Forbes Marshalll P.Ltd., v. DCIT,

ITA 1/PUN/2009 | 2004-2005
Pronouncement Date: 27-10-2010 | Result: Allowed

Appeal Details

RSA Number 124514 RSA 2009
Assessee PAN AAACF2630E
Bench Pune
Appeal Number ITA 1/PUN/2009
Duration Of Justice 1 year(s) 9 month(s) 26 day(s)
Appellant Forbes Marshalll P.Ltd.,
Respondent DCIT,
Appeal Type Income Tax Appeal
Pronouncement Date 27-10-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted A
Tribunal Order Date 27-10-2010
Assessment Year 2004-2005
Appeal Filed On 01-01-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV JM AND SHRI D. KARUNAKARA RAO AM I.T.A. NO. 01/PN/2009: A.Y. 2004-05 FORBES MARSHALL PVT. LTD. A-34/35 MIDC INDUSTRIAL AREA H BLOCK PIMPRI PUNE-411 018 PAN AAACF 2630 E APPELLANT VS. DY. CIT CIR. 10 PUNE RESPONDENT APPELLANT BY : SHRI KISHOR PHADKE RESPONDENT BY: SHRI ABHAY DAMLE ORDER PER SHAILENDRA KUMAR YADAV JM THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A)-III PUNE DATED 10-9-2008 FOR A.Y. 2 004-05 ON VARIOUS DESCRIPTIVE GROUNDS. 2. THE ISSUE IS WITH REGARDS TO DISALLOWANCE OF RS. 25 95 595/- BEING PROVISION FOR AFTER SALES SERVICE S. THE A.O FOUND THAT THE ASSESSEE COMPANY HAS MADE PAYMENT OF RS. 36 56 993/- TO FORBES MARSHALL LTD. A SISTER CONCE RN TOWARDS TECHNICAL CONSULTANCY UNDER THE HEAD LEGAL AD PROF ESSIONAL EXPENSES AND HAS MADE A PROVISION OF RS. 25 95 595 /-. THE A.O OBSERVED THAT THE PROVISION OF RS. 25 95 595/- DID NOT APPEAR TO BE ESSENTIAL AND WARRANTED AS THE ASSESSE E HAS NOT ITA NO. 01/PN/2009 FORBES MARSHALL PVT.LTD. A.Y. 2004-05 2 ENTERED INTO ANY SUCH AGREEMENT WITH FORBES MARSHAL L LTD. WHEN THE MATTER WAS CARRIED IN APPEAL BEFORE THE CI T(A) WHO HAS CONFIRMED THE SAME. 3. THE STAND OF THE ASSESSEE BEFORE US IS THAT THE CIT(A) FAILED TO APPRECIATE THAT THE PAYMENT WAS ONLY A CO NTRACTUAL PAYMENT WHICH WAS FULLY JUSTIFIABLE. ACCORDING TO THE LEARNED AR THE CIT(A) WAS NOT JUSTIFIED IN CONCLUDING THAT THE ASSESSEE HAS NOT FURNISHED ANY MATERIAL WHICH COULD ESTABLIS H THE BASIS FOR QUANTIFICATION OR ESTABLISH THAT THE LIAB ILITY HAD ARISEN DURING THE YEAR UNDER CONSIDERATION. ACCORD INGLY THE LEARNED AR SUBMITTED THAT THE CIT(A) HAS FAILED TO APPRECIATE THE VARIOUS FACTS AND EXPLANATIONS PLACED BY THE AS SESSEE. ALL THE INCOME HAD ACCRUED AND BEING CREDITED TO P & L A/C MATCHING EXPENSES WHICH HAVE TO BE INCURRED ARE COR RECTLY PROVIDED AND SHOULD BE ALLOWED. THE LEARNED AR ALS O SUBMITTED THAT THE CIT(A) FAILED TO APPRECIATE THAT THE SISTER COMPANY FORBES MARSHALL LTD. HAS ALREADY OFFERED T HIS AMOUNT AS INCOME IN THE SUBSEQUENT YEAR AND THAT DISALLOWANCE OF THIS AMOUNT WOULD LEAD TO DOUBLE TA XATION WHICH WAS AGAINST THE PRINCIPLES OF NATURAL JUSTICE . 4. THERE IS NOTHING ON RECORD THAT THE SISTER CONCE RN HAS ALREADY OFFERED THIS AMOUNT AS INCOME IN SUBSEQUENT YEAR. WE FIND THAT THIS MATTER NEEDS DEEP PROBE TO REACH DEFINITE ITA NO. 01/PN/2009 FORBES MARSHALL PVT.LTD. A.Y. 2004-05 3 CONCLUSION AS FAR AS ISSUE OF ALLOWABILITY OF PROVI SION OF WARRANTY IS CONCERNED. SO IN THE INTEREST OF JUSTI CE WE RESTORE THIS ISSUE TO A.O WITH A DIRECTION TO DECIDE THE SA ME AS PER FACT AND LAW AVAILABLE AT THE RELEVANT POINT OF TIM E AFTER PROVIDING DUE OPPORTUNITY OF HEARING TO THE ASSESSE E. SINCE WE ARE RESTORING THE MATER WE REFRAIN TO COMMENT U PON THE MERITS OF THE CASE. 5. IN THE RESULT THE APPEAL IS DISPOSED OFF AS IND ICATED ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH OCTOBER 2010. SD/- SD/- (D. KARUNAKARA RAO) (SHAILENDRA KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE DATED THE 27 TH OCTOBER 2010 ANKAM COPY OF ORDER IS FORWARDED TO 1. ASSESSEE 2. DEPARTMENT 3. CIT-IV PUNE 4. CIT(A)-III PUNE 5. D.R. A BENCH BY ORDER ASSTT. REGISTRAR I.T.A.T. PUNE BENCH