Toshiba India Pvt. Ltd., Gurgaon v. ACIT, CIRCLE- 25(2), New Delhi

ITA 6531/DEL/2017 | 2013-2014
Pronouncement Date: 30-11-2017 | Result: Partly Allowed

Appeal Details

RSA Number 653120114 RSA 2017
Assessee PAN AABCT4829N
Bench Delhi
Appeal Number ITA 6531/DEL/2017
Duration Of Justice 1 month(s)
Appellant Toshiba India Pvt. Ltd., Gurgaon
Respondent ACIT, CIRCLE- 25(2), New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 30-11-2017
Appeal Filed By Assessee
Tags No record found
Order Result Partly Allowed
Bench Allotted I
Tribunal Order Date 30-11-2017
Assessment Year 2013-2014
Appeal Filed On 30-10-2017
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : I - 2 NEW DELHI BEFORE SH. AMIT SHUKLA JUDICIAL M EMBER AND SH. O.P. KANT ACCOUNTANT MEMBER ITA NO. 6531 /DE L/ 2017 ASSESSMENT YEAR: 2013 - 14 M/S. TOSHIBA INDIA PVT. LTD. 3 RD FLOOR BUILDING NO.10 TOWER B DLF CYBER CITY PHASE II GURGAON HARYANA VS. ACIT CIRCLE 25(2) NEW DELHI PAN : AABCT4829N ( APPELLANT ) (RESPONDENT) APPELLANT BY SH. UPVAN GUPTA ADV. RESPONDENT BY SH. SANJAY KUMAR YADAV SR.DR DATE OF HEARING 21.11.2017 DATE OF PRONOUNCEMENT 30.11.2017 ORDER PER O.P. KANT A. M. : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST ORDER DATED 26/09/2017 PASSED BY THE LD. ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE - 25(2) NEW DELHI (HEREINAFTER REFERRED TO AS THE ASSESSING OFFICER ) IN TERMS OF SECTION 143(3) READ WITH SECTION 144C(13) OF THE INCOME - TAX ACT 1961 (IN SHORT THE ACT ) FOR ASSESSMENT YEAR 2013 - 14. 2. THE I MPUGNED ORDER HAS BEEN PASSED PURSUANT TO THE DIRECTION DATED 16/08/2070 OF THE LD. DISPUTE RESOLUTION PANEL (DRP) IN TERMS OF SECTION 144C(5) OF THE ACT. IN APPEAL THE ASSESSEE HAS RAISED FOLLOWING GROUNDS: 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE IMPUGNED ASSESSMENT COMPLETED VIDE ORDER DATED 26.09.2017 UNDER SECTION 143(3) READ WITH SECTION 144C OF THE INCOME - TAX ACT 1961 ( THE ACT ) IS ILLEGAL AND BAD IN LAW. 2 ITA NO. 6531/DEL/2017 1.1 THAT THE ASSESSING OFFICER ERRED ON FACTS AND IN LAW IN COMPLETING THE IMPUGNED ASSESSMENT AT AN INCOME OF RS.77 55 44 240 AGAINST INCOME OF RS.26 45 57 240 DECLARED BY THE APPELLANT IN THE RETURN OF INCOME FOR THE RELEVANT ASSESSMENT YEAR. 1.2 THAT THE ASSESSING OFFICER ERRED ON FACTS AND IN LAW IN REFERRING THE IMPUGNED AS SESSMENT PROCEEDINGS TO THE TRANSFER PRICING OFFICER ( TPO ) WITHOUT AN INDEPENDENT APPLICATION