DEPUTY COMMISSIONER OF INCOME-TAX vs. M/S. TATA AUTOCOMP GY BATTERIES LTD., PUNE

आदेश / ORDER PER ANIL CHATURVEDI, AM :

Assessee is a company stated to be engaged in the business of manufacturing of Batteries. Assessee electronically filed its return of

income for A.Y. 2009-10 on 24.09.2010 declaring loss of

Rs.35,44,84,222/-. The case was selected for scrutiny and thereafter

assessment was framed u/s 143(3) of the Act vide order 18.03.2013 and

the total loss was determined at Rs.32,61,62,800/-. Aggrieved by the

order of AO, assessee carried the matter before Ld.CIT(A), who vide order

dated26.02.2016 (in appeal No.PN/CIT(A)-5/Asst.CIT-7, Pune/153/2013-

14) granted substantial relief to the assessee. Aggrieved by the order of

Ld.CIT(A), Revenue is now in appeal before us and has raised the

following effective ground :

“Whether, on the facts and in the circumstances of the case and in law, the Hon’ble CIT(Appeal) was justified in deleting the addition made on account of disallowance of Administrative Support Services claimed u/s 40A(2)(b) of the Act.”

assessee had paid administrative service charges of Rs.2,83,21,427/- to

its holding company i.e., Tata Autocomp Systems Ltd (TACO), one of the

joint venture partners having 50% shares and similar amount was paid

as royalty to other holding company i.e., GS Yuasa International Limited,

Japan. AO noted that the amount paid towards the administrative service

charges of Rs.2,83,21,427/- was from parties covered by Sec.40A(2)(b) of

the Act. The assessee was asked to justify the same in relation to the

reasonableness and nature of services. Assessee inter-alia submitted

that the amount was paid pursuant to the administrative support service

agreement entered between Assessee and TACO. AO on perusing the

agreement noted that TACO was providing services at the start-up

phase and operating phase. He noted that the services mentioned in

operating phase were general in nature and requires no specialized

services requiring high technical and professional knowledge. AO also

noted that the fee payable by the assessee was fixed as a percentage to

the total turnover of the assessee. AO was of the view that it was difficult

to understand as to how a price for the services rendered can be fixed on

the basis of sales without knowing the expenditure nor knowing the

volume of turnover. AO also noted that assessee had incurred expenses

towards recruitment of new employees, travelling expenses,

reimbursement etc. and it had paid separately for the services taken up

by the TACO. AO therefore concluded that assessee had not received any

administrative expenses from TACO during the assessment year and

further concluded that assessee has not substantiated the services

availed. He therefore held that in the absence of any justification for the

amount paid, the claim of expenses paid to TACO at Rs.2,83,21,427/-

was not allowable u/s 40A(2)(b) of the Act and accordingly he disallowed

Rs.2,83,21,427/-. Aggrieved by the order of AO, assessee carried the

matter before Ld.CIT(A) who noted that the facts of the assessee’s case

were identical to the facts of Tata Johnson Control Automotive Ltd., and

in that case Pune Bench of the Tribunal (in ITA No.1450/PN/2011 for

A.Y. 2006-07 order dated 09.12.2015) had decided the issue in favour of

the assessee. Ld.CIT(A) has re-produced the findings of ITAT in Page 27

to 33 of her order which for the sake of brevity not reproduced by us.

She thereafter by following the order in the case of Tata Johnson

Automotive Ltd., (supra), the decision of Hon’ble Bombay High Court in

the case of CIT Vs. Indo Saudi Services (Travel) (P.) Ltd., and other

decisions cited in the order has decided the issue in favour of the

assessee.

Aggrieved by the order of Ld.CIT(A), Revenue is now in appeal before

us.

Ld.CIT(A). Ld.A.R. on the other hand reiterated the submissions made

before AO and Ld.CIT(A) and further submitted that Ld.CIT(A) had decided

the issue in favour of the assessee by following the decision of Pune

Bench of Tribunal in the case of Tata Johnson Automotive Ltd., (supra)

and submitted that against the aforesaid order of the Tribunal, Revenue

had preferred appeal before the Hon’ble Bombay High Court and that the

Hon’ble Bombay High Court had dismissed the appeal of Revenue. He

thus supported the order of Ld.CIT(A).

record. The issue in the present ground is with respect to disallowance of

expenses paid to TACO u/s 40A(2)(b) of the Act. We find that Ld.CIT(A)

after relying on the decision in the case of assessee’s sister concern i.e.,

Tata Johnson Automotive Ltd., (supra) and other decisions referred to in

her order, decided the issue in favour of the assessee. Before us,

Revenue has not pointed out any distinguishing feature in the facts of the

case in the year under consideration and in the case of assessee’s sister

concern i.e., Tata Johnson Automotive Ltd., (supra) nor has pointed out

any fallacy in the findings of Ld.CIT(A). Further the Tribunal’s decision in

the case of Tata Johnson Automotive Ltd., (supra) has been upheld by

Hon’ble Bombay High Court. In view of the aforesaid facts, we following

the order of the Co-ordinate Bench of the Tribunal in the case of

assessee’s sister concern i.e., Tata Johnson Automotive Ltd., (supra) and

for similar reasons dismiss the ground of Revenue. Thus, the ground of

the Revenue is dismissed.

Order pronounced on the 12th day of July, 2019.

Sd/- Sd/- (PARTHA SARATHI CHAUDHURY) (ANIL CHATURVEDI) �या�यक सद�य / JUDICIAL MEMBER लेखा सद�य / ACCOUNTANT MEMBER

पुणे Pune; �दनांक Dated : 12th July, 2019. Yamini

आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent 3. CIT(A)-5, Pune. Pr.CIT, Pune-4, Pune. 4. 5 �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, “ए” / DR, ITAT, “A” Pune; 6. गाड� फाईल / Guard file.

आदेशानुसार/ BY ORDER // True Copy // व�र�ठ �नजी स�चव / Sr. Private Secretary आयकर अपील�य अ�धकरण ,पुणे / ITAT, Pune.