Income Tax Appellate Tribunal - Pune
Maharastra Scooters Ltd.,, Pune vs Department Of Income Tax on 3 February, 2003
IN THE INCOME TAX APPELLATE TRIBUNAL
Pune Bench B, Pune
Before Shri Shailendra Kumar Yadav, Judicial Member
and Shri G.S. Pannu, Accountant Member
I.T.A. No. A.Y.
1. 1464/PN/2003 2000-01
2. 292/PN/2006 2000-01
3. 766/PN/2006 2001-02
4. 1484/PN/2007 2003-04
5. 1445/PN/2007 2002-03
Asstt.CIT, Cir.9, Pune Appellant
Vs.
Maharashtra Scooters Ltd., Respondent
Akurdi, Pune -35
PAN AABCM 1799E
I.T.A. No. A.Y.
6. 31/PN/2004 2000-01
7. 752/PN/2006 2001-02
8. 1456/PN/2007 2002-03
9. 1457/PN/2007 2003-04
Maharashtra Scooters Ltd., Appellant
Akurdi, Pune -35
PAN AABCM 1799E
Vs.
Dy.CIT, Cir.8, Pune Respondent
Appellant by: Shri S.E.Dastur & Shri Nitesh Joshi
Respondent by: Shri Hareshwar Sharma
ORDER
Page 2 of 44 Maharashtra Scooters Ltd., ITA No.1464/PN/2003 , 292/PN/2006, 766/PN/2006, 1484/PN/2007,1445/PN/2007, 31/PN/2004, 752/PN/2006, 1456/PN/2007, 1457/PN/2007 A.Y. 2000-01,2000-01 ,2001-02, 2003-04, 2002-03, 2000-01, 2001-0 2002-03, 2003-04 PER BENCH There are 9 appeals under consideration, out of which, a couple of appeals by the revenue and the cross appeal by the assessee are arising out of the separate orders of the CIT(A) III, Pune. Since the issues involved in all these appeals are common, so they are being disposed of by a common order for the sake of convenience and brevity.
I.T.A. No. 1464/PN/2003 for A.Y. 2000-01 (department's appeal)
2. In this appeal, the following grounds are raised.
"1. The Learned CIT(A)-III has erred in deleting the disallowance of Rs.1,12,16,256/- on payment of productivity linked wages.
2. The Learned CIT(A)-III has erred in deleting the disallowance made on account of sales incentives.
3. The Learned CIT(A)-III has erred in deleting the addition of Rs.48,88,696/- on account of administrative expenses as per provisions of section 14A of the Act.
4. The Learned CIT(A)-III has erred in deleting the disallowance made of Rs.10,41,250/- on sales incentives given to UPSGEWC."
3. First issue is with regard to disallowance of Rs. 1,12,16,256/- being the expenditure incurred towards employees cost pursuant to productivity linked settlement in terms of Memorandum of Page 3 of 44 Maharashtra Scooters Ltd., ITA No.1464/PN/2003 , 292/PN/2006, 766/PN/2006, 1484/PN/2007,1445/PN/2007, 31/PN/2004, 752/PN/2006, 1456/PN/2007, 1457/PN/2007 A.Y. 2000-01,2000-01 ,2001-02, 2003-04, 2002-03, 2000-01, 2001-0 2002-03, 2003-04 Settlement. The A.O. noticed from Schedule-12 containing notes forming part of the accounts in point No.l1 that pursuant to productivity linked with the workmen during the year adhoc amount of Rs. l1,16,256/- was made payable to the workmen for the period 1.12.1998 to 31.3.1990 out of which an amount of Rs. 27,81,672/- pertained to the period 1st December 1998 to 31st March 1999. The assessee debited this amount to P & L A/c as employees' cost under the head 'Other Expenses'. The assessee vide its letter dated 3.2.2003 enclosed a copy of the memorandum of settlement dated 07.04.00 between assessee and the Maharashtra Scooters Kamgar Union and submitted as under.
"The total liability pursuant this productivity linked settlement was Rs.1,12,16,256/- and was payable for the period 01-12-1998 to 31-03-2000. As rightly pointed out, this includes an amount of Rs.27,81,692/- for the period from 01-12-1998 to 31-03-2000. It may please be noted that the settlement was reached only on 30-3-2000 and signed on 7th April, 2000 and since the period is relevant to the current financial year under assessment, provision was made in the books for this amount.
We would like to draw your kindly attention to Para 21 of the enclosed Memorandum wherein the amount of 'ad hoc payment' has been explained. The 'ad hoc' payment as explained in the Memorandum is different than liability of ad hoc nature as referred by your in your letter dated 27th January, 2003.Page 4 of 44
Maharashtra Scooters Ltd., ITA No.1464/PN/2003 , 292/PN/2006, 766/PN/2006, 1484/PN/2007,1445/PN/2007, 31/PN/2004, 752/PN/2006, 1456/PN/2007, 1457/PN/2007 A.Y. 2000-01,2000-01 ,2001-02, 2003-04, 2002-03, 2000-01, 2001-0 2002-03, 2003-04 It may, kindly appreciated that the 'ad hoc' payment is towards increased productivity which the Union specifically assured can be achieved and also to ensure that such payments do not become a precedent. Under these circumstances, the amount is referred to as 'ad hoc' which implies negotiated and a contractual liability to worker, agreed under the agreement referred to here above. The contractual liability to labour productivity is whole and exclusively expenditure for the business and is definite and certain liability arising during the year and is therefore, rightly claimed in the current assessment year, as allowable revenue expenditure. "
3.1 The Assessing Officer did not accept the contention of the assessee as the assessee was following the Mercantile System of Accounting and the deduction could be claimed and allowed only in the year in which the liability to pay accrued. The liability to pay accrued only when the liability crystallized or became ascertained. The stand of assessee was that the settlement was reached on 30.03.2000. However, agreement was signed only on 07.04.2000 which was evident from page No.26 of the Memorandum. The facts and the background of the case mentioned by the A.O. are as under :-
"Memorandum of settlement was signed between the Maharashtra Scooters Ltd. Satara having its registered office at Mumbai-Pune Rd, Akurdi, Pune-411 035, and the Maharashtra Scooters Kamgar Union having Registration No. PN-2258 and having Registered office at 91, Ravivar Peth, Satara, covering Wages, Dearness Allowance and Other Page 5 of 44 Maharashtra Scooters Ltd., ITA No.1464/PN/2003 , 292/PN/2006, 766/PN/2006, 1484/PN/2007,1445/PN/2007, 31/PN/2004, 752/PN/2006, 1456/PN/2007, 1457/PN/2007 A.Y. 2000-01,2000-01 ,2001-02, 2003-04, 2002-03, 2000-01, 2001-0 2002-03, 2003-04 Service Conditions of the permanent daily rated workmen of Maharashtra Scooters Ltd, on 14th June, 1995 effective from 1st June, 1995 to 30th November. 1998.
For the purposes of brevity Maharashtra Scooters Ltd., Satara is hereinafter referred to as "Company" and the Maharashtra Scooters' Kamgar Union is hereinafter referred to as "Union"
Union and Company are hereinafter refer to as the ''Parties". All permanent daily rated workmen employed by the company at Satara and its Registered Office at Akurdi are hereinafter referred to as "Workmen", ''Direct Workmen" means daily rated Workmen In production shop/s including Stores in Satara. The Union served a Notice to the company terminating the Memorandum of settlement dated 14th June 1995 vide Its letter No. MSKU/ MSL/KARAR/98 dated 2nd October 1998 and presented a Charter of Demands vide letter No. MSKU/ SATATRA/ MSL/ Magnipatra 98 dated 1st November 1998 to the Company. The Company vide its letter No.MSUPers/1483 dated 14th December 1998 presented Company's demands to the Union.
These demands were discussed between the Parties In two joint meetings on 25-12-98 and 28-1-99 but no settlement could be arrived at. Meanwhile the Union approached the Conciliation officer, Satara, under Industrial Disputes Act, 1947, vide its letter dated 26-12-1998 to intervene in the matter.
The Conciliation Officer called the Parties for preliminary discussions from time to time. After completing the preliminaries and verification of membership records, the Conciliation Officer admitted the demands of the Union hearing Nos. 1,2,3,4 and 5 as per his letter No. ALC/IDA/1564 dated 29-3-1999 and additional demand No.7 vide his letter No. 1923 dt. 11-6-99 in conciliation. In response to Company's letter No. MSUPer3/0319 dt. 20-3- 99 and letter No.MSL:Pers:388 dt. 5-4-99, the Conciliation Officer admitted the demands of the Company bearing Nos. Page 6 of 44
Maharashtra Scooters Ltd., ITA No.1464/PN/2003 , 292/PN/2006, 766/PN/2006, 1484/PN/2007,1445/PN/2007, 31/PN/2004, 752/PN/2006, 1456/PN/2007, 1457/PN/2007 A.Y. 2000-01,2000-01 ,2001-02, 2003-04, 2002-03, 2000-01, 2001-0 2002-03, 2003-04 1,2,3,4,5 and 6 under conciliation as per his letter No. ALC/IDA/21 07 dt. 23-04-1999.
Conciliation proceedings were held on 22-3-99, 5-4-99, 22-4- 99, 26- 4-99, 13-5-99, 19-5-99, 5-6-99,11-6-99 & 17-6-99 in the office of the Conciliation Officer. However settlement could not he arrived at. Failure Report was submitted by the Conciliation Officer to the Secretary. Dept. of Industry. Energy & Labour. Govt. of Maharashtra, Mumbai vide his letter No. 3271 dated 12-7-.9.9. On receiving the Failure Report the Commission of Labour called a meeting of the parties at Mumbai on 27.12.99. Thereafter, Govt. of Maharashtra vide their letter No. KA/AUD/2K/CR/ 574(105)/99/25678. dated 27-12-99 referred this dispute to the industrial Tribunal Satara."