OF MIND AS TO REQUIREMENT OF DOING SO ON THE BASIS OF FACTS AND CIRCUMSTANCES OF THE CASE. 1.3 THAT THE ASSESSING OFFICER ERRED ON FACTS AND IN LAW IN REFERRIN G THE IMPUGNED ASSESSMENT PROCEEDINGS TO THE TPO WITHOUT RECORDING PROPER REASONS/ PRIMA FACIE SATISFACTION AS TO REQUIREMENT OF DOING SO. 1.4 THAT THE ASSESSING OFFICER ERRED ON FACTS AND IN LAW IN REFERRING THE IMPUGNED ASSESSMENT PROCEEDINGS TO THE TPO WITHOUT AFFORDING AN OPPORTUNITY OF BEING HEARD TO THE APPELLANT BEFORE DOING THE SAME. 1.5 THAT THE DRAFT ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER WAS TOTALLY ILLEGAL AND BARRED BY LIMITATION SINCE THE EXTENSION IN TIME LIMIT FOR COMPLETION OF ASSESSMENT IN CASE OF REFERENCE TO TPO WAS NOT APPLICABLE/ AVAILABLE IN THE IMPUGNED ASSESSMENT PROCEEDINGS. 2. THAT THE ASSESSING OFFICER/ TPO ERRED ON FACTS AND IN LAW IN MAKING ADDITION TO THE INCOME OF THE APPELLANT OF RS.51 09 87 000 ON PROTECTIVE B ASIS ON ACCOUNT OF THE ALLEGED DIFFERENCE IN ARM S LENGTH PRICE OF THE INTERNATIONAL TRANSACTION OF ADVERTISEMENT MARKETING AND PROMOTION EXPENSES ( AMP EXPENSES ). 2.1 THAT THE ASSESSING OFFICER/ DRP/ TPO ERRED ON FACTS AND IN LAW IN MAKING THE AFORESAI D ADDITION BY HOLDING THAT THE AMP EXPENSES INCURRED BY THE APPELLANT CONSTITUTED AN INTERNATIONAL TRANSACTION. 2.2 THAT THE ASSESSING OFFICER/ TPO ERRED ON FACTS AND IN LAW IN HOLDING THAT THE AMP EXPENSES UNILATERALLY INCURRED BY THE APPELLANT IN INDIA COULD BE CHARACTERIZED AS AN INTERNATIONAL TRANSACTION AS PER SECTION 92B OF THE ACT EVEN IN ABSENCE OF EXISTENCE OF ANY UNDERSTANDING/ ARRANGEMENT/ CONTRACT BETWEEN THE APPELLANT AND THE ASSOCIATED ENTERPRISE ( AE ). 3 ITA NO. 6531/DEL/2017 2.3 THAT THE ASSESSING OFFICER/ TPO ERRED ON FACTS AND IN LAW IN HOLDING THAT THE AMP EXPENSES CONSTITUTED AN INTERNATIONAL TRANSACTION AND THE AE SHOULD HAVE COMPENSATED THE APPELLANT FOR THE SAME WITHOUT APPRECIATING THAT THE APPELLANT WAS THE ECONOMIC OWNER OF BRAND IN INDIA AND COULD NO T BE EXPECTED TO SEEK COMPENSATION FOR EXPENDITURE INCURRED ON ASSET OWNED BY IT. 2.4 THAT THE ASSESSING OFFICER/ TPO ERRED ON FACTS AND IN LAW IN MAKING THE AFORESAID ADDITION WITHOUT APPRECIATING THAT THE AMP EXPENSES WERE INCURRED BY THE APPELLANT WHOL LY AND EXCLUSIVELY FOR THE PURPOSES OF ITS BUSINESS AND NOT ON BEHALF OF OR FOR THE BENEFIT OF AE; ANY BENEFIT TO THE AE BEING ONLY INCIDENTAL. 