dated 28/06/2010 and 12/12/2011.
12.1.The AO is directed to verify the claim made by the assessee and to allow the credit accordingly.GOA-7 is allowed in favour of the assessee,in part.
ITA/1427/Mum/2015 (AY :2009-10):
13.Bad debts disallowance and reconciliation of AIR information are the effective Grounds of appeal for the year under appeal. Following our order for earlier year we decide first Ground of appeal in favour of the assessee.Second effective Ground is allowed in part in favour of the assessee.
As a result,appeals filed by the assessee for both the AY.s are is partly allowed and the appeal filed by the AO stands dismissed.
फलतःिनधा रती ारा दोन िन के िलए दािखल अपील अपील अंशतःमंजूर क जाती ह और िनधा रती अिधकारी ारा .व.
दािखल क गई अपील नामंजरू क जाती है .
Order pronounced in the open court on 4th August, 2017.
आदेश क घोषणा खुले यायालय म दनांक 4 अग त, 2017 क
को गई ।
(राम लाल नेगी / Ram Lal Negi) (राजे / Rajendra)
Sd/- Sd/-
याियक सद य / JUDICIAL MEMBER लेखा सद
य / ACCOUNTANT MEMBER
मुंबई Mumbai; दनांक/Dated :04.08.2017.
Jv.Sr.PS.
आदेश क ितिलिप अ ेिषत/Copy of the Order forwarded to :
1.Appellant /अपीलाथ 2. Respondent / यथ 6 2811M/14;3362/14 & 1427/15 SKF India Ltd.
3.The concerned CIT(A)/संब अपीलीय आयकर आयु , 4.The concerned CIT /संब आयकर आयु
5.DR "A " Bench, ITAT, Mumbai /िवभागीय ितिनिध, खंडपीठ,आ.अ. याया.मुंबई
6.Guard File/गाड फाईल स यािपत ित //True Copy// आदेशानुसार/ BY ORDER, उप/सहायक पंजीकार Dy./Asst. Registrar आयकर अपीलीय अिधकरण, मुंबई /ITAT, Mumbai.7