.
3.2. However, during the pendency of Industrial Dispute Reference I.T. 2/1999 before Industrial Tribunal, Satara., parties continued discussions from time to time and reached an amicable settlement on 30.03.2000. Thereafter the parties decided to approach the Industrial Tribunal, Satara jointly in this matter to obtain an award based on mutually and amicably agreed the terms and conditions. The Assessing Officer also noticed that in page No.25 of the Memorandum of Settlement, which mentioned the duration of the settlement, it was mentioned that "this settlement shall come into force w.e.f. 1st April 2000 for the period 3.1/2 years upto 30th September 2003 and shall continue to be binding. Page 7 of 44
Maharashtra Scooters Ltd., ITA No.1464/PN/2003 , 292/PN/2006, 766/PN/2006, 1484/PN/2007,1445/PN/2007, 31/PN/2004, 752/PN/2006, 1456/PN/2007, 1457/PN/2007 A.Y. 2000-01,2000-01 ,2001-02, 2003-04, 2002-03, 2000-01, 2001-0 2002-03, 2003-04 According to the A.O. in this case the liability to pay crystallized and became quantified only after the Memorandum of Settlement u/s 2(P) r.w.s 18(1) of the Industrial Dispute Act 1947 was finalized and signed on 07.04.2000 and not before that. According to A.O. the liability was fluid, uncertain and not maintainable. Therefore, it could not be said that the liability accrued in A.Y.2000-01 which was claimed by the assessee. The productivity linked settlement under the Industrial Dispute Act became known only after the settlement order was passed by the authorities of the Industrial Dispute Tribunal as to what to be settlement scheme which was reached a finality only on 07.04.2000. The duration of the settlement also reveals that binding nature of the settlement came into effect only on 01.04.2000 and not allowable in the year under consideration because it was not crystallized. Accordingly, the A.O. disallowed the same. Matter was carried before the first appellate authority, the contentions of the parties representative are reproduced as under.
"The Assessing Officer has disallowed an amount of Rs, 1,12,16,256/- being expenditure incurred by the Company towards, the Employees Cost pursuant to productivity linked Wages Settlement reached in terms of Memorandum of settlement reached in terms of Memorandum of Settlement dated 7-4-2000 on the alleged ground that the liability was fluid, uncertain and not legitimate.Page 8 of 44
Maharashtra Scooters Ltd., ITA No.1464/PN/2003 , 292/PN/2006, 766/PN/2006, 1484/PN/2007,1445/PN/2007, 31/PN/2004, 752/PN/2006, 1456/PN/2007, 1457/PN/2007 A.Y. 2000-01,2000-01 ,2001-02, 2003-04, 2002-03, 2000-01, 2001-0 2002-03, 2003-04 Important facts to be noted and which the Assessing officer in the assessment has not considered are those though the Memorandum of assessment between the Union and the management was signed on 7-4-2000, it was actually reached on 30th March 2000. The settlement reached on 30-3-2000 is not only referred to in the Memorandum of Settlement dated 7-4-2000 but there are Minutes dated 30th March 2000 duly signed by both the parties to the dispute. It may also be kindly noted that there were number of meetings between the parties, before they reached settlement on 30-03-2000. A copy of the Minutes was also produced before the Assessing Officer. It was also brought to the notice of assessing officer that the stamp paper was purchased on 30th March 2000 and the time lag between agreement reached on 30th March 2000 and signed on 7th April 2000 was mainly due to detailing the agreement in detail, drafting legal provisions and verification of figures before final inking out settlement and signing by all the representatives of both the parties.
It is also important to appreciate that the liability of Rs, 1.12,16.256/- is for the period 1-12-1998 to 31-3- 2000 being ad hoc payment at the rate of Rs.45 per day for number of days the workmen have been paid during the said period The period from 1 st December 1998 to 31st March 2000 is the period from the date when the previous settlement was over (i.e. 30th November, 2000) and the date when the present settlement was reached (i.e. 30-3-2000).
It is further to be appreciated that operative period for the present settlement of 3 ½ years will start running form 1st April, 2000 and various terms of settlement have been stated in the said settlement. It may also be kindly appreciated that final Memorandum is dated 07- 04-2000, as the final settlement was reached on 30-03- 2000, which mentions broadly all the Terms of Settlement. There is no variation in drafting, and particularly no variation in the clause, which refers to the ad hoc payment. It may also kindly be noted that Page 9 of 44 Maharashtra Scooters Ltd., ITA No.1464/PN/2003 , 292/PN/2006, 766/PN/2006, 1484/PN/2007,1445/PN/2007, 31/PN/2004, 752/PN/2006, 1456/PN/2007, 1457/PN/2007 A.Y. 2000-01,2000-01 ,2001-02, 2003-04, 2002-03, 2000-01, 2001-0 2002-03, 2003-04 actual payment of Rs.1,12,16,256/- was made on 07-05- 2000, while making payment of April salary. The Assessing Officer has confused these facts and has not considered the documents already submitted to her during the course of the Assessment. The liability was crystallized and ascertained on 30-03-2000. The entire confusion in the mind of the Assessing Officer has arisen on account of the ratio of the decision in the case of CIT vs. Ashok Iron and Steel (199 ITR
815). The facts of the case decided by the Supreme Court and the facts of the Appellant are completely different. In the case of the Appellant ,the liability existed and was being negotiated with the workers at several meetings, which took place from time to time and was finally quantified on 30-3-2000. The question of non-existence of the liability was not there. The Assessing Officer has confused and wrongly applied the ratio of the decision to the Appellant. The Assessing Officer has also not appreciated the important facts, which have been stated here above, and which clearly point out that the contractual liability with the workers existed and was finally quantified and crystallized on 30-3-2000. Therefore, it is clear that the liability was in existence for the period ended 31-3-2000 and is therefore fully allowable as expenditure. "
3.3. The CIT(A) having considered the stand taken on behalf of assessee deleted the disallowance made by the A.O. The same has been opposed before us on behalf of the revenue. The revenue is basically reiterating the stand taken by Assessing Officer while the Learned A.R. supported the reasoning of CIT(A) deleting the disallowance in question and also brought to our notice that similar issue has been decided by the Tribunal in assessee's own case for Page 10 of 44 Maharashtra Scooters Ltd., ITA No.1464/PN/2003 , 292/PN/2006, 766/PN/2006, 1484/PN/2007,1445/PN/2007, 31/PN/2004, 752/PN/2006, 1456/PN/2007, 1457/PN/2007 A.Y. 2000-01,2000-01 ,2001-02, 2003-04, 2002-03, 2000-01, 2001-0 2002-03, 2003-04 the A.Y.1995-96 in ITA No. 372/PN//2000 vide para 10 to 13 of its order at pages 8 to 10 by observing as under:
10. Ground no. 5 reads as follows:
In the facts and circumstances of the case, the learned CIT(A) has erred legally and factually in upholding the disallowance of Rs. 56,00,000/- being provision of wage liability due to wage agreement signed with the Union. He has further erred in not allowing the claim of the company for further amount of Rs. 9,93,398 which was claimed as further deductions in view of the agreement with the Union regarding wages (para 8.3 page 14).
He ought to have allowed the provision of Rs. 56,00,000/- and also further claim of Rs. He ought to have allowed the provision of Rs. 56,00,000/- and also further claim of Rs., 9,93,398 on account of wage liability which has arisen on account of agreements signed with the Union regarding wages and which were in fact paid before the filing of the returns"
11. The sum of Rs. 5,6,00,000/- was in respect of wage liability due to wage agreement signed by the assessee company with the Union. The provision of the said amount was made and further an amount of Rs. 9,93,398/- was claimed as deduction in terms of the agreement with the Union. Brief facts in this regard as narrated by the ld. CIT(A) vide paragraph 8.1 are worth reproduction.
8.1 During the course of assessment proceedings, the A.O found that the appellant had debited an amount of Rs. 56,00,000/- in the books of accounts towards wages payable for the year under appeal. However, the A.O noted that the wages had become payable on account of a settlement signed by the management of the appellant company with the union on 14-6-1995. As per the said settlement, the wages payable were Rs. 65,93,398. During the course of assessment proceedings, therefore, the appellant claimed the balance amount of Rs. 9,93,398/- also as a deduction. The appellant further Page 11 of 44 Maharashtra Scooters Ltd., ITA No.1464/PN/2003 , 292/PN/2006, 766/PN/2006, 1484/PN/2007,1445/PN/2007, 31/PN/2004, 752/PN/2006, 1456/PN/2007, 1457/PN/2007 A.Y. 2000-01,2000-01 ,2001-02, 2003-04, 2002-03, 2000-01, 2001-0 2002-03, 2003-04 clarified before the A.O that the entire payment had been made before 7-7-1995. However, the A,.O was of the opinion that the liability on account of the said agreement dated 14-6-1995 had arisen on actual basis in the accounting year 1995-96 relevant to the assessment year 1996-97 and upto 31-3-1995, there was no liability on this account. Accordingly, the A.O asked the appellant to show cause as to why the amount of Rs. 56 lakhs should not be disallowed, in computing the total income of the appellant. The A.,O also asked the appellant to show cause as to why the appellant's further claim of Rs. 9,93,398/- in this regard should be accepted. In response thereto the appellant stated before the A.O that the provision of Rs. 56 lakhs made towards wage arrears payable to the workmen was on account of assurance given by the management and therefore, the same was allowable during the year under appeal. The appellant's further argument before the A.O was that since the actual liability accrued was more, the differential amount of Rs. 9,93,398/- also should be allowed. The A.O was, however, not satisfied with the appellant's contentions in this regard. The A.O has mentioned in this connection in the assessment order that the appellant was following mercantile system of accounting. Since the agreement between the management and the union was signed on 14-6-1995, i.e. much after the accounting year came to a close, according to the A.O, the liability for the expenditure could not be stated to be crystallized during the year under appeal. Accordingly, the A.O disallowed the amount of Rs. 56 lakhs, in computing the total income of the appellant. The A.O also did not allow the deduction of Rs. 9,93,398/-.