2.5 THAT THE ASSESSING OFFICER/ TPO ERRED ON FACTS AND IN LAW IN MAKING THE AFORESAID ADDITION TO THE INCOME OF THE APPELLANT BY APPLYING THE BRIGHT LINE TEST MECHANISM ( BLT ) TO DETERMINE THE ARM S LENGTH PRICE OF THE AMP EXPENSES. 2.6 THAT THE ASSESSING OFFICER/ TPO ERRED ON FACTS AND IN LAW IN APPLYING BLT TO DETERMINE THE ARM S LENGTH PRICE OF THE AMP EXPENSE S WITHOUT APPRECIATE THAT THE SAID METHOD IS NOT MANDATED/ PRESCRIBED UNDER THE TRANSFER PRICING REGULATIONS OF INDIA AND HAS BEEN REJECTED BY THE JURISDICTIONAL DELHI HIGH COURT IN THE CASE OF SONY ERICSSON MOBILE COMMUNICATIONS LIMITED: 374 ITR 118. 2. 7 WITHOUT PREJUDICE THE ASSESSING OFFICER ERRED ON FACTS AND IN LAW IN NOT REDUCING SALES PROMOTION EXPENSES AMOUNTING TO RS.37 02 65 809 FROM CUMULATIVE AMP EXPENSES WHILE COMPUTING PROTECTIVE ADJUSTMENT ON ACCOUNT OF EXCESS AMP EXPENDITURE INCURRED BY THE APPELLANT. 2.8 WITHOUT PREJUDICE THE ASSESSING OFFICER ERRED ON FACTS AND IN LAW IN NOT REDUCING THE REIMBURSEMENTS AMOUNTING TO RS.2 08 05 743 RECEIVED BY THE APPELLANT FROM ITS AE IN CONNECTION WITH THE AMP EXPENSES WHILE COMPUTING THE PROTECTIVE ADJUSTMENT ON ACCOUNT OF ALLEGED INTERNATIONAL TRANSACTION OF PROVISION OF BRAND BUILDING SERVICES. 3. THAT THE ASSESSING OFFICER/ DRP/TPO ERRED ON FACTS AND IN LAW IN REJECTING THE BENCHMARKING ANALYSIS DONE BY THE APPELLANT AND UNDERTAKING INTENSITY BAS ED COMPARABILITY ADJUSTMENT ON SUBSTANTIVE BASIS THOUGH THE SAME DOES NOT HAVE ANY MONETARY 4 ITA NO. 6531/DEL/2017 IMPACT SINCE THE ADJUSTMENT FALLS WITHIN THE TOLERABLE RANGE OF + - 3%. 4. THAT THE ASSESSING OFFICER/ DRP ERRED ON FACTS AND IN LAW IN NOT ALLOWING THE ADDITIONAL CLAIM OF DEDUCTION ON ACCOUNT OF INTEREST PAID ON CUSTOM DUTY AMOUNTING TO RS.5 23 44 182 PURSUANT TO ORDER OF THE SETTLEMENT COMMISSION. 4.1 THAT THE ASSESSING OFFICER/ DRP ERRED ON FACTS AND IN LAW IN NOT ALLOWING THE AFORESAID ADDITIONAL CLAIM OF DEDU CTION BY INCORRECTLY HOLDING THAT THE SAME DOES NOT PERTAIN TO THE RELEVANT ASSESSMENT YEAR. 4.2 THAT THE ASSESSING OFFICER/ DRP ERRED ON FACTS AND IN LAW IN NOT ALLOWING THE AFORESAID ADDITIONAL CLAIM OF DEDUCTION WITHOUT APPRECIATING THAT ON THE BASIS O F PRINCIPLE OF MATCHING CONCEPT AND ACCOUNTING POLICIES FOLLOWED BY THE APPELLANT THE SAME PERTAINED TO THE RELEVANT ASSESSMENT YEAR AND WAS ALLOWABLE AS DEDUCTION IN THE SAID ASSESSMENT YEAR ONLY EVEN THOUGH IT GOT MATERIALIZED IN A LATER YEAR. 4.3 THA T THE ASSESSING