DCIT, New Delhi v. M/s Good Year India Ltd.,, Faridabad

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH : C NEW DELHI) BEFORE SHRI A.D. JAIN J UDICIAL MEMBER AND SHRI A.K. GARODIA ACCOUNTANT MEMBER ITA. NO.80/DEL./2010 (ASSESSMENT YEAR : 2004-05) DCIT CIRCLE 12(1) VS. M/S GOOD YEAR INDIA LTD. NEW DELHI. MATHURA ROAD BALLABGARH DISTT. FARIDABAD (HARYANA) (PAN/GIR NO.AAACG3511H) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI NEERAJ K. JAIN FCA REVENUE BY : SMT. MONA MOHANTY SR.DR ORDER PER A.K. GARODIA AM THIS IS A REVENUES APPEAL DIRECTED AGAINST THE OR DER OF THE CIT(A)-XV NEW DELHI DATED 16.10.2009 FOR AY 2004-05. THE GROUNDS RAISED BY THE REVNEUE READ AS UNDER: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE ORDER OF THE CIT(A) IS WRONG PERVERSE ILLEGAL AND AGAINST THE PROVISIONS OF LAW WHICH IS LIABLE TO HE SET ASIDE. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW THE LD.CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE MADE BY THE AO O F RS.89 07 086/- OUT OF CONSUMABLES STORES IGNORING THAT THE VARIOUS CON SUMABLES AND STORES USED FOR THE PURPOSES OF REPAIR/MAINTENANCE OF PLAN T AND MACHINERY WERE CAPITAL EXPENDITURE BEING ENDURING IN NATURE. 2. LD.DR OF THE REVENUE SUPPORTED THE ASSESSMENT OR DER WHEREAS LD.AR OF THE ASSESSEE SUPPORTED THE ORDER OF CIT(A). IT IS ALSO SUBMITTED BY HIM THAT THE AO HAS REFERRED TO AY 2003-04 WHILE MAKING THESE DISALLOWA NCES AS CAN BE SEEN IN PARA.4.1 OF THE ASSESSMENT ORDER. IT IS SUBMITTED THAT IN AY 2 003-04 SUCH DISALLOWANCE WAS DELETED BY THE CIT(A) AND AGAINST THAT ORDER OF CIT(A) ALSO THE REVENUE WAS IN APPEAL BEFORE THE TRIBUNAL AND THIS APPEAL OF THE REVENUE IN THAT YEAR HAS BEEN DISMISSED BY THE ITA NO.80/DEL./2010 (AY : 2004-05) 2 TRIBUNAL IN ITA NO.4033/DEL./2007 DATED 29.1.2009. IT IS ALSO SUBMITTED BY HIM THAT THIS TRIBUNAL DECISION IS AVAILABLE ON PAGES 1-4 OF THE PAPER BOOK. 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT IN THE PRESENT YEAR ALSO THE AO HAS MADE DISALLOWANCES OF RS.89.07 LAKHS OUT OF TOTAL EXPENSES OF RS.854 LAKHS INCURRE D BY THE ASSESSEE ON ACCOUNT OF MACHINERY REPAIR EXPENSES. THE DISALLOWANCE HAS BE EN MADE BY THE AO ON THE BASIS THAT THE EXPENSES OF CAPITAL NATURE ARE ESTIMATED AT 15% OF THE ISSUES FROM COMPANY NET STORES AND DISALLOWED. IN AY 2003-04 ALSO THE DISALLOWAN CE OF RS.82.17 LAKHS WAS MADE OUT OF CONSUMABLE STORES AND SPARE PARTS EXPENSES CLAIM ED AT RS.547.87 LAKHS AND IN THAT YEAR ALSO DISALLOWANCE WAS MADE BY HOLDING THAT 15% ISSUES FROM NET STORES ARE TREATED AS CAPITAL EXPENDITURE IN THAT YEAR. THE TRIBUNAL HAS DELETED THE DISALLOWANCE IN THAT YEAR AND RELEVANT PARA OF THE TRIBUNAL DECISION BEING PA RA NO.4 IS REPRODUCED BELOW: WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED TH E MATERIAL ON RECORD. AS THE FACTS EMERGE NO DEFECTS HAVE BEEN FOUND IN THE BOO KS OF ASSESSEE IN TERMS OF ANY OBJECTION ON SPARE PART ISSUING RECORD OR OTHERWISE . ON RANDOM BASIS AO HAS RECOURSED TO ESTIMATE AND MADE AN ESTIMATE ABOUT 15 % PARTS BEING CAPITAL IN NATURE WHICH IN OUR VIEW IS AN AD HOC TREATMENT. CIT(A) HAS CONSIDERED THE ISSUE IN RIGHT PERSPECTIVE FORM THE COMPARISON IT EMERGES THAT IN EARLIER YEARS ON COMPARABLE BASIS ASSESSEE CLAIMED MORE STORES AND S PARE PARTS. IN VIEW THEREOF ON ASSUMPTION BASIS ALSO THE FIGURES CANNOT BE FOU ND FAULT WITH. WE SEE NO INFIRMITY IN THE ORDER OF CIT(A) WHICH IS UPHELD. 4. SINCE THE FACTS IN THE PRESENT YEAR ARE IDENTICA L RESPECTFULLY FOLLOWING THIS TRIBUNAL DECISION IN ASSESSEES OWN CASE WE DO NOT FIND ANY REASON TO INTERFERE IN THE IMPUGNED ORDER OF CIT(A) AND WE THEREFORE CONFIRM THE SAME. 5. IN THE RESULT THE APPEAL OF THE REVENUE IS DISM ISSED. 6. ORDER PRONOUNCED IN OPEN COURT ON THE DATE OF HE ARING I.E. 29.04.2010. SD/- SD/- (A.D. JAIN) (A.K. GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED APRIL 29 2010. SKB ITA NO.80/DEL./2010 (AY : 2004-05) 3 COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-XV NEW DELHI. 5.CIT(ITAT) NEW DELHI. AR/ITAT