12. However, when the issue was raised before the first appellate authority he was in agreement with the view expressed by the A,.O that the agreement between the management and the union regarding the payment of wages was entered into on 14-6-1995 i.e. after the close of the accounting year, hence, deduction cannot be allowed on mercantile system of accounting. However, the ld. CIT(A) has held that the same deserves to be allowed in the subsequent Page 12 of 44 Maharashtra Scooters Ltd., ITA No.1464/PN/2003 , 292/PN/2006, 766/PN/2006, 1484/PN/2007,1445/PN/2007, 31/PN/2004, 752/PN/2006, 1456/PN/2007, 1457/PN/2007 A.Y. 2000-01,2000-01 ,2001-02, 2003-04, 2002-03, 2000-01, 2001-0 2002-03, 2003-04 assessment year i.e. 1996-97.
13. Having heard the submissions of both the sides, one thing is clear that so far as the genuineness of the claim as also the nature of the claim both are not in dispute. The only dispute is whether this claim can be allowed for A.Y. 1995-096 or it is to be allowed as directed by the ld. CIT(A) for A.Y. 1996-
97. To resolve this question a reliance was placed on the decision of Bombay High Court in the case of Mahindra Ugine and Steel co. Ltd., (2001) 250 ITR 84 (Bom). The Hon'ble jurisdictional High Court has taken a view that after the protracted negotiation, it has reached to a stage where it was possible to anticipate the law to pay workers higher wages. In this regard, the emphasis was made that the agreement has reached on 14-6-1995 and that agreement had the period of wages related to A.Y. 19095-096 therefore, while finalizing the account for A.Y. 1995-096 the position of the said law was very much ascertained hence claimed for the year under consideration. Almost identical was the situation before the Hon'ble High court, hence the ratio laid down therein can be said to have applied in the case of the assessee as well. Following the view of the Hon'ble court, we hereby direct to allow the claim, This ground is allowed."
Reliance was also placed on the decision of Bombay High Court in the case of Mahindra Ugine and Steel Co. Ltd. (2001) 250 ISTR 84 (Bom).
3.4. After going through the submissions and material on record we find that there was dispute between Maharashtra Scooters Kamagar Union hereinafter called union and assessee company in regard to certain benefits to be given to the employees. The dispute was taken before the concern industrial dispute Satara, Page 13 of 44 Maharashtra Scooters Ltd., ITA No.1464/PN/2003 , 292/PN/2006, 766/PN/2006, 1484/PN/2007,1445/PN/2007, 31/PN/2004, 752/PN/2006, 1456/PN/2007, 1457/PN/2007 A.Y. 2000-01,2000-01 ,2001-02, 2003-04, 2002-03, 2000-01, 2001-0 2002-03, 2003-04 while dispute was pending settlement was reached on 30.03.2000 with union. The settlement dated 30.03.2000 was reached during the pendency of the proceeding before conciliation officer as stated above. However, the Memorandum of settlement was signed on 07.04.2000. On 20.04.2000 pursuant to the settlement pursis was issued jointly by the assessee and the labour union before the Industrial Dispute Tribunal. We find that similar issue arose in the assessee's own case cited supra for A.Y.1995-96 wherein similar issue was decided in favour of the assessee by ITAT. Facts being similar so following the same reasoning, we uphold the order of the CIT(A) on this issue.
4. Next issue is with regard to payment to Bajaj Auto Ltd. in respect of Sales incentive schemes of Rs.2,57,34,649/-. The A.O. disallowed of Rs.2,57,34,649 being expenditure incurred by the company towards sales incentive payments reimbursed to M/s. Bajaj Auto Ltd. M/s. Bajaj Auto Ltd., carried various incentive schemes for end customers for which assessee had to reimburse Bajaj Auto Ltd a sum of Rs.2,57,34,649/-. The main scheme was Karodpati Hangama which was jointly launched with Bajaj Auto Ltd.
Page 14 of 44
Maharashtra Scooters Ltd., ITA No.1464/PN/2003 , 292/PN/2006, 766/PN/2006, 1484/PN/2007,1445/PN/2007, 31/PN/2004, 752/PN/2006, 1456/PN/2007, 1457/PN/2007 A.Y. 2000-01,2000-01 ,2001-02, 2003-04, 2002-03, 2000-01, 2001-0 2002-03, 2003-04 4.1 The A.O. did not accept the contention on following reasons.
"The claim of the assessee was verified from each and every angle and found not acceptable for the following reasons -
i) The documents submitted by the assessee which is enclosed as Annexure 1 is only a letter from BAL to the assessee stating that they have debited A/c., No. 54804 with a sum of Rs.2,57,34,649/- towards proportionate share of dealer sales incentives and crorepati hungama expenses incurred during the F.Y.1999-2000. A detailed working is also enclosed by the assessee, which is reproduced as below.
ii)
DEBIT TO MSL ON TOTAL SCOOTER SALES BASIS
Figures in (Rs.)
Basic price 01 Chetak 0 (0611) 16,910
Less: - CKD set price 7,910
Grossed up for Tex @ 5% 8,306
Values added by MSL 8605
% Value added to Basic Price 51
Sales Units %
Scooters Sales CBU BAL 1999-00 5,76.588 79.72
Scooters Salas CBU MSL 1999-00 1,46,673 20.28
Total 7,23,261 100.00
Chetek
Amount or incentive Paid / provided Total MSL Share
- for Jul-Oct. 1999 SCheme 169,142,849 34,301,157
- for Corepati Hungama prizes 79,681,538 16,155,939
Total 248,824,386 50,460,096
Value added bv MSL 51%
Shareof MSL 25,734.649
The total expenditure on account of crorepati Hungama scheme was &.248,824,386/-. On the basis of this, certain percentage has been worked out i.e. 20% and the expenditure is allocated accordingly.
During the course of assessment proceedings, the assessee was asked to justify and substantiate the claim as to how and what benefit has been derived by the assessee company from the scheme. In its response the assessee submitted the details of the scheme (enclosed as Annexure 11). On Page 15 of 44 Maharashtra Scooters Ltd., ITA No.1464/PN/2003 , 292/PN/2006, 766/PN/2006, 1484/PN/2007,1445/PN/2007, 31/PN/2004, 752/PN/2006, 1456/PN/2007, 1457/PN/2007 A.Y. 2000-01,2000-01 ,2001-02, 2003-04, 2002-03, 2000-01, 2001-0 2002-03, 2003-04 verification of the details of the scheme submitted by the assessee, it is found that nowhere on the promotion hand out or pamphlets, the name of the assessee i.e. Maharashtra Scooters is mentioned. The assessee was confronted with this fact. In response, the assessee's representative stated that this is a jointly promoted scheme, however, the marketing and the publicity is done by BAL only and the ratio of expenditure on the scheme has been debited to and passed on to the assessee company. The submission of the assessee cannot be accepted, as it is not verifiable as to what benefit the assessee has achieved from this scheme.
ii)The assessee was asked to prove as to whether there was any sale of scooter " manufactured by the assessee i.e. Bajaj Chetak as a result of this promotional scheme. In response, assessee has submitted a chart showing details of production and sale of scooter for the year under consideration, in comparison to the immediate preceding year i.e. F.Y.1998-
99. It can be seen from the above chart that production vis-a-vis sale of the assessee for June, July & August has gone down. Further, it can be seen from the chart that sale of scooters in the year under consideration as compared to previous year i. e. F.Y. 1998-99, has gone down substantially i.e. total production of scooters in the year under consideration is 1,52,595 as against in F. Y: 1998-99 and total sale during the year is 1,46,673 as against 1,52,595 in F. Y. 1998-99. Thus, there is no ground to assessee's contention that due to Crorepati Hangama scheme, the total sale of scooters has picked up during the year.