OFFICER/ DRP ERRED ON FACTS AND IN LAW IN NOT ALLOWING THE AFORESAID ADDITIONAL CLAIM OF DEDUCTION WITHOUT APPRECIATING THAT THE EXPENDITURE ON ACCOUNT OF INTEREST PAID ON CUSTOM DUTY BEING INCURRED WHOLLY AND EXCLUSIVELY FOR BUSINESS PURP OSES WAS ALLOWABLE AS DEDUCTION IN THE RELEVANT ASSESSMENT YEAR ONLY. 4.4 WITHOUT PREJUDICE IT IS HUMBLY PRAYED BEFORE THIS HON BLE TRIBUNAL TO KINDLY ALLOW THE AFORESAID ADDITIONAL CLAIM OF DEDUCTION ON ACCOUNT OF INTEREST PAID ON CUSTOM DUTY BY TREAT ING THE SAME AS FRESH CLAIM OF DEDUCTION MADE DURING THE PRESENT APPELLATE PROCEEDINGS IN VIEW OF THE DECISION OF SUPREME COURT IN THE CASE OF NATIONAL THERMAL POWER CO. LTD. V. CIT: 229 ITR 383 AND THE DECISION OF THE DELHI HIGH COURT IN THE CASE OF DCM B ENETTON INDIA LTD. VS. CIT: 173 TAXMAN 283. 5. THAT THE ASSESSING OFFICER ERRED ON FACTS AND IN LAW IN CHARGING INTEREST UNDER SECTIONS 234B AND 234C OF THE ACT. THE APPELLANT CRAVES LEAVE TO ADD AMEND OR VARY THE ABOVE GROUNDS OF APPEAL ON OR BEFORE THE DATE OF HEARING. 5 ITA NO. 6531/DEL/2017 3 . THE BRIEFLY STATED FACTS OF THE CASE ARE THAT THE ASSESSEE I.E. TOSHIBA INDIA IS A WHOLLY - OWNED SUBSIDIARY OF TOSHIBA CORPORATION JAPAN. THE TOSHIBA INDIA IS ENGAGED IN TRADING OF CONSUMER DURABLES IT PRODUCTS ETC . AND PROVID ING REPRESENTATIVE AND MARKETI NG SUPPORT SERVICES TO TOSHIBA GROUP C OMPANIES . IT ALSO PROVIDED WARRANTY SERVICES IN INDIA. FOR THE YEAR UNDER CONSIDERATION THE ASSESSEE FILED RETURN OF INCOME ON 30/11/2013 DECLARING TOTAL INCOME OF RS.26 45 57 240/ - . THE CASE WAS SELECTED FOR SCRUTINY AND NOTICE UNDER SECTION 143(2) OF THE ACT WAS ISSUED AND COMPLIED WITH. THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAD ENTERED INTO INTERNATIONAL TRANSACTION WITH ITS ASSOCIATED ENTERPRISES THUS W ITH THE PREVIOUS APPROVAL OF LD. PRINCIPAL COMMISSIONER OF INCOME - TAX HE REFERRED MATTER OF DETERMINATION OF ARM S LENGTH PRICE OF THE INTERNATIONAL TRANSACTION TO THE LD. TRANSFER PRICING OFFICER (TPO). THE LD. TPO ACCEPTED THE BENCHMARKING OF VARIOUS INTERNATIONAL TRANS ACTIONS CARRIED OUT BY THE ASSESSEE USING TRANS ACTIONAL NET MARGIN METHOD (TNM M) HOWEVER NOTED THAT ASSESSEE WAS ESS ENTIALLY DISTRIBUTOR AND SELLING CONSUMER DURABLES AND IT PRODUCTS BEARING THE BRAND/TRADEMARK OF ITS ASSOCIATED ENTERPRISE NAMELY TOSHIB A . ACCORDING TO THE LD. TPO THE ASSESSEE DISCHARGE D MARKETING FUNCTIONS WHICH INCLUDED MARKET