Commissioner Of Income Tax-I v. Cummins Generator Technology Indialtd

sbw IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.949 OF 2012 Commissioner of Income Tax-I ...Appellant vs. Cummins Generator Technology IndiaLtd. ...Respondent Mr. Vimal Gupta, Senior Advocate, i/b. Mr. Vipul Arun Bajpayee for the Appellant.Mr. J. D. Mistry, Senior Advocate, with Mr. Nishant Thakkar & Jas Sanghavi i/b. PDS Legal for the Respondent. CORAM : S. C. DHARMADHIKARI & G. S. KULKARNI, JJ.DATE : 21[st] MARCH, 2014. P.C. :- 1]Having heard Mr.Gupta, learned counsel appearing on behalf of the appellant/Revenue and perusing with his assistance the concurrent orders which have been delivered by the Commissioner of Income Tax (Appeals) and the Income Tax Tribunal, we are of the opinion that the only submission which has been canvassed before us does not raise any substantial question of law. The averment is that the Tribunal erred in accepting the contentions of the respondent-assessee and with regard to termination of agreement with Crompton Greaves Ltd., sbw the Tribunal ought to have noticed that the assessee is a joint venture company formed by Crompton Greaves and one Newage International Limited, U.K. in the year 1993-94. The joint venture company combined the technological strength of Newage and marketing strength of CGL. However, merely because this agreement is terminated does not mean that the sum of Rs.4,90,00,000/-paid for termination of the marketing agreement was an allowable expenditure under Section 37(1) of the Income Tax Act, 1961. The assessing officer's view and equally that of the Commissioner of Income Tax (Appeals) for sustaining the dis-allowance need not have been interfered with, particularly because the transaction was with a related party. 2]The Tribunal has found that there was no dispute about the execution of the agreement. The assessee company manufactured products with the technology available with it and CGL provided its sales and service network for marketing the products. The share holding agreement between the joint venture partners and also the marketing agreement between the assessee and Crompton Greaves Ltd. were terminated. Since both the agreements were terminated, the assessee agreed to pay the sum of Rs.4,90,00,000/-. That was an allowable sbw expenditure in the light of test of commercial expenditures. The Tribunal found that this was a business decision and serves a business purpose. The impugned expenditure has been incurred for commercial expediency. We find that the reasoning of the Tribunal on this aspect in paras 15 to 17 of the order under challenge, is based on correct legal principles. In such circumstances, we do not find that the Tribunal was in any error in reversing the order passed by the assessing officer or the Commissioner of Income Tax (Appeals) and directing that the assessee be permitted toclaimthedeductionofRs.4,90,00,000/-, representing compensation paid to Crompton Greaves Ltd. as an allowable expenditure in terms of Section 37(1) of the Act. 3]Since this is the only issue raised before us, we find that the appeal does not raise any substantial question of law. It is accordingly dismissed. (G. S. KULKARNI, J.) (S.C.DHARMADHIKARI, J.) wadhwa