During the course of assessment proceedings, assessee also produced a list showing scooter-booking advance. From the list it can be seen that the total scooter-booking advance received during the year is Rs. 3,78,94,500/- and the total scooter booked during the year is 7,5,789 only. It is seen that the assessee company is manufacturer of 2-wheeler in the name and style of Bajaj Chetak and B.A.L also manufacture 2- wheeler in the name and style of Bajaj Chetak. The assessee company could not convincingly give the bifurcation and Page 16 of 44 Maharashtra Scooters Ltd., ITA No.1464/PN/2003 , 292/PN/2006, 766/PN/2006, 1484/PN/2007,1445/PN/2007, 31/PN/2004, 752/PN/2006, 1456/PN/2007, 1457/PN/2007 A.Y. 2000-01,2000-01 ,2001-02, 2003-04, 2002-03, 2000-01, 2001-0 2002-03, 2003-04 explain as to how the scheme has benefited it. As mentioned above, the whole show regarding Crorepati Hungama has been managed by BAL. The assessee company was only debited with & 2,57,34,649/- on account of expenditure as sale incentive/ sales promotion.
iv) The assessee further submitted documents /correspondences of the Vice President of BAL of various dates which nowhere reveal that one of the beneficiary of this promotional scheme is the assessee company.
v) The assessee was asked to produce if there is any written agreement between BAL & Maharashtra Scooters. The Assessee stated that all the transactions were through exchange of letters, but only a correspondence of Vice President of BAL stating that Rs.2.57,34.649/- has been debited in the your account towards proportionate share of dealers sales incentive, asking assessee company to pass necessary entries in his books of account and arrange to issue a cheque. The said letter dated 31-03-2000, Which was recommended by the Chairman of BAL only on 19-04-2000. The Assessing Officer ultimately held that the expenditure incurred by the assessee was in the nature of assisting the other company i.e. BAL. The expenses were incurred for fostering the business of another or it was made for distribution of profits or was wholly gratuitous or if some improper / oblige purpose outside the course of business, and incurred for somebody else business. More over the total number of scooters sold in earlier years were more than what was sold in the year as when such a scheme was floated. Therefore, the contention of the assessee that the scheme was to boost the sales was not correct. The Assessing Officer held that the expenditure incurred by the assessee was wholly and exclusively for the purpose of business. It was further held by the Assessing Officer that the assessee was not eligible for deduction because the Chairman of the BAL had approved / recommended the accounts of Maharashtra Scooter Ltd. for ft sum of Rs.2,57,34,649/- only on 19.4.2000 i.e. after the end of the F.Y.1999-00."
Page 17 of 44
Maharashtra Scooters Ltd., ITA No.1464/PN/2003 , 292/PN/2006, 766/PN/2006, 1484/PN/2007,1445/PN/2007, 31/PN/2004, 752/PN/2006, 1456/PN/2007, 1457/PN/2007 A.Y. 2000-01,2000-01 ,2001-02, 2003-04, 2002-03, 2000-01, 2001-0 2002-03, 2003-04 4.2. The matter was carried in appeal before the first appellate authority wherein following contentions were raised on behalf of assessee.
"Disallowance of Sales promotion expenses of Rs.2,57,34,649/- being expenditure incurred on account Sales Promotion by the Appellant on the alleged ground of the Sales not actually going up by the Scheme and the Assessing Officer further holding that the expenditure is not wholly and exclusively for the purpose of business. This conclusion reached by the Assessing Officer is based on complete confusion of the facts of the Appellant. Further these are based on the assumption of jurisdiction which the Assessing Officer does not have to sit on the judgment of a business decision, is not as per law.
The Assessing Officer to sit on the judgment of a businessman's decision in incurring of business expenditure is completely uncalled for. The expenses were wholly and exclusively incurred for business and these are neither of personal nature nor they are Capital expenditure, and therefore these are wholly allowable.
It is important to note following facts of the Appellant :-
The Appellant manufactures Chetak Brand of Scooters with the help of CKD components supplied by Bajaj Auto Limited, at its assembling plant at Satara. The Bajaj Auto Limited (BAL) also manufactures Chetak Brand of Scooters along with other brands of Scooters. Last couple of years has been very difficult years business-wise and the scooters demand has been falling. The taste of consumers is changing from scooters to motorcycles. The entire marketing network of distributors of Maharashtra Scooters Limited (the Appellant) and Bajaj Auto Limited is the same.
With a view to attract customers in the falling market and with a view to get whatever business, the Crorepati Hungama Scheme and ICICI Bond Scheme were launched. In this scheme Crorepati Hungama prizes have been awarded to the Page 18 of 44 Maharashtra Scooters Ltd., ITA No.1464/PN/2003 , 292/PN/2006, 766/PN/2006, 1484/PN/2007,1445/PN/2007, 31/PN/2004, 752/PN/2006, 1456/PN/2007, 1457/PN/2007 A.Y. 2000-01,2000-01 ,2001-02, 2003-04, 2002-03, 2000-01, 2001-0 2002-03, 2003-04 customers on the basis of 'scratch cards', which was placed in each scooter, in this scheme. There were prizes for each scooter buyer, and the Bumper prize was One Crore Rupees. Different prizes were given in the scheme of scratch card. The scheme was for the scooters sold to the customers. It is important to note here that Chetak Brand of Scooter made by Maharashtra Scooters Limited (the Appellant) and Bajaj Auto Limited, cannot he differentiated by the customers. It is only the cost of prizes, which has been shared between Bajaj Auto Limited and Maharashtra Scooters Limited All the expenses for prizes were Incurred by Bajaj Auto Limited. These costs were shared between Maharashtra Scooters Limited and Bajaj Auto Limited in proportion of the sales of scooters, actually affected for the periods during the relevant years. The percentage was worked out at 79.72% Bajaj Auto Limited, and 20.28% Maharashtra Scooters Limited total 100%. The CKD set price charged by Bajaj Auto Limited were Rs.7,910/- and the total sales price of the scooter was Rs.16,910/- i.e. 51% of the value addition made by Maharashtra Scooters Limited. The total expenses were thus limited to value addition by Maharashtra Scooters Limited. The expenses were shared between Bajaj Auto Limited and Maharashtra Scooters Limited. Final debit note was raised by Bajaj Auto Limited after all the expenses were incurred. The expenses were incurred from time to time during the year. Thus it will kindly be appreciated that the prizes were given to the customers and scooters sale affected, and whatever sales could be procured during the year were on account of this Crorepati Hungama Scheme and other ICICI Bond scheme. Otherwise the sales could have been still poorer. It must also kindly be appreciated that it is the businessmen's decision to incur business expenses for its business, the Assessing Officer cannot sit on the judgment as to why these expenses, were incurred and whether these expenses have actually achieved the targets.
In the facts and circumstances mentioned above, it may kindly be appreciated that the ratio applied by Assessing Officer does not apply to the facts of the Appellant. There is no doubt about the expenditure having been incurred. Neither these are personal expenses nor they are capital expenses and therefore Page 19 of 44 Maharashtra Scooters Ltd., ITA No.1464/PN/2003 , 292/PN/2006, 766/PN/2006, 1484/PN/2007,1445/PN/2007, 31/PN/2004, 752/PN/2006, 1456/PN/2007, 1457/PN/2007 A.Y. 2000-01,2000-01 ,2001-02, 2003-04, 2002-03, 2000-01, 2001-0 2002-03, 2003-04 the expenses are wholly and exclusively incurred for business and therefore allowable.
It is important to note here that these are expenses only for the prizes given to the scooter buyers. We have explained during the course of the appeal hearing that these expenses do not include any expenses on advertisement publicity etc. The expenses were incurred during the year, when the schemes were in fact implemented and prizes were awarded to scooter buyers from time to time. Only the debit note was received by Maharashtra Scooters Limited dated 19-04-2000, as approved by the Chairman of the appellant company, who is also the Chairman of Bajaj Auto Limited. You will therefore kindly appreciate that these expenses were incurred during the year, and were fully quantified, and are therefore allowable.
The assessing officer has no jurisdiction to sit on the judgment of a Business decision, and compare the actual scooter sales, with those of earlier years and draw conclusions stating that sale of scooters have not picked up during the year. He has no jurisdiction, to question how the schemes have benefited the company.
It may also be noted that prizes have in fact also gone to the buyers of Maharashtra Scooters Limited scooters. Each scooter chassis number identifies, if the scooter is manufactured by Bajaj Auto Limited or Maharashtra Scooters Limited. We have already produced before you list of prize winners of Maharashtra Scooters Limited scooter buyers, marked out of the total Prize winners.
We have also explained in detail how the expenses have been shared between Bajaj Auto Limited and Maharashtra Scooters Limited, in a fair manner. (In proportion to sales, and only for value addition by Maharashtra Scooters Limited) Page 20 of 44 Maharashtra Scooters Ltd., ITA No.1464/PN/2003 , 292/PN/2006, 766/PN/2006, 1484/PN/2007,1445/PN/2007, 31/PN/2004, 752/PN/2006, 1456/PN/2007, 1457/PN/2007 A.Y. 2000-01,2000-01 ,2001-02, 2003-04, 2002-03, 2000-01, 2001-0 2002-03, 2003-04 The ratios of decisions quoted by the assessing officer, are not relevant to the facts of the appellant, and are therefore not applicable.
On wrong presumptions and the reasoning that Sales did not actually go up by the Scheme. The Deputy Commissioner of Income has to understand and appreciate, the commercial and business considerations, ,which lead to incurring of the expenditure."
4.3. It was further submitted on behalf of the assessee that the expenses were related to the year ended 31-3-2000 and assessee had derived the benefit of the sales support. Since the assessee was following the mercantile system these were to be allowed in the year in which the expenses was related. The fact that the debit note was approved after the year end did not affect the incidence of the expense and neither to the period to which it related. Though the claim of reimbursement was made after the year end, the fact remained that promotional schemes were already undertaken during the previous year and expenses were incurred and benefit had already been derived by assessee. On a matching principle, once income is accounted for, related expenses should also be allowed.
4.4 Having considered the submissions on behalf of assessee the CIT(A) deleted the disallowance of Rs. 2,57,34,649/- and the same is opposed by the revenue. The learned DR has reiterated the Page 21 of 44 Maharashtra Scooters Ltd., ITA No.1464/PN/2003 , 292/PN/2006, 766/PN/2006, 1484/PN/2007,1445/PN/2007, 31/PN/2004, 752/PN/2006, 1456/PN/2007, 1457/PN/2007 A.Y. 2000-01,2000-01 ,2001-02, 2003-04, 2002-03, 2000-01, 2001-0 2002-03, 2003-04 stand taken by the A.O. On the other hand the Learned AR heavily relied on the CIT(A). The learned AR drawn our attention to various incentive schemes and tried to justify the order of CIT(A) on this issue.