DEVELOPMENT THEREBY CREATING AND ADDING VALUE TO THE EXISTING INTANGIBLES OWNED BY THE AE BY WAY OF EXPENDITURE ON ADVERTISING MARKETING AND PROMOTION (AMP) I NCURRED TO PROMOTE THE BRAND - NAME TOSHIBA WHICH IS OWNED BY ITS AE. THE INCURRING OF SUCH EXPENDITURE HAS INVARIABLY RESULT ED INTO A BENEFIT TO THE AE AND FOR WHICH THE ASSESSEE SHOULD HAVE BEEN SUITABLY COMPENSATED. THE LD. TPO ASKED THE ASSESSEE AS TO WHY THE TRANSACTION OF AMP EXPENDITURE MIGHT NOT BE BENCHMARKED IN LINE WITH THE DIRECTION OF THE HON BLE DELHI HIGH COURT IN THE CASE OF SONY ERICSSON MOBILE COMMUNICATIONS INDIA (PVT.) LTD. VS. CIT - III (2015) 6 ITA NO. 6531/DEL/2017 55 TAXMANN.COM 240 (DELHI) . T HE ASSESSEE SUBMITTED THAT IT WAS A MANUFACTURER AND NOT JUST DISTRIBUTOR AND HENCE THE JUDGMENT OF HON BLE DELHI HIGH COURT IN THE CASE OF SONY ERICSSON (SUPRA) DID NOT APPLY TO IT AND THE SUBSEQUENT DECISION OF THE HON BLE DELHI HIGH COURT IN THE CASE OF MARUTI SU ZUKI INDIA LTD (ITA 110/2014) WOULD APPLY AND ACCORDING TO WHICH AMP EXPENDITURE IS NOT AN INTERNATIONAL TRANSACTION IN CASE OF MANUFACTURER. THE LD. TPO IN THE LIGHT OF THE VARIOUS DECISIONS OF THE HON BLE HIGH COURT INTERNATIONAL APPROACH BASE EROSION AND P ROFI T S HIFTING (BEPS) GUIDANCE OF G20/OECD COUNTRIES ETC. CONSIDERED THE DISTRIBUTION AGREEMENT BETWEEN THE ASSESSEE AND AES AND CONCLUDED THAT EXPENDITURE INCURRED TO MARKET AND PROMOTE T HE BRAND NAMES/TRADEMARK WAS AN INTERNATIONAL T RANSACTION. 3 .1 THE HON BLE DELHI HIGH COURT IN THE CASE OF SONY ERICSSON (SUPRA) REJECTED THE BRIGHT LINE T EST (BLT) METHOD FOR COMPUTING THE ARM S LENGTH PRICE OF THE AMP TRANSACTION AND DIRECTED THAT FOR THE PURPOSE OF COMPARABILITY THE COMPARABLE SHOULD BE IDENTIF IED IN SUCH A WAY THAT THEY ARE CARRYING OUT MARKETING AND DISTRIBUTION FUNCTION AND THE COMPARABLES SHOULD HAVE COMPARABLE INTENSITIES OF EXPENSES INCURRED FOR SALES AND MARKETING AND IN THE CASE OF THE ASSESSEE. THE LD. TPO COMPUTED THE ADJUSTMENT UNDER AMP ACCORDING TO THE MANNER PROPOSED BY THE HON BLE DELHI HIGH COURT IN THE CASE OF SONY ERICSSON (SUP RA) ON SUBSTANTIVE BASIS AT RS. 19 80 30 988/ - AND ALSO PROPOSED ADDITION ON PROTECTIVE BASIS FOLLOWING THE BLT METHOD AMOUNTING TO RS. 1 31 21 90 000/ - . 