Itxa/1061/2013 Of The Commissioner Of Income Tax - V v. Atlas Copco (I) Ltd

sas IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL (LOD) NO.1107 OF 2012 The Commissioner of Income Tax-V, Pune ..Appellant. V/s. Atlas Copco (I) Ltd. ..Respondent. Mr. Tejveer Singh for the appellant. Mr. P.J. Pardiwala, senior Advocate with A.K.Jasani for the respondent. CORAM : J.P. DEVADHAR AND M.S. SANKLECHA, JJ. DATED : 1ST FEBRUARY, 2013 P.C. :- 1.In this appeal for the assessment year 2001-02, the revenue has raised the following reframed questions of law for our consideration:- (a)Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in deleting the disallowance of Rs.1,00,000/- being the amount written off by the assessee on account of inter corporate deposits (ICD) ?law, the Tribunal was justified in deleting the disallowance of Rs.1,00,000/- being the amount written off by the assessee on account of inter corporate deposits (ICD) ? (b)Whether on the facts and in the circumstances of the case and in law, the Tribunal erred in allowing the claim in deleting the disallowance of Rs.2,72,628/- on account of repairs to factory building ?law, the Tribunal erred in allowing the claim in deleting the disallowance of Rs.2,72,628/- on account of repairs to factory building ? (c)Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in not excluding Miscellaneous Receipts of Rs.19,97,515/- from the business profits for the purpose of computing deduction u/s.80HHC of the I.T. Act, 1961 ?law, the Tribunal was justified in not excluding Miscellaneous Receipts of Rs.19,97,515/- from the business profits for the purpose of computing deduction u/s.80HHC of the I.T. Act, 1961 ? (d)Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in deleting the disallowance of Rs.2,20,84,664/- beingcommission paid to various parties in respect of orders obtained from govt. agencies ?law, the Tribunal was justified in deleting the disallowance of Rs.2,20,84,664/- beingcommission paid to various parties in respect of orders obtained from govt. agencies ? (e)Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in allowing claim of warranty provision when the assessee has failed to make scientific and reliable estimate of the liability ?law, the Tribunal was justified in allowing claim of warranty provision when the assessee has failed to make scientific and reliable estimate of the liability ? (f)Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in deleting the disallowance of Rs.2,17,38,129/- on account of account of stock written off being only a provision made for diminution in stock ?law, the Tribunal was justified in deleting the disallowance of Rs.2,17,38,129/- on account of account of stock written off being only a provision made for diminution in stock ? 2.So far as question (a) & (d) are concerned, counsel for the parties state that the same stands concluded by our decision in Income Tax Appeal No.2285 of 2011 in the assessee's own case rendered by itxal-1107-12 us today i.e. 1[st] February, 2013. Thus, question Nos.(a) & (d) do not arise for consideration. 3.So far as question (e) is concerned, counsel for the parties state that the same stands covered by our decision in Income Tax Appeal No.111 of 2012 rendered by us in the assessee's own case today i.e. 1[st] February, 2013. In view of the above question (e) does not arise. 4.So far as question (c) is concerned, the Tribunal has restored the matter to the assessing officer for fresh consideration. In view of the above, we do not see any reason to entertain question (c). 2.So far as question (a) & (d) are concerned, counsel for the parties state that the same stands concluded by our decision in Income Tax Appeal No.2285 of 2011 in the assessee's own case rendered by itxal-1107-12 us today i.e. 1[st] February, 2013. Thus, question Nos.(a) & (d) do not arise for consideration. 3.So far as question (e) is concerned, counsel for the parties state that the same stands covered by our decision in Income Tax Appeal No.111 of 2012 rendered by us in the assessee's own case today i.e. 1[st] February, 2013. In view of the above question (e) does not arise. 4.So far as question (c) is concerned, the Tribunal has restored the matter to the assessing officer for fresh consideration. In view of the above, we do not see any reason to entertain question (c). 5. So far as question (b) is concerned, the assessee had spent Rs.2.72 crores on repairs to factory building and disallowed the expenditure on the ground that these were in the nature of capital expenditure resulting in enduring benefit and, therefore, it could not be allowed as revenue expenditure. The CIT(A) upheld the disallowance made by the assessing officer. In appeal, the Tribunal held that the expenditure incurred for repairs of the factory shed was merely to strengthen the existing shed in the factory premises and, therefore, the expenses are only for regular repairs and, therefore, in nature of the revenue expenditure. This was particularly so as no enduring benefit resulted on account of the said expenditure and thus deleted the disallowance of Rs.2.72 crores. This decision of the Tribunal is based on a finding of fact and, therefore, raises no question of law. In view of the above, question (b) is not entertailed. 6.So far as question (f) is concerned, the controversy is with regard to writing off of the closing stock to the extent of Rs.2.17 crores. The Tribunal in its order recorded a finding of fact that at the end of each year age analysis of the inventory is carried out by them and any material which does not move for a period of 12 to 24 months is written off at 50% of the book value and at 100% of book value if it has not moved for more than 24 months and thereafter sold as a scrap and the income thereof is offered to tax. Before the Tribunal, the respondent-assessee had pointed out that similar dispute has arisen in the assessee's own case for the assessment years 1973-74 to 1975-76 and the Tribunal upheld the stand of the respondent-assessee. It also records the fact that the respondent-assessee's policy of identifying and making provision for the diminution of the value of the obsolete stock was accepted by the department for earlier assessment years and no disallowance was made in the earlier assessment years till the instant assessment year. The revenue has not been able to point out any distinguishable circumstances during the current assessment year from that existing and accepted in the earlier assessment years and also more particularly with regard to the order of the Tribunal for the assessment years 1973-74 to 1975-76. In the aforesaid circumstances, we see no reason to entertain question (f) as formulated by thetaken revenue. 7.Accordingly, the appeal is dismissed with no order as to costs. (M.S. SANKLECHA, J.) (J.P. DEVADHAR, J.)