DCIT CENTRAL CIRCLE-7, NEW DELHI vs. FARM2PLATE DAIRY PRODUCE PVT. LTD., NEW DELHI

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ITA 8325/DEL/2019Status: DisposedITAT Delhi11 April 2022AY 2014-153 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that once the substantive addition is settled under the VSVS, the protective addition related to the same issue cannot be sustained. This is in line with CBDT clarifications regarding VSVS.

What were the facts?

The Assessing Officer (AO) made both substantive and protective additions on account of Advertisement, Marketing, and Promotion (AMP) expenditure. The assessee opted for the Vivad Se Vishwas Scheme (VSVS) for the substantive addition.

What were the issues?

Whether a protective addition can be sustained when the substantive addition on the same issue has been settled under the Vivad Se Vishwas Scheme.

Which sections of the Income-tax Act were involved?

Section 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH ‘B’ : NEW DELHI

Before: SHRI AMIT SHUKLA & DR. B.R.R. KUMAR

For Appellant: Shri Rajat Jain, CA
For Respondent: Ms. Yagya Saini Kakkar, CIT DR
Hearing: 10.03.2022

impugned order dated 31.07.2019 passed by the ld. CIT(A)-44, New Delhi for the quantum of assessment passed under section 143 (3) of the Income-tax Act, 1961 (for short ‘the Act’) for the assessment year 2014-15. submitted that here, in this case, addition was made on account of AMP expenditure where AO has made both substantive and protective adjustment on account of AMP adjustment. Protective adjustment was made on the basis of BLT method and substantive addition was made of Rs.3,47,78,337/- which was made on account of intensity approach. The assessee had gone for the “Vivad Se Vishwas Scheme, 2020” (VSVS) on account of substantive addition. The ld. CIT( A) has mainly directed the Assessing Officer not to include marketing or selling expenses from such adjustments and also held that protective adjustment is not enforceable.

3.

Before us, ld. CIT DR firstly had objected that it is a transfer pricing issue and as such the matter may be moved to Transfer Pricing Bench. First of all, we find that it is not a case where any argument on behalf of the TP issue is required by the ld. CIT DR, albeit the issue here is whether the impugned appeal is covered by VSVS or not.

4.

It is an undisputed fact that AO has made both substantive and protective addition wherein substantive addition was made of Rs.3,47,78,337/- by using Intensity Method and protective addition was made for Rs.24,73,81,255/- by using BLT method. Now, once the matter has been settled in VSVS on substantive addition then any been clarified by the CBDT vide Circular No.IT/A/1/2020-TPL dated 04.03.2022 vide Question No.35 wherein CBDT has clarified that substantive addition is covered under VSVS then on settlement of dispute related to substantive addition AO shall pass rectification order deleting the protective addition relating to the same issue in the case of assessee. Thus, the present appeal of the Department is not maintainable in view of the issue being settled under VSVS and required Form-5 has already been issued and filed before us.

Accordingly, the appeal filed by the Revenue is dismissed.

Order was pronounced on 11th day of April, 2022.

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