3 .2 AGAINST THE ADJUSTED PROPOSED BY THE LD. TPO THE ASSESSEE BEFORE THE LD. DR THE ASSESSEE FILED OBJECTIONS BEFORE THE LD. DRP. THE LD. DRP DIRECTED TO VERIFY THE SEGMENTAL ACCOUNT AND OTHER ARITHMETICAL ERRORS / FACTUAL MISTAKES TO ALLOW CERTAIN EXPENSES OUT OF AMP. IN VIEW OF THE DIRECTIONS OF THE LD. DRP ADJUSTMENT WAS REVISED. A TABLE REVISING 7 ITA NO. 6531/DEL/2017 THE ADJUSTMENT BOTH ON SUBSTANTIVE AS WELL AS PROTECTIVE BASIS BY THE ASSESSING OFFICER IN THE IMPUGNED FINAL ASSESSMENT ORDER IS REPRODUCED AS UNDER: ON SUBSTANTIVE BASIS S. NO. NATURE OF INTERNATIONAL TRANSACTION ADJUSTMENT AS PER THE ORDER OF THE TRANSFER PRICING OFFICER ADJUSTMENT AFTER THE DIRECTIONS ISSUED BY THE HON BLE DRP 1. AMP - DISTRIBUTION 19 80 30 988 NIL ON PROTECTIVE BASIS S. NO. NATURE OF INTERNATIONAL TRANSACTION ADJUSTMENT AS PER THE ORDER OF THE TRANSFER PRICING OFFICER ADJUSTMENT AFTER THE DIRECTIONS ISSUED BY THE HON BLE DRP 1 AMP - DISTRIBUTION (PROTECTIVE ADDITION) 1 31 21 90 000 51 09 87 000 3 .3 T HUS WE FIND THAT SUBSTANTIVE ADDITION ON AMP ADJUSTMENT ON AMP STANDS ALREADY DELETED BY THE LD. DRP AND ONLY THE ADDITION MADE ON PROTECTIVE BASIS FOLLOWING THE BLT METHOD WAS SUSTAINED BY THE LD. DRP AGAINST WHICH THE ASSESSEE IS IN APPEAL BEFORE US. 4 . T HE LD. COUNSEL SUBMITTED THAT GROUND NO. 1 AND 1.1 OF THE APPEAL ARE GENERAL IN NATURE. SINCE THE GROUND BEING GENERAL IN NATURE WE ARE NOT REQUIRED TO ADJUDICATE UPON SPECIFICALLY AND ACCORDINGLY DISMISSED AS INFRUCTUOUS. 5 . FURTHER DURING THE HEARING OF THE CASE THE LD. COUNSEL DID NOT PRESS THE GROUND NOS.1.2 TO 1.5 AND 2.1 TO 2.4 AND GROUND NO. 3 ACCORDINGLY ALL THESE GROUNDS ARE DISMISSED AS INFRUCTUOUS. 6 . THE GROUND NOS. 2 2.5 TO 2.6 RELATES TO PROTECTIVE ADDITION MADE APPLYING THE BLT. 6 .1 B EFORE US THE LEARNED COUNSEL SUBMITTED THAT TRIBUNAL IN THE CASE OF NICKON INDIA PRIVATE L IMITED ( ITA NO. 4574/DEL/2017 DATED 20.09.2017 ) HAS DELETED THE IDENTICAL ADDITION OF PROTECTIVE NATURE AND THEREFORE IN THE CASE OF THE ASSESSEE ALSO NO ADDITION COULD BE SUSTAINED. 8 ITA NO. 6531/DEL/2017 6 .2 THE LD. CIT ( DR ) ON THE OTHER HAND RELIED ON THE FINDING OF THE LOWER AUTHORITIES. 6 .3 WE HAVE HEARD THE RIVAL SUBMISSION AND PERUSED THE RELEVANT MATERIAL ON RECORD. WE FIND THA T TRIBUNAL IN THE CASE OF NICKON INDIA PRIVATE L IMITED (SUPRA) HAS DELETED THE ADJUSTMENT MADE ON PR OTECTIVE BASIS APPLYING THE BLT . THE RELEVANT FINDING OF THE TRIBUNAL IS REPRODUCED AS UNDER: 18. SO FOLLOWING THE DECISION RENDERED BY HON BLE DELHI HIGH COURT IN CASE OF SONY ERICSSON MOBILE COMMUNICATIONS INDIA (P.) LTD. (SUPRA) AND COORDINATE BENCH OF THE TRIBUNAL IN PERFETTI VAN MELLE INDIA PVT. LTD. (SUPRA) TP ADJUSTMENT AMOUNTING TO RS.22 30 18 964 / - BY APPLYING BLT IS NOT SUSTAINABLE ON PROTECTIVE BASIS HAVING NO STATUTORY MANDATE. SO GROUND NO. 5 IS DETERMINED IN FAVOUR OF THE ASSESSEE. 