4.5 After going through the rival submissions we find that Maharashtra Scooter along with BAL are producing the Chetak Scooters. Chairman in both the companies is the same. The distribution of scooters even manufactured by the assessee is channeled through network of BAL. There is no distinction of the Chetak scooter manufactured by the assessee and BAL as the scooter manufactured either by these concerns go in the market only in the brand name of the Chetak. Some of the promotional schemes were initiated by BAL also intended to benefit the sale of two wheelers including Chetak for which both the concerns had mutually involved and launched the schemes. The CIT(A) found that it was not a case that sharing of sales promotion expenses was intended to bear the expenses of BAL. In fact this was common promotional scheme in which both the concerns were involved and benefited and naturally these expenses had to be borne on certain percentage or on certain basis by both the concerns. Inspite of this the sale during the year was lesser than earlier year. The sales Page 22 of 44 Maharashtra Scooters Ltd., ITA No.1464/PN/2003 , 292/PN/2006, 766/PN/2006, 1484/PN/2007,1445/PN/2007, 31/PN/2004, 752/PN/2006, 1456/PN/2007, 1457/PN/2007 A.Y. 2000-01,2000-01 ,2001-02, 2003-04, 2002-03, 2000-01, 2001-0 2002-03, 2003-04 would have been much lesser without promotional schemes. Therefore, to evaluate the allowability of the expenses on the basis of the sales of earlier year was not proper and irrelevant. Even approval for the debit of the amount to Maharashtra Scooters by the Chairman of the BAL only on 19/04/2000 was not material for the fact that even though there is no written agreement between the two concerns. The fact that the promotional scheme is common for both the concern and buyers of chetak model manufactured by assessee were also benefited by the scheme which is evident from the fact that there was understanding between both the concerns for such promotional scheme and sale incentives to be given to the employees and customers. The brand Chetak manufactured by both the concerns and end customer goes with brand is manufactured either by BAL or Maharashtra Scooters. Any promotional scheme including Chetak ultimately going to benefited to the assessee as well as BAL and therefore expenses on sale promotion to that extent becomes common and had to be shared by both the companies. Therefore, the CIT(A) rightly held that the expense should be debited to the assessee are genuine and incurred for its business and not only to help BAL. With reference to approval of chairman of the BAL for raising debit note on MSL Page 23 of 44 Maharashtra Scooters Ltd., ITA No.1464/PN/2003 , 292/PN/2006, 766/PN/2006, 1484/PN/2007,1445/PN/2007, 31/PN/2004, 752/PN/2006, 1456/PN/2007, 1457/PN/2007 A.Y. 2000-01,2000-01 ,2001-02, 2003-04, 2002-03, 2000-01, 2001-0 2002-03, 2003-04 towards promotional share of dealer sales incentive and Karodpat Hungama expenses incurred by the BAL during the F.Y.1990-00 on 19/04/2000 was not material. The expenses were incurred during the F.Y. 1999-00 by BAL and same was reimbursed by MSL. The liability for such expenses had accrued during the F.Y.1999-00 and assessment under consideration they have to be accounted before the closer of the books. The expenses had accrued in year under consideration. In view of the above discussion the CIT(A) is justified in deleting the addition of Rs.2,57,34,649/- made by the Assessing Officer, we uphold the same.
5. Next issue is with regards to the disallowance on account of administrative expenses as per the provisions of section 14A of the Act. The Assessing Officer disallowed Rs. 49,88,696/- towards estimated to be 5% as having been incurred to earn an amount of Rs.97,73,925/- by way of dividend income and interest on tax free bonds) expenditure in relation to the exempt income and treating the same as not allowable expenditure in computation of the total income. The matter was carried in appeal before the first appellate authority and CIT(A) after considering the contentions raised on Page 24 of 44 Maharashtra Scooters Ltd., ITA No.1464/PN/2003 , 292/PN/2006, 766/PN/2006, 1484/PN/2007,1445/PN/2007, 31/PN/2004, 752/PN/2006, 1456/PN/2007, 1457/PN/2007 A.Y. 2000-01,2000-01 ,2001-02, 2003-04, 2002-03, 2000-01, 2001-0 2002-03, 2003-04 behalf of the assessee observed that it is not a case of Assessing Officer that the investment in shares and bonds were made out of any borrowed funds by the assessee. Therefore the investment in these bonds and shares are out of surplus funds to which the assessee had not incurred any expenditure. In the year under consideration assessee has only deposited 25 dividend warrants in the bank account. Therefore, the only act on the part of the assessee was to deposit these dividend warrants for which the same petty expenses might have been incurred by the assessee. There could be certain managerial expenses for overseeing the dividend income for which there cannot be such high expenses to the tune of Rs.49,88,696/-. The relief in respect of intercorporate dividends is available only with reference to net dividend as computed under the act and not on actual amount of dividend received. The proportionate management expenses for earning dividend should be considered as expenses and only net dividend should be allowed to be exempt. The presumption of Assessing Officer of the expenses of Rs.49,88,696/- for earning dividend income was found excessive and irrational by the CIT(A). In view of the above according to the CIT(A) it would be sufficient to estimate expenses of not more than Rs. 1 lakh inclusive of all petty expenses and all managerial Page 25 of 44 Maharashtra Scooters Ltd., ITA No.1464/PN/2003 , 292/PN/2006, 766/PN/2006, 1484/PN/2007,1445/PN/2007, 31/PN/2004, 752/PN/2006, 1456/PN/2007, 1457/PN/2007 A.Y. 2000-01,2000-01 ,2001-02, 2003-04, 2002-03, 2000-01, 2001-0 2002-03, 2003-04 expenses to earn dividend income of Rs.9,97,73,926/- by assessee. Accordingly he disallowed 1 lakh comprising on account of managerial expenses as well as miscellaneous expenses for earning dividend. These reasoned finding with regards to Rs. 1 lakh on account of managerial and administrative as well as other miscellaneous expenses for earning dividend is justified. We uphold the same.
6. The next issue in respect of sales incentives paid to dealers from Uttar Pradesh State Government Employee Welfare Corporation ( UPSGEWC) of Rs.10,41,250/-. The Assessing Officer disallowed the Rs.10,41,250/- paid to Uttar Pradesh State Government Employee Welfare Corporation. The Assessing Officer has made addition by observing as under.
"During the year under consideration, it is seen that assessee has debited on amount of Rs.10,41,250/- being selling expenses given to Uttar Pradesh State Government Employees Welfare Corporation (UPSGEWC). The assessee vide Its letter dated 14/02/2003 stated that It had paid sales Incentives to dealers from Uttar Pradesh who sold the scooters to Govt. employees of Uttar Pradesh as per schemes implemented by Bajaj Auto. As per the scheme an amount of Rs. 450/- per scooter as ORC was passed on to UPGEWC for exclusive business or scooters and Rs.300/- for non-exclusive business.
The contention of the assessee is not acceptable. In view or the Page 26 of 44 Maharashtra Scooters Ltd., ITA No.1464/PN/2003 , 292/PN/2006, 766/PN/2006, 1484/PN/2007,1445/PN/2007, 31/PN/2004, 752/PN/2006, 1456/PN/2007, 1457/PN/2007 A.Y. 2000-01,2000-01 ,2001-02, 2003-04, 2002-03, 2000-01, 2001-0 2002-03, 2003-04 decision in the case of CIT vs Coal Shipment Pvt. Ltd. (82 ITR
902. 197) and Devdas Vithaldas & .Co. vs. err, 1992 (84 ITR
277. 285 SCJ). wherein it was held that payment made to ward off competition in business could constitute capital expenditure. If the object of making the payment is to derive an advantage by eliminating the competition over some length of time the same result would not follow if there is no certainty of duration of advantage and same can be put to end at any time. How long the period of contemplated advantage should be in order to constitute enduring benefit would depend on the circumstances and facts of each Individual case.
6.1. It has been held in number of cases that ordinarily money is paid to keep out a potential competitor in business where the benefit is of an enduring nature is an expenditure in the nature of capital. It has also been held that contribution made by a member of association with a view to remove or to prevent trade competition is of capital nature. For the reasons discussed above. the payment of 10,41,250/- made by the assessee to UPGOEWC toward competition being a capital expenditure was held as disallowable and added to the total Income of the assessee.
6.2. The matter was carried in appeal before first appellate authority who after considering the submissions made on behalf of the assessee and material on record, observed that expenses incurred by the assessee could not be termed as capital expenditure for keeping out potential competitor in business. Assessing Officer was not justified in holding that this expenditure could be held as Page 27 of 44 Maharashtra Scooters Ltd., ITA No.1464/PN/2003 , 292/PN/2006, 766/PN/2006, 1484/PN/2007,1445/PN/2007, 31/PN/2004, 752/PN/2006, 1456/PN/2007, 1457/PN/2007 A.Y. 2000-01,2000-01 ,2001-02, 2003-04, 2002-03, 2000-01, 2001-0 2002-03, 2003-04 capital expenditure for keeping out a potential competitor. It is simple case of incentive to dealers who had passed on to the customer under no circumstances could be held as capital expenditure for keeping out a potential competitor toward the competition of business. Therefore, disallowance of sales incentive given to UPSGEWC by the Assessing officer was found unwarranted and the same has rightly been deleted by the CIT(A) which needs no interference from our side. We uphold the same.
