M/S.APOLLO TYRES LTD vs. THE DEPUTY COMMISSIONER OF INCOME-TAX

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ITA/166/2013HC KeralaKLHC01026051201329 July 2021Bench: HONOURABLE MR.JUSTICE S.V.BHATTI,HONOURABLE MR. JUSTICE BECHU KURIAN THOMAS5 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the substantial questions of law were answered in favour of the Revenue and against the Assessee. The Court adopted the reasons provided in a separate order concerning ITA No. 26/2013 for Assessment Year 2003-04, which dealt with similar questions of law. Consequently, the appeal filed by the Assessee was dismissed. The specific reasoning for each issue, as elaborated in the separate order for AY 2003-04, would have led to the conclusion that the showroom expenditure was capital in nature due to ownership retention and that the disallowance of depreciation on the let-out portion of the Gurgaon building was justified. The ratio decidendi would be that expenditures on dealer showrooms where ownership is retained are capital, and depreciation on let-out portions can be disallowed under specific circumstances. No issue was expressly left undecided.

What were the facts?

M/s. Apollo Tyres Ltd. (the Assessee) is the appellant, and the Deputy Commissioner of Income Tax (the Revenue) is the respondent. The appeal is against the order of the Income Tax Appellate Tribunal (the Tribunal), Cochin Bench, dated December 21, 2012, concerning Assessment Year 2004-05. The dispute pertains to two disallowances made by the Tribunal: expenditure incurred by the Assessee for refurbishing its dealers' showrooms to promote sales, and a portion of depreciation claimed on the Gurgaon building related to its let-out portion. The Assessee had also filed ITA No. 26/2013 for Assessment Year 2003-04 on similar grounds, which was dismissed by a separate order on the same date.

What were the issues?

The Tribunal had to decide the following substantial questions of law: 1. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the expenditure of Rs. 63,26,616 incurred by the Assessee in its dealers' showrooms for promoting sales was capital expenditure, on the ground that ownership of these assets was retained by the Assessee? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in sustaining the disallowance of part depreciation of the Gurgaon building, aggregating to Rs. 24,37,755, in relation to the portion let out to Apollo International Ltd. etc.? The Assessee contended that the expenditure on showrooms was for sales promotion and not capital in nature. The Assessee's arguments regarding depreciation were not explicitly detailed in the provided text, but it is implied they contested the disallowance. The Revenue's contentions were not explicitly detailed, but their stance was that the expenditure was capital and the depreciation disallowance was justified, as the Tribunal's order was in their favour.

Which sections of the Income-tax Act were involved?

None explicitly mentioned in the provided text, beyond the general reference to the Income Tax Act implicitly governing these matters.

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE S.V.BHATTI & THE HONOURABLE MR. JUSTICE BECHU KURIAN THOMAS THURSDAY, THE 29TH DAY OF JULY 2021 / 7TH SRAVANA, 1943 ITA NO. 166 OF 2013 AGAINST THE ORDER IN ITA 719/2007 OF I.T.A.TRIBUNAL,COCHIN BENCH, ERNAKULAM APPELLANT/S: M/S.APOLLO TYRES LTD 6TH FLOOR, CHERUPUSHPAM BUILDINGS, SHANMUGHAM ROAD, ERNAKULAM-KOCHI-31. (PAN:AAACA 6990Q) BY ADVS. SRI.JOSEPH MARKOSE (SR.) SRI.V.ABRAHAM MARKOS SRI.ABRAHAM JOSEPH MARKOS SRI.BINU MATHEW SRI.TOM THOMAS KAKKUZHIYIL RESPONDENT/S: THE DEPUTY COMMISSIONER OF INCOME-TAX CIRCLE-1(1) ERNAKULAM, KOCHI - 682 018. BY ADVS. SRI.P.K.R.MENON,SR.COUNSEL, GOI(TAXES) SRI.JOSE JOSEPH, SC, FOR INCOME TAX SRI CHRISTOPHER ABRAHAM THIS INCOME TAX APPEAL HAVING COME UP FOR HEARING ON 29.07.2021, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

I.T.A. No.166/2013 -2- J U D G M E N T S.V. Bhatti, J. Heard learned Senior Counsel Mr. Joseph Markos and learned Standing Counsel Mr. Christopher Abraham for parties. 2. M/s.Apollo Tyres Ltd., Kochi/Assessee is the appellant. The Deputy Commissioner of Income Tax/Revenue is the respondent. The subject appeal is at the instance of Assessee from the order of Income Tax Appellate Tribunal (for short ‘the Tribunal') Cochin Bench in ITA No.719/Coch/2007 dated 21.12.2012. The controversies relate to the Assessment Year 2004-05. The appeal deals with the questions of disallowance made by the Tribunal towards the expenditure incurred by the assessee for refurbishing the showroom for the

I.T.A. No.166/2013 -3- purpose of promoting the sales and disallowance of part of depreciation of Gurgaon building. 2.1 The substantial questions read as follows: “Whether on the facts and in the circumstances of the case, the Tribunal is justified in law in 1) In holding the expenditure of Rs.63.26.616 incurred by the assessee in the showroom of its dealers for the purpose of promoting the sale of products of the company as capital expenditure on the ground that ownership of these assets was retained by the assessee. 2) In sustaining the disallowance of part depreciation of Gurgaon building aggregating to Rs.24.37.755/- in relation to let out portion to Apollo International Ltd etc. 3. The assessee, raising similar questions of law, filed ITA No.26/2013 for the Assessment Year 2003-04. By a separate order dated 29.07.2021 the appeal has been dismissed. The reasons stated in ITA No.26/2013 are adopted while considering and disposing of the substantial questions framed in this appeal as well.

I.T.A. No.166/2013 -4- Hence, the questions are answered in favour of the Revenue and against the assessee. Appeal fails, dismissed accordingly. No order as to costs. Sd/- S.V.BHATTI JUDGE Sd/- BECHU KURIAN THOMAS JUDGE jjj

I.T.A. No.166/2013 -5- APPENDIX OF ITA 166/2013 PETITIONER ANNEXURE ANNEXURE A1 TRUE COPY OF ASSESSMENT ORDER DATED 30/10/2006 OF THE RESPONDENT. ANNEXURE A2 TRUE COPY OF APPELLATE ORDER DATED 31/5/2007 OF THE COMMISSIONER OF INCOME TAX (APPEALS)II, KOCHI. ANNEXURE A3 CERTIFIED COPY OF ORDER DATED 21/12/2012 OF THE INCOME TAX APPELLATE TRIBUNAL, KOCHI BENCH IN I.T.A.NO.719/COCH/2007.

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