6 .4 W E F IND THAT THE BLT FOR COMPUTING ARM S LENGTH P RICE OF AMP TRANSACTION HAS ALREADY BEEN REJECTED BY TH E HON BLE DELHI HIGH COURT IN THE CASE OF SONY ERICSSON (SUPRA) AND THUS ADJUSTMENT EVEN PROTECTIVE BASIS CANNOT BE SUSTAINED . THE DECISION OF THE HON BLE J URISDICTIONAL HIGH COURT IS A BINDING PRECEDENT AND THE LOWER AUTHORITIES CANNOT DISREGARD IT MEREL Y BECAUSE THE R EVENUE HAS CHALLENGED IT BEFORE THE HON BLE SUPREME COURT. THUS RESPECTFULLY FOLLOWING THE ABOVE DECISION OF THE TRIBUNAL WE DIRECT THE LD. AO/TPO TO DELETE THE PROTECTIVE ADDITION OF RS . 51 09 87 000/ - . ACCORDINGLY WE ALLOW THE RELEVANT GROUNDS OF THE APPEAL OF THE ASSESSEE. 7 . SINCE WE HAVE ALREADY ALLOWED THE GROUND OF THE ASSESSEE IN RESPECT OF PROTECTIVE ADDITION OF AMP THE GROUND NOS. 2 .7 AND 2.8 OF THE APPEAL ARE RENDERED INFRU CTUOUS AND ACCORDINGLY WE ARE NOT ADJUDICATING UPON T HOSE GROUNDS. THUS THE GROUND NOS. 2.7 & 2.8 OF THE APPEAL ARE DISMISSED. 9 ITA NO. 6531/DEL/2017 8 . IN GROUND NOS. 4 TO 4.4 THE ASSESSEE HAS RAISED ISSUE OF NOT ALLOWING ADDITIONAL CLAIM OF DEDUCTION AMOUNTING TO RS.5 23 44 182 / - PURSUANT TO THE ORDER OF THE S ETTLE MENT C OMMISSI ON. 8 .1 THE ASSESSEE MADE CLAIM OF DEDUCTION IN QUESTION BEFORE THE ASSESSING OFFICER HOWEVER HE (THE A.O.) DECLINED AS THE SAME WAS NOT CLAIMED IN THE RETURN OF INCOME FILED. THE LD. DRP CONSIDERED THE SUBMISSION OF THE ASSESSEE AND HELD THAT CLAIM WAS NOT ALLOWABLE DUE TO THE REASON THAT IT WAS NOT PERTAINING TO THE PERIOD UNDER CONSIDERATION AND ARISE ONLY IN THE SUBSEQUENT PERIOD. 8 .2 BEFORE US THE LD. COUNSEL SUBMITTED THAT A SEARCH WAS CONDUCTED BY THE DIRECTORATE OF REVENUE INTELLIGENCE ( DRI) AT THE PREMISES OF ASSESSEE UNDER THE CUSTOMS ACT ON 23/07/2014. ON SHOW CAUSE NOTICE ISSUED BY THE DRI THE ASSESSEE FILED APPLI CATION BEFORE THE SETTLEMENT COMMISSION AND PAID CUSTOM DUTY ALONGWITH INTEREST IN THE MONTH OF MARCH 2016. THE SETTLEMENT C OMMISSION PASSED FINAL ORDER ON 24/06/2016 RESULTING TAX DEMAND ALONGWITH INTEREST AND PENALTY. THE ASSESSEE PAID PENALTY IN THE MO NTH OF AUGUST 2016. THE LD. COUNSEL CLAIMED THAT INTEREST PAID ON