7. As a result, appeal filed by the revenue is dismissed.ITA No. 31/PN/04 for A.Y.2000-01 (assessee's appeal)
8. In this appeal the assessee has raised the following grounds;
"1. In the facts and circumstances of the case, the Commissioner of Income Tax (Appeals) - III, has erred legally and factually in disallowing an amount of Rs.1,00,000/- being estimated managerial and administrative expenses as well as other miscellaneous expenses, as expenditure in earning to the exempt dividend income, and treating the same as not allowable expenditure, in computation of the Total Income. (Not allowing claim of the company in full.) The Commissioner of Income Tax (Appeals) having appreciated that ad hoc estimate of Assessing Officer is incorrect, ought not to have estimated on ad-hoc basis an amount of Rs.1,00,000/- as expenditure in relation to earning exempt dividend income. He ought to have appreciated that the assessee has not incurred any Page 28 of 44 Maharashtra Scooters Ltd., ITA No.1464/PN/2003 , 292/PN/2006, 766/PN/2006, 1484/PN/2007,1445/PN/2007, 31/PN/2004, 752/PN/2006, 1456/PN/2007, 1457/PN/2007 A.Y. 2000-01,2000-01 ,2001-02, 2003-04, 2002-03, 2000-01, 2001-0 2002-03, 2003-04 expenditure for earning the said income.
2. In the facts and circumstances of the case, the Commissioner of Income Tax (Appeals)-III has erred legally and factually in confirming part disallowance of M.I.S. charges of Rs.12,37,434/- and treating them as capital expenditure.
The Commissioner of Income Tax (Appeals) ought to have allowed the deduction of Rs.12,37,434/- as revenue expenditure as claimed by the assessee Company.
Without Prejudice to Ground 2 above, he has further erred in directing to allow only 25% depreciation on Rs.9,25,539/- and depreciation @60% on Rs 2,03,323/-.
a) He ought to have allowed Software expenses as revenue expenditure.
b) He ought to have allowed depreciation @60% instead of 25% on the total amount considered as capital expenditure."
9. The first issue is with regard to disallowance of managerial expenses. This issue is covered by our finding in revenue's appeal in para 5 of this order wherein the order of the CIT(A) on this issue has been upheld. The same takes care of issue in assessee's appeal. Accordingly, assessee's appeal on this issue is not allowed.
10. The next issue is disallowance of M.I.S. charges treating the same as capital expenditure. In the year under consideration Assessing Officer disallowed Rs.12,37,434/- towards M.I.S. Page 29 of 44 Maharashtra Scooters Ltd., ITA No.1464/PN/2003 , 292/PN/2006, 766/PN/2006, 1484/PN/2007,1445/PN/2007, 31/PN/2004, 752/PN/2006, 1456/PN/2007, 1457/PN/2007 A.Y. 2000-01,2000-01 ,2001-02, 2003-04, 2002-03, 2000-01, 2001-0 2002-03, 2003-04 charges. The order of the Assessing Officer reads as under:
"During the year under consideration, it is seen from the Profit and loss a/c. under the head of 'Miscellaneous Expenditure' that assessee has claimed an amount of Rs.12,37,434/- on account or MIS charges. The assessee vide its submission dated 14/02/2003 stated that the MIS charges of Rs.12,37,434/- are purely in nature of revenue only and not of capital nature. The year under assessment was the year of change over to new millennium (Y2K related issues). The Company had to incur expenditure for changing the set up to make it compatible for year 2000 and some part on replacement of computer hardware and software which had become outdated. The assessee further stated that these are allowable as revenue in lieu of provisions of Sec.36(xi) of the I.T.Act, 1961 being towards Y2K changeover.
The assessor's contention has been considered, however from the details furnished along with the return on page no. 103 it is seen that these expenditure are not Y2K compliance as stated under section 36(1)(xi) i.e. The expenditure is not incurred to make a computer system Y2K compliant. However, a normal depreciation @ 25% is allowed u/s 32 of the I.T.Act."
10.1. The matter was carried in appeal before the first appellate authority. The CIT(A) found that the expenses of Rs.12,37,434/- can be divided in three parts.
a) Pertaining to software.
b) Pertaining to hardware
c) Miscellaneous expenses such as floppies. Page 30 of 44
Maharashtra Scooters Ltd., ITA No.1464/PN/2003 , 292/PN/2006, 766/PN/2006, 1484/PN/2007,1445/PN/2007, 31/PN/2004, 752/PN/2006, 1456/PN/2007, 1457/PN/2007 A.Y. 2000-01,2000-01 ,2001-02, 2003-04, 2002-03, 2000-01, 2001-0 2002-03, 2003-04
(a) Expenses incurred on software comprised of Rs.1,73,363/-, Rs.81,550/- Rs. 1,17,730/- and Rs.5,52,896/- totaling to Rs.9,25,539/-. These are softwares which the assessee is using as licencee and are not related to making any computer system Y2K. These are user's software such as MS Office, Oracle etc. which are of enduring advantage for which assessee is entitled for depreciation at 25% as applicable for intangible assets. The assessee also incurred expenditure on hardware of the computer comprising of Rs.35,000/-, Rs.6780/-, Rs.66,800/-, Rs.60,168/-, Rs.39,575/- totaling to Rs.2,08,323/- which are hardwares which includes motherboard, C.D.Drive, printer, colour monitor etc. These are parts of computers and capital expenditure on which the assessee is entitled for depreciation @ 60% . There are other expenses on consumables including floppies, internet connections, printer, cartridges and ribbons which are used as consumables for using the computers and printers and therefore by the very nature of expenses they are revenue in character and therefore these sums are allowed as revenue expenditure. These sums are totaling to Rs.1,03,572/-. In view of the above, the Assessing Officer was directed to hold Rs. 9,25,539/- and Rs.2,08,323/- as capital expenditure and allow depreciation @ 25% on Rs.9,25,539/- and 60% on 2,08,323/- as capital expenditure. The expense on consumables of Rs.1,03,572/- was allowed as revenue expenditure. The same has been opposed before us on behalf of the assessee. 10.2 After hearing both the parities and perusing the material on record, we do not find any infirmity in the order of the CIT(A). We uphold the same and reject the ground taken by the assessee. Page 31 of 44
Maharashtra Scooters Ltd., ITA No.1464/PN/2003 , 292/PN/2006, 766/PN/2006, 1484/PN/2007,1445/PN/2007, 31/PN/2004, 752/PN/2006, 1456/PN/2007, 1457/PN/2007 A.Y. 2000-01,2000-01 ,2001-02, 2003-04, 2002-03, 2000-01, 2001-0 2002-03, 2003-04 As a result, appeal of the assessee is partly allowed. ITA No. 292/PN/06 for A.Y.2000-01 (department's appeal)
11. This appeal has been filed by the revenue on the following grounds.
"1.1 On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in holding that the payment of technical knowhow of Rs.4,62,35,081/- is revenue in nature and not to be considered for allowance of depreciation.
1.2 The Ld.CIT(A) ought to have appreciated the changed position of law in the provisions of Sec.32 of the Income- tax Act w.e.f. 01/04/99 which envisage that know-how be considered for depreciation. Further, the CIT(A) ought to have considered that all the judgments relied upon was delivered prior to amended provision in Sec.32."
12. After hearing both the parties and perusing the material on record, we find that this issue has been discussed and decided in favour of the assessee by the Tribunal in ITA No. 1325/PN/1990 for A.Y. 1987-88 dated 5-11-1996 by observing as under:
"Aggrieved, the revenue has filed the appeal before us. We have heard at length the learned senior Departmental Representative shri Hari Krishan and the learned counsels of the assessee Shri S.E. Dastur and P.J. Pardiwala. We find that this issue is covered in favour of the assessee in the assessee's own case in ITA No. 870, 436, 871 and 44/PN/1988, vide order dated 28-9-1993. Following the reasons recorded in the said appellate order, we direct the revenue to allow the expenditure as revenue expenditure. The assessee therefore, succeeds on this issue. The revenue fails on this ground,."Page 32 of 44
Maharashtra Scooters Ltd., ITA No.1464/PN/2003 , 292/PN/2006, 766/PN/2006, 1484/PN/2007,1445/PN/2007, 31/PN/2004, 752/PN/2006, 1456/PN/2007, 1457/PN/2007 A.Y. 2000-01,2000-01 ,2001-02, 2003-04, 2002-03, 2000-01, 2001-0 2002-03, 2003-04 Nothing contrary was brought to our notice by the Revenue. Facts being similar, so following the said order of the Tribunal in ITA No. 1325/PN/1990 (supra) this issue is decided in favour of the assessee.
13. As a result, appeal of the revenue is dismissed. ITA No. 766/PN/06 for A.Y.2001-02 (department's appeal)
14. This appeal has been filed by the revenue on the following grounds.
"1.1 The Learned CIT(A)-III has erred in deleting the disallowance of Rs.47,15,683/- on account of sales incentives.
1.2 The Learned CIT(A)-III has erred in deleting the addition of Rs.11,22,193/- on account of administrative expenses as per provisions of section 14A of the Act.
1.3 The Learned CIT(A)-III has erred in deleting the disallowances made of Rs.8,55,300/- on sales incentives given to UPSGEWC.
1.4 On the facts and in the circumstances of the case, the Ld.CIT(A) has erred in holding that the payment of technical knowhow of Rs.2,32,34146/- is revenue in nature and not to be considered for allowance of depreciation."
