PR. COMMISSIONER OF INCOME TAX-6 vs. MARUTI SUZUKI INDIA LTD.

ITA/381/2016HC DelhiDLHC01046106201607 December 2017Bench: CASES PERTAINING TO SPL.DIVISION BENCHES2 pages

AI SummaryDismissed

What did the High Court hold?

The High Court, in view of its orders passed on the same day in other related appeals (ITA Nos. 250 of 2005 and 171 of 2012), answered all the framed questions of law in the negative. This means the High Court found no error in the ITAT's decision to cancel the additions made by the Revenue. Consequently, the additions in respect of custom duty paid on import of components for export purposes (where export had not occurred by year-end) and custom duty on inventory in closing stock were deleted. Furthermore, the High Court upheld the ITAT's ruling that the sales tax exemptions received from the Government of Haryana were capital in nature, aligning with the principle laid down in Sahney Steel & Press Works Ltd v. CIT. The ratio decidendi is that the ITAT's findings on these issues were correct and did not warrant interference by the High Court. The operative direction was to dismiss the appeal.

What were the facts?

The Revenue, Pr. Commissioner of Income Tax-6, appealed against an order dated 24th August 2015 passed by the Income Tax Appellate Tribunal (ITAT) in ITA Nos. 5120/Del/2010 and 2441/Del/2012 for Assessment Year 2006-07. The appeal was admitted by the High Court on 16th November 2016, and specific questions of law were framed. The dispute involved additions made by the Revenue concerning custom duty paid on imported components for export purposes where exports had not yet occurred by the year-end, custom duty on inventory in closing stock, and sales tax exemptions received from the Government of Haryana. The amount in dispute for the first two items was Rs. 8,65,07,635/- & Rs. 1,47,142/- and Rs. 22,52,46,693/-, respectively. The third item involved Rs. 32,25,70,213/-.

What were the issues?

The High Court had to decide the following questions of law: 1. Did the ITAT err in cancelling the additions made by the Revenue in respect of custom duty paid on the import of components for export purposes, for which export had not been made by the year-end, amounting to Rs. 8,65,07,635/- & Rs. 1,47,142/-? 2. Did the ITAT err in cancelling the additions made by the Revenue in respect of custom duty on inventory in closing stock, amounting to Rs. 22,52,46,693/-? 3. Did the ITAT err in ruling that sales tax exemptions received to the tune of Rs. 32,25,70,213/- from the Government of Haryana were capital in nature, overlooking the Supreme Court's decision in Sahney Steel & Press Works Ltd v. CIT (1997) 228 ITR 253? Assessee's Contentions: The judgment does not record specific contentions made by the assessee (Maruti Udyog Ltd.) before the High Court. However, the ITAT's decision, which the High Court upheld, implies the assessee argued against the additions made by the Revenue on these counts. Revenue's Contentions: The Revenue contended that the ITAT had erred in cancelling the additions made in respect of the custom duty on imported components for export and on inventory, and also in its ruling on the nature of sales tax exemptions.

AI-generated summary — verify with the full judgment below

ITA No.381/2016

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$~ * IN THE HIGH COURT OF DELHI AT NEW DELHI +

ITA No. 381/2016 Reserved on: 11th November 2017

Decided on: 7th December, 2017

PR. COMMISSIONER OF INCOME TAX-6

....Appellant Through: Mr. Mr. Rahul Chaudhary and Mr. Sanjay Kumar, Advocates.

versus

MARUTI UDYOG LTD.

..... Respondent Through : Mr. S. Ganesh, Senior Advocate with Ms. Kavita Jha, Mr. S. Sukumaran, Mr. Anand Sukumar, Mr. Bhuwan Dhoopar, Ms. Roopali Gupta and Mr.Bhupesh Pathak, Advocates.

CORAM: JUSTICE S. MURALIDHAR JUSTICE PRATHIBA M. SINGH

JUDGMENT %

07.12.2017 Dr. S. Muralidhar, J. 1. This is an appeal by the Revenue against the order dated 24th August 2015 passed by the ITAT in ITA Nos. 5120/Del/2010 and 2441/Del/2012 for AY 2006-07.

While admitting this appeal on 16th November 2016, the following questions of law were framed: “Did the ITAT fall into error in cancelling the additions in respect of

ITA No.381/2016

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the following:-

i) Custom Duty paid on import of components for export purposes for which export had not been made by year end: Rs. 8,65,07,635/- & Rs. 1,47,142/-.

ii) Custom Duty on Inventory in closing stock: Rs. 22,52,46,693/-.

(iii) Did the Tribunal fall into error in ruling that sales tax exemptions received to the tune of Rs. 32,25,70,213/from Government of Haryana was capital in nature overlooking the decision of Supreme Court in Sahney Steel & Press Works Ltd v. CIT (l997) 228 ITR 253?

In view of the orders passed today by this Court in ITA Nos. 250 of 2005 and 171 of 2012, the questions are answered in the negative, i.e. in favour of the Assessee and against the Revenue. The appeal is accordingly dismissed.

S. MURALIDHAR, J.

PRATHIBA M. SINGH, J. DECEMBER 07, 2017 Rm

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