THE CUSTOM DUTY WHICH AROSE IN FINANCIAL YEAR 2015 - 16 WAS RELEVANT TO THE A SSESSMENT YEAR IN CONSIDERATION AND THEREFORE IT SHOULD BE ALLOWED AS DEDUCTION TO THE ASSESSEE IN THE ASSESSMENT YEAR UNDER CONSIDERATION. THE LEARNED COUNSEL ATTEMPTED TO DISTINGUISH THE DECISION OF THE TRIBUNAL IN THE CASE OF THE ASSESSEE FOR ASSESSMENT YEAR 2012 - 13. ON THE CONTRARY T HE LEARNED CIT (DR) RELIED ON THE FINDING OF THE LOWER AUTHORITIES. 8 .3 DURING THE HEARING OF THE CASE PROVISION OF SECTION 43B OF THE ACT WERE WERE BROUGHT TO THE NOTICE OF THE LD. COUNSEL WHICH READS THAT ANY SUM PAYABLE BY T HE ASSESSEE BY WAY OF TAX DUTY - CESS OR FEE BY WHATEVER NAME CALLED SHALL BE ALLOWED IN THE PREVIOUS YEAR IN WHICH S UCH SUM IS ACTUALLY PAID BY HIM . THE LD. COUNSEL ADMITTED THAT AMOUNT 10 ITA NO. 6531/DEL/2017 BEING PAID IN SUBSEQUENT YEARS IT CANNOT BE ALLOWED AS DEDUCTION IN THE YEAR UNDER CONSIDERATION . 8 .4 WE FIND THAT IN ASSESSEE S OWN CASE TRIBUNAL IN ITA NO. 1357/DEL/2070 IN ASSESSMENT YEAR 2012 - 13 HAS ALSO DISALLOWED THIS CLAIM OF THE DEDUCTION BUT ON THE GROUND THAT THE LIABILITY TOWARDS SUCH INTEREST GOT CRYSTALLIZED AND PAID IN SUBSEQUENT YEARS. THE RELEVANT FINDING OF THE TRIBUNAL IS REPRODUCED AS UNDER: 22. WE ARE CONVINCED WITH THE VIEW CANVASSED BY THE DRP AS FOLLOWED IN THE IMPUGNED ORDER. OBVIOUSLY THE ASSESSEE PAID INTEREST ON CUSTOMS DUTY IN THE FINANCIAL Y EAR 2015 - 16. THE LIABILITY TOWARDS SUCH INTEREST GOT CRYSTALLIZED AND PAID DURING SUCH LATER YEAR ONLY. BY NO STANDARD THE ASSESSEE CAN CLAIM DEDUCTION FOR A PART OF SUCH INTEREST IN THE YEAR UNDER CONSIDERATION. AS THE CLAIM PERTAINS TO A SUBSEQUENT PERI OD THE ASSESSEE MAY TAKE NECESSARY ACTION FOR GETTING THE DEDUCTION IN SUCH LATER YEAR AS PER LAW. THESE GROUNDS ARE NOT ALLOWED. 8 .5 T HUS IN VIEW OF THE FINDINGS OF TRIBUNA (SUPRA) AND PROVISION OF SECTION 43B OF THE ACT DEDUCTION FOR PAYMENT OF INT EREST IS NOT ALLOWABLE IN THE YEAR UNDER CONSIDERATION. THUS G ROUND NOS. 4 TO 4.4 OF THE APPEAL ARE ACCORDINGLY DISMISSED. 9 . IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED PARTLY. THE DECISION IS PRONOUN CED IN THE OPEN COURT ON 3 0 T H NOV . 201 7 . S D / - S D / - ( AMIT SHUKLA ) ( O.P. KANT ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 3 0 T H NOVEMBER 201 7 . RK / - (D.T.D) COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT 4 . CIT(A) 5 . DR ASST. REGISTRAR ITAT NEW DELHI