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Facts
The appeals involve common facts and were heard together. The assessee filed Miscellaneous Applications (MA) to rectify perceived mistakes in previous tribunal orders regarding the adjudication of grounds related to excise duty, custom duty, and R&D cess, as well as provisional liability for FPI-OE components.
Held
The Tribunal decided that the non-adjudication of certain grounds constituted a mistake apparent from the record, recalling the appeal for proper adjudication. It also directed the deletion of disallowances concerning excise duty, custom duty, and R&D cess, stating these issues were covered by previous decisions and Supreme Court orders.
Key Issues
Whether the non-adjudication of appeal grounds is a mistake apparent from the record. Whether excise duty, custom duty, and R&D cess paid on imports for export purposes, even if not materialized, are allowable as deductions under Section 43B of the Income Tax Act.
Sections Cited
254(2), 43B, 145A
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Income Tax Appellate Tribunal, DELHI BENCH ‘I’: NEW DELHI
Before: SHRI SUDHIR PAREEK & SHRI AVDHESH KUMAR MISHRA
ORDER PER BENCH Common facts arise in the above captioned appeals of the assessee and Revenue; therefore, these appeals were heard together and are being disposed off by this common order.
The captioned appeals were decided vide common order dated 12.03.2024 of the Tribunal. The assessee filed two separate Miscellaneous Applications (MA) against both appeals on the following issues: (i) ITA 4174/Del/2010 - Revenue Appeal: The assessee filed MA for the reason that while adjudicating Ground of Appeal No.6 challenging the addition/disallowance of provisional liability for FPI-OE components, the Tribunal inadvertently remanded the issue to the Assessing Officer (‘AO’) following its original order dated 17.10.2018 for AY 2009-10 without taking cognizance of its MA order dated 19.06.2019 for the said appeal for AY 2009-10 in MA No.718/Del/2018, wherein the said addition/disallowance had been deleted (refer Para 68-71 @ Pages 613-625 read with MA order dated 19.06.2019 @ Para 652-659 of Case Law Paper Book-1). (ii) ITA 4081/Del/2010 - Assessee Appeal: The assessee filed MA for the reason that Grounds of Appeal Nos. 2.1 to 2.1.2 and 2.2 were inadvertently not adjudicated by the Tribunal.
& 4174/Del/2010 Maruti Suzuki India Ltd. 2.1 The above-mentioned MAs of the assessee were decided by the Tribunal vide MA Order dated 13.03.2025. The assessee’s MA arisen from the Assessee Appeal in ITA 4081/Del/2010 was allowed by recalling the said appeal for adjudication of Grounds of Appeal
Nos. 2.1 to 2.1.2 and 2.2 of the said appeal as under: "19. We have heard the rival submissions and perused the materials on record. We find that ground no 2.1 to 2.1.2 relating to deduction of duty paid and ground no 2.2 relating to deduction claimed on account of custom duty, have not been adjudicated. We are of considered view that non-adjudication of grounds of appeal, constitutes mistake apparent from record falling within the scope of section 254(2) of the Act, as held by the Hon'ble Supreme Court in the case of Honda Siel Power Products Ltd: 295 ITR 466 (SC), CIT Reliance Telecom Ltd: 440 ITR
1. (SC). The said Tribunal order is therefore recalled for the limited purpose of adjudicating the grounds 2.1 to 2.1.2 and ground 2.2. Accordingly, the M.A. no 355/Del/2024 is allowed." 2.2 The assessee’s MA arisen from the Revenue Appeal in ITA 4147/Del/2010 was allowed and the consequential addition/disallowance of provisional liability for FPI-OE components was directed to be deleted. The relevant part of the MA order reads as under: "
We have heard the rival submissions. In view of the aforesaid, we are of the considered view that the order dated 12.03.2024 contains apparent mistake on record and the same is required to be rectified. The said mistake is rectified by issuing necessary directions to the limited extent that the disallowance made on account of FPI may, in conformity with the rectified decision of the Tribunal dated 19.06.2019 issued for assessment year 2009-20, is deleted and the grounds of appeal No.6 is accordingly allowed.
10. In the result, the miscellaneous application no 354/Del/2024 is allowed" 3 & 4174/Del/2010 Maruti Suzuki India Ltd. 2.3 Since both MAs were allowed vide MA Order dated 13.03.2025; therefore, the Registry revived both appeals treating the same recalled for limited purpose as above. However, it is evident from the MA Order dated 13.03.2025 that the MA arisen from the Revenue Appeal in ITA 4147/Del/2010 was allowed with the direction to delete the said addition/ disallowance raised in the Ground numbered 6 of the said appeal. Further, the said appeal of the Revenue was not recalled for hearing. In the above background, both appeals were heard together. ITA 4174/Del/2010: 3. As far as the issue of the addition/disallowance of provisional liability for FPI-OE components raised in ITA 4147/Del/2010 is concerned; we, after hearing both parties on this issue, are of the considered view that the Tribunal vide its order dated 13.03.2025 in the above-mentioned MA has already allowed this issue in favour of the assessee. Thus; we respectfully following the Tribunal’s order dated 13.03.2025 (supra), direct the AO to do needful and allow consequential relief to the assessee accordingly. Accordingly, this appeal stands disposed of as above. ITA 4081/Del/2010: 4. The first issue raised in Ground numbered 2.1 to 2.1.2 is the disallowance of Excise Duty on vehicles (Rs.59,70,869/-), Excise Duty on spare parts (Rs.24,70,671/-) and R & D Cess (Rs.82,860/-) aggregating to & 4174/Del/2010 Maruti Suzuki India Ltd. Rs.85,24,400/- under section 43B of the Act. In the relevant year, the assessee has claimed deduction of duty of Rs.85,24,400/-, being balance in the PLA, under section 43B of the Act on payment basis as the same has been paid by the assessee under Rule 4 of the Excise Rules, 2002 in order to cover the duty required to be paid on goods to be removed from bonded warehouse. As per the assessee, the excise duty and R & D Cess payable on such goods had been debited to the PLA at the time of removal of said goods. But the AO did not disallow the aforesaid claim of deduction following the assessment order of AY 2005-06, which was upheld by the Ld. CIT(A).