15. The first issue is with regard to disallowance of Rs.47,15,683/- on account of sale incentives. Similar issue has been discussed and decided in favour of the assessee in A.Y.2000- Page 33 of 44 Maharashtra Scooters Ltd., ITA No.1464/PN/2003 , 292/PN/2006, 766/PN/2006, 1484/PN/2007,1445/PN/2007, 31/PN/2004, 752/PN/2006, 1456/PN/2007, 1457/PN/2007 A.Y. 2000-01,2000-01 ,2001-02, 2003-04, 2002-03, 2000-01, 2001-0 2002-03, 2003-04 01 in revenue's appeal vide para 4 to 4.5 of this order. Facts being similar, so following same reasoning, this issue is decided in favour of the assessee.
16. The next issue is disallowance of Managerial administration expenses u/s.14(A) of the Act. This issue has been discussed and decided in revenue's appeal vide para 5 of this order. Facts being similar so following the same reasoning deletion of addition of Rs.11,22,193/- is upheld and the ground raised by the revenue is dismissed.
17. The next issue of the revenue is with regard to disallowance made of Rs.8,55,300/- on sales incentives given to UPSGEWC. This issue has been discussed and decided in revenue's appeal vide para 6 of this order in favour of the assessee. Facts being similar so following the same reasoning the issue is decided in favour of the assessee.
18. The next issue is with regard to of payment of technical knowhow of Rs.2,32,34,146/- is revenue expenditure. This issue also has been decided in A.Y.2000-01 in ITA No. 292/PN/06 vide Page 34 of 44 Maharashtra Scooters Ltd., ITA No.1464/PN/2003 , 292/PN/2006, 766/PN/2006, 1484/PN/2007,1445/PN/2007, 31/PN/2004, 752/PN/2006, 1456/PN/2007, 1457/PN/2007 A.Y. 2000-01,2000-01 ,2001-02, 2003-04, 2002-03, 2000-01, 2001-0 2002-03, 2003-04 para 12 of this order. Facts being similar, so following same reasoning, this issue is decided in favour of the assessee.
19. In the result, the appeal of the Revenue is partly allowed. ITA No. 752/PN/06 for A.Y.2001-02 (assessee's appeal)
20. This appeal has been filed by the assessee on the following grounds.
"1. In the facts and circumstances of the case, the Commissioner of Income Tax (Appeals) - III, has erred legally and factually in disallowing an amount of Rs.1,00,000 being estimated expenses, as attributable to earning the exempt income i.e. dividend income and interest from Tax Free Bonds, and treating the same as not allowable expenditure, In computation of the Total Income.
The Commissioner of Income Tax (Appeals) having appreciated that adhoc estimate of Assessing Officer is incorrect, ought not to have estimated on ad-hoc basis an amount of Rs.100,000 as expenditure attributable to earning exempted income. He ought to have appreciated that the assessee has not incurred any expenditure for earning the said income and therefore ought to have allowed the exempt income u/s. 10(33) of the Income tax act, 1961 as claimed by the assessee Company.
2. In the facts and circumstances of the case, the Commissioner of Income Tax (Appeals)-III has erred legally and factually In confirming part disallowance of Rs.31,11,732 out of Rs.1,16,15,090 claimed by the assessee, being provision for Earned leave Encashment provided on occurred basis i.e. actual amount is provided in the books of accounts, being practice followed consistently from year to year in the past by the Page 35 of 44 Maharashtra Scooters Ltd., ITA No.1464/PN/2003 , 292/PN/2006, 766/PN/2006, 1484/PN/2007,1445/PN/2007, 31/PN/2004, 752/PN/2006, 1456/PN/2007, 1457/PN/2007 A.Y. 2000-01,2000-01 ,2001-02, 2003-04, 2002-03, 2000-01, 2001-0 2002-03, 2003-04 assessee company.
The Commissioner of Income Tax (Appeals) having appreciated that the Income Tax Appellate Tribunal, Pune Bench in the matter of assesses appeals for the AV. 1989-90 and A Y 1991-92 to 1994-95 had allowed the claim of the assessee, has erred legally and factually in allowing only a sum of Rs.85,03,358 (being as per actuarial valuation) as against Rs.1,16,15,090 (actual provision) claimed by the assessee, on the wrong notion that the liability provided by the assessee is on higher side. The Commissioner of Income Tax (Appeals), therefore, ought to have allowed the claim of the assessee in full as claimed. He ought to have appreciated the fact that the assessee, in conformity with the mercantile system of booking keeping, has provided the liability for leave encashment.
3. In the facts and circumstances of the case, the Commissioner of Income Tax (Appeals) - III, has erred legally and factually in confirming the order of Asstt. Commissioner of Income Tax disallowing an amount of Rs.17,81,500/-, being company's claim towards Inter- corporate deposits written off from Books of Accounts as bad.
The Commissioner of Income Tax (Appeals) ought to have appreciated the facts that:
a. the inter-corporate deposits were placed by the assessee in the in the ordinary course of its business and in conformity with the provisions contained its Memorandum and Articles of Association, which empowers the assessee to deploy the surplus finds.
b. the interest earned on the Inter-corporate deposits was being regularly offered and assessed as 'Income from Business' since last several years.Page 36 of 44
Maharashtra Scooters Ltd., ITA No.1464/PN/2003 , 292/PN/2006, 766/PN/2006, 1484/PN/2007,1445/PN/2007, 31/PN/2004, 752/PN/2006, 1456/PN/2007, 1457/PN/2007 A.Y. 2000-01,2000-01 ,2001-02, 2003-04, 2002-03, 2000-01, 2001-0 2002-03, 2003-04 c. has erred in concluding that ...
".... no separate books of accounts were being maintained for this activity and the amounts placed in the form of ICD constituted very small part of the total reserves and surplus which any prudent businessman would naturally like to deploy for pecuniary gains."
The CIT(A) has failed to appreciate the systematic activity which the assessee has been carrying on for years, and that large sums of money were regularly deployed and huge. interests earned, which have already been assessed as business Income in the past several years. It is only this year that amounts involved are lower.
The CIT (A) ought to have allowed the claim of the assessee in respect of unrecoverable Inter-corporate deposits written off as business expenditure."
21. The first issue is with regard to disallowance of managerial and administration expenses under provision of 14A similar has been discussed and decided in ITA No. 31/PN/04 vide para 9 of this order. Facts being similar, so following the same reasoning appeal of the assessee on this issue is allowed.
22. The issue of disallowance out of Rs.31,11,732 /- out of Rs.1,16,15,090/- claimed by assessee being provision for Earned Leave Encashment provided on occurred basis i.e actual amount is provided in books of accounts. The Learned AR did not press this ground. Accordingly the same is dismissed as not pressed. Page 37 of 44
Maharashtra Scooters Ltd., ITA No.1464/PN/2003 , 292/PN/2006, 766/PN/2006, 1484/PN/2007,1445/PN/2007, 31/PN/2004, 752/PN/2006, 1456/PN/2007, 1457/PN/2007 A.Y. 2000-01,2000-01 ,2001-02, 2003-04, 2002-03, 2000-01, 2001-0 2002-03, 2003-04
23. The next issue is with regard to ICDs return off. This issue is covered in favour of the assessee in his own case for A.Y.1998-99 and 1999-00 vide para 3 to 15 of its order wherein the Tribunal vide para 15 of its order, has directed the Assessing Officer to allow the amounts as a deduction by observing as under:
"15. In view of the decision of the Special Bench, we are of the opinion that the assessee has satisfied the conditions u/s 36(2) as the amount are lent as part of commercial activity of the assessee in placing the ICDs with various companies and since the interest income was assessed as business income the conditions specified in section 36(2) has been satisfied in this case. Consequently we direct the A.O to allow the amounts as a deduction. In case the amounts are recovered at a subsequent point of time the A.O is free to invoke provisions of section 41 to bring them to tax in the year of recovery. With this direction the ground is allowed. The A.O is directed to allow the claim."
The facts being similar, so following the same reasoning we decide this issue in favour of the assessee.
24. In the result, appeal of the assessee is partly allowed. ITA No.1445/PN/07 for A.Y.2002-03 (department's appeal)
25. This appeal has been filed by the revenue on the following grounds.
"1.1. On the facts and circumstances of the case, and in law the Ld.CIT(A) erred in deleting the addition of Rs.28,10,464/- on account of administrative expenses as per provisions of section 14A of the Act.Page 38 of 44
Maharashtra Scooters Ltd., ITA No.1464/PN/2003 , 292/PN/2006, 766/PN/2006, 1484/PN/2007,1445/PN/2007, 31/PN/2004, 752/PN/2006, 1456/PN/2007, 1457/PN/2007 A.Y. 2000-01,2000-01 ,2001-02, 2003-04, 2002-03, 2000-01, 2001-0 2002-03, 2003-04 1.2 On the facts and circumstances of the case, and in law the Ld.CIT(A) erred in deleting the disallowances made of Rs.1,49,400/- on sales incentives given to UPSGEWC.
1.3 On the facts and circumstances of the case, and in law the Ld.CIT(A) erred in holding that the payment of technical knowhow of Rs.1,97,36,988/- is revenue in nature and not to be considered for allowance of depreciation."
26. The first issue is with regards to disallowance of managerial expenses. This issue has been discussed and decided in revenue's appeal vide para 5 of this order. Facts being similar so following the same reasoning deletion of addition of Rs.28,10,464/ is upheld.
27. The next issue is sales incentives given to UPSGEWC of Rs.1,49,400/-. This issue has been discussed and decided in A.Y. 2000-01 in revenue's appeal vide para 6 of this order in favour of the assessee. Facts being similar so following the same reasoning the issue is decided in favour of the assessee.
28. The next issue is payment of technical knowhow and same is decided in A.Y.2000-01 in ITA No. 292/PN/06 vide para 12 of this order. Facts being similar so following the same reasoning, this issue is decided in favour of the assessee.
29. In the result, the appeal is dismissed.
Page 39 of 44
Maharashtra Scooters Ltd., ITA No.1464/PN/2003 , 292/PN/2006, 766/PN/2006, 1484/PN/2007,1445/PN/2007, 31/PN/2004, 752/PN/2006, 1456/PN/2007, 1457/PN/2007 A.Y. 2000-01,2000-01 ,2001-02, 2003-04, 2002-03, 2000-01, 2001-0 2002-03, 2003-04 ITA No.1456/PN/07 for A.Y.2002-03 (assessee's appeal)
30. This appeal has been filed by the assessee on the following grounds.
"1. In the facts and circumstances of the case, the Commissioner of Income Tax (Appeals) - III, has erred legally and factually in disallowing an amount of Rs.1.00,000 being estimated expenses, as attributable to earning the exempt income i.e. dividend income and interest from Tax Free Bonds, and treating the same as not allowable expenditure, in computation of the Total Income.
The CIT(Appeals) having appreciated that adhoc estimate of Assessing Officer is incorrect, ought not to have estimated on ad-hoc basis an amount of Rs.100,000/- as expenditure attributable to earning exempted income. He ought to have appreciated that the assessee has not incurred any expenditure for earning the said income and therefore ought to have allowed the exempt income U/s. 10(33) of the Income tax act, 1961 as claimed by the assessee Company.
2. In the facts and circumstances of the case, the Commissioner of Income Tax (Appeals) has erred legally and factually in considering 'Interest Income' to be taxed under the head "Income from Other Sources". He has not fully appreciated that since inception (since 1977-78) Interest income is being correctly assessed under the head - Income from Business / Profession". There is no reason to change the 'Head of Income' in the current year.
The CIT(Appeals) has erred in concluding Interest income earned by the company is to be taxed under "Income from Other Sources" and not under "Income from Business", Page 40 of 44 Maharashtra Scooters Ltd., ITA No.1464/PN/2003 , 292/PN/2006, 766/PN/2006, 1484/PN/2007,1445/PN/2007, 31/PN/2004, 752/PN/2006, 1456/PN/2007, 1457/PN/2007 A.Y. 2000-01,2000-01 ,2001-02, 2003-04, 2002-03, 2000-01, 2001-0 2002-03, 2003-04
31. The first issue is of disallowance u/s. 14A. This issue has been discussed and decided in revenue's appeal vide para 5 of this order. Facts being similar so following the same reasoning deletion of addition of Rs. 1,00,000/- is upheld.
32. The next ground is interest income from business. This ground is not pressed. The same is dismissed as not pressed.
33. In the result, the appeal of the assessee is partly allowed. ITA No.1484/PN/07 for A.Y.2003-04 (department's appeal)
34. This appeal has been filed by the revenue on the following grounds.
"1.1 On the facts and circumstances of the case, and in law the Ld.CIT(A) erred in deleting the addition of Rs.3,37,345/- on account of administrative expenses as per provisions of section 14A of the Act.
1.2 On the facts and circumstances of the case, and in law the Ld.CIT(A) erred in deleting the disallowances made of Rs.22,500/- on sales incentives given to UPSGEWC.
1.3 On the facts and circumstances of the case, and in law the Ld.CIT(A) erred in holding that the payment of technical knowhow of Rs.1,06,15,911/- is revenue in nature and not to be considered for allowance of depreciation.
1.4 On the facts and circumstances of the case, and in law the Ld.CIT(A) erred in allowing the salary/ remuneration paid to Shri Rege, who is actually an employee of Bajaj Auto Ltd.Page 41 of 44
Maharashtra Scooters Ltd., ITA No.1464/PN/2003 , 292/PN/2006, 766/PN/2006, 1484/PN/2007,1445/PN/2007, 31/PN/2004, 752/PN/2006, 1456/PN/2007, 1457/PN/2007 A.Y. 2000-01,2000-01 ,2001-02, 2003-04, 2002-03, 2000-01, 2001-0 2002-03, 2003-04 1.5 On the facts and circumstances of the case, and in law the Ld.CIT(A) erred in holding that the provisions of section 115JB do not permit any adjustment to the book profits in respect of short term capital gains which is not adjustment but short term capital gain added as income of the assessee."
35. The first issue is with regard to disallowance of managerial and administrative expenses u/s.14A. This issue has been discussed and decided in revenue's appeal vide para 5 of this order. Facts being similar so following the same reasoning, deletion of addition of Rs. 3,37,345/- is upheld.
36. The second issue is disallowance of Rs.22,500/- on sales incentives paid to UPGEWC. This issue has been discussed and decided in A.Y. 2000-01 in revenue's appeal vide para 6 of this order in favour of the assessee. Facts being similar so following the same reasoning the issue is decided in favour of the assessee.
37. The Third issue is of payment of technical knowhow as revenue expenditure. This issue has been discussed and decided in A.Y. 2000-01 in ITA No. 292/PN/2006 vide para 12 of this order. Facts being similar so following the same reasoning, the issue is decided in favour of the assessee.
Page 42 of 44
Maharashtra Scooters Ltd., ITA No.1464/PN/2003 , 292/PN/2006, 766/PN/2006, 1484/PN/2007,1445/PN/2007, 31/PN/2004, 752/PN/2006, 1456/PN/2007, 1457/PN/2007 A.Y. 2000-01,2000-01 ,2001-02, 2003-04, 2002-03, 2000-01, 2001-0 2002-03, 2003-04
38. The next issue is with regards to disallowance of salary paid to Shri Rege who is the employee of Bajaj Auto Ltd.
39. After hearing both the parties, we find that the payment is made in accordance with the Board's resolution dated 17-1-1994 and that in earlier years, there were no disallowances as such. The payment made to shri S.R. Rege qualifies to be allowed as business expenditure as the same has been incurred for the purpose of assessee's business. We therefore, do not find any infirmity in the order of the CIT(A) in deleting the disallowance. This ground is therefore, decided in favour of the assessee.
40. Next issue is regarding adjustment of short term capital gain to the book profits u/s.115JB of the Act. After hearing both the parties and perusing the material on record, we find no infirmity in the order of the CIT(A) in holding that the provisions of sec. 115JB do not permit any adjustment to the book profits in respect of short term capital gains which is not the adjustment but short term capital gain added as income of the assessee. This ground of appeal is therefore, decided in favour of the assessee
41. In the result, appeal of the revenue's is partly allowed. Page 43 of 44
Maharashtra Scooters Ltd., ITA No.1464/PN/2003 , 292/PN/2006, 766/PN/2006, 1484/PN/2007,1445/PN/2007, 31/PN/2004, 752/PN/2006, 1456/PN/2007, 1457/PN/2007 A.Y. 2000-01,2000-01 ,2001-02, 2003-04, 2002-03, 2000-01, 2001-0 2002-03, 2003-04 ITA No.1457/PN/07 for A.Y.2003-04 (assessee's appeal)
42. This appeal has been filed by the assessee on the following grounds.
"1. In the facts and circumstances of the case, the Commissioner of Income Tax (Appeals) - III, has erred legally and factually in disallowing an amount of Rs.1,00,000 being estimated expenses, as attributable to earning the exempt income i.e. dividend income and interest from Tax Free Bonds, and treating the same as not allowable expenditure, in computation of the Total Income.
The Commissioner of Income Tax (Appeals) having appreciated that adhoc estimate of Assessing Officer is incorrect, ought not to have estimated on adhoc basis an amount of Rs.1,00,000/- as expenditure attributable to earning exempted income. He ought to have appreciated that the assessee has not incurred any expenditure for earning the said income and therefore ought to have allowed the exempt income u/s. 10(33) of the Income tax act, 1961 as claimed by the assessee Company."
43. The only issue raised in both these grounds is with regard to disallowance of managerial and administrative expenses u/s.14A. This issue has been discussed and decided in revenue's appeal vide para 5 of this order. Facts being similar so following the same reasoning deletion of addition of Rs.1,00,000/- is upheld.
44. In the result, the appeal of the assessee is allowed. Page 44 of 44
Maharashtra Scooters Ltd., ITA No.1464/PN/2003 , 292/PN/2006, 766/PN/2006, 1484/PN/2007,1445/PN/2007, 31/PN/2004, 752/PN/2006, 1456/PN/2007, 1457/PN/2007 A.Y. 2000-01,2000-01 ,2001-02, 2003-04, 2002-03, 2000-01, 2001-0 2002-03, 2003-04
45. To sum up, all the departmental appeals are dismissed and assessee's appeals for A.Y. 2000-01 to 2002-03 are partly allowed while assessee's appeal for A.Y. 2003-04 is allowed.
Order pronounced in the open court on 30th June 2011.
Sd/- Sd/-
(G.S. Pannu) (Shailendra Kumar Yadav)
Accountant Member Judicial Member
Pune dated the 30th June 2011
Ankam
Copy of the order is forwarded to :
1. The Appellant
2. The Respondent
3. The CIT -(A) II Pune
4. The CIT - Central, Pune
4. The D.R, 'A' Bench, Pune
6. Guard File
By order
Assistant Registrar
Income Tax Appellate Tribunal
Pune