5. With respect to the first issue; i.e. the disallowance of Rs.85,24,400/- under section 43B of the Act, the Ld. Sr. Counsel submitted that this issue stood covered in favour of the assessee by the decision of the Hon'ble Supreme Court in the case of Modipon Ltd.; 400 ITR 1. Further, he submitted that this issue had been decided by the Hon'ble Delhi High Court in favour of the assessee in the assessee’s own cases of AYs 1994-95, 1995-96, 1996-97 reported in 255 CTR 140 (Para 15-16), AY 1999-00 reported in 406 ITR 562 (Para 16-20) and AY 2000-01 in ITA 442/2005 (Para 3). He further submitted that the Revenue had not challenged any of the orders of the Hon’ble Delhi High Court before the Supreme Court; therefore, this issue had now attained finality. He further drew our attention to various orders of the Tribunal in assessee’s own & 4174/Del/2010 Maruti Suzuki India Ltd. cases for AYs 2004-05 to 2010-11 (such orders were placed in the PB), wherein this issue also stood decided in favour of the assessee. In view of these decisions, he prayed for deletion of the said disallowance upheld by the Ld. CIT(A).
6. The 2nd issue is in respect of disallowance of Custom duty of Rs.10,28,95,484/- paid on the import of components for export purpose for which the export had not materialized during the relevant year. It was submitted by the Ld. Sr. Counsel that the assessee had consistently been following exclusive method of accounting in respect of custom duty paid on import of components for export purposes. The duties paid on purchases were not included in the cost of purchases and the value of closing stock in the Profit & Loss Account as the accounting of such duties, both in the purchases as well as the closing stock as per the requirement of section 145A of the Act, was tax neutral. However, to give effect to the provisions of section 43B of the Act, which mandated that duties paid by an assessee were to be allowed as deduction on payment basis, custom duty paid by the applicant on import of components for export purposes, whether or not export against the same had actually taken place during the relevant year, had been claimed as deduction in the Income Tax Return (‘ITR’). However, it was disallowed by the AO following the reasoning in the assessment order of AY 2005-06.
& 4174/Del/2010 Maruti Suzuki India Ltd. 6.1 The Ld. Sr. Counsel submitted that this issue stood covered in favour of the assessee by the decisions of the Tribunal in assessee’s own cases for AYs 1999-2000, 2000-01, 2005-06 to 2009-10 (such orders were placed in the PB). The Ld. Sr. Counsel drew our attention to the fact that the Tribunal’s orders for AYs 1999-2000 and 2000-01 were confirmed by the Hon’ble Delhi High Court and the SLP filed by the Revenue against the order of the Hon’ble Delhi High Court had now been affirmed by the Hon’ble Supreme Court vide order dated 27.03.2025, wherein the SLP filed by the Revenue was dismissed. Therefore, this issue had now attained finality. In view of these decisions, he prayed for deletion of the said disallowance upheld by the Ld. CIT(A).
On the other hand, the Ld. CIT-DR placed reliance on the AO’s order. He contended that the PLA expenses had no relation with the goods manufactured; hence, the disallowance on the basis of custom duty paid on purchases for export could not be allowed as expenses.
We have heard both parties at length and have perused the material available on the record. As far as the first issue; i.e. the disallowance of Rs.85,24,400/- made under section 43B of the Act is concerned, we have given a thoughtful consideration to this issue and are of the considered opinion that this issue is squarely covered by the decisions of the Coordinate bench in the assessee’s own cases for AYs 2004-05 to 2010-11 and earlier years as mentioned above in para 5 of this order. We therefore, 7 & 4174/Del/2010 Maruti Suzuki India Ltd. respectfully, following the decisions of the Coordinate bench in the assessee’s own cases for AYs 2004-05 to 2010-11 and earlier years as mentioned above in para 5 of this order, hereby delete the disallowance of Rs.85,24,400/- made under section 43B of the Act. The assessee gets consequential relief. Thus, all relevant grounds in this regard raised by the assessee are allowed accordingly.
9. The last issue is in respect of disallowance of Custom duty of Rs.10,28,95,484/- paid on the import of components for export purpose for which the export had not materialized during the relevant year. We have given a thoughtful consideration to this issue and are of the considered opinion that this issue is squarely covered by the decisions of the Tribunal in assessee’s own cases for AYs 1999-2000, 2000-01, 2005- 06 to 2009-10, which also gets buttressed by the decision of the Hon’ble Delhi High Court in assessee’s own case for AYs 1999-2000, against which the SLP filed by the Revenue has been dismissed by the Hon’ble Supreme Court vide order dated 27.03.2025. We therefore, respectfully, following the decisions of the Coordinate bench in the assessee’s own cases for AYs AYs 1999-2000, 2000-01, 2005-06 to 2009-10 and the order of the Hon’ble Delhi High Court in assessee’s own case for AYs 1999-2000 as mentioned above in para 6.1 of this order, hereby delete the disallowance of Rs.10,28,95,484/- made under section 43B of the Act. The assessee & 4174/Del/2010 Maruti Suzuki India Ltd. gets consequential relief. Thus, all relevant grounds in this regard raised by the assessee are allowed accordingly.
In the result, both recalled appeals are allowed in favour of the assessee. The Revenue appeal is dismissed as above and the assessee’s appeal is allowed as above.