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Income Tax Appellate Tribunal, “E” BENCH, MUMBAI
Before: SHRI PRASHANT MAHARISHI, AM & SHRI KULDIP SINGH, JM
These are the three appeals pertaining to M/s Tata Motors Finance Ltd. (assessee) for two AYs i.e. 2012-13 by Revenue and for AY 2013-14 cross appeals, involving AY 2012-13 DCIT V Tata Motors Finance Limited 02. Dy. Commissioner of Income-tax dated 01.03.2002, Mumbai, (the learned Assessing Officer) against the order passed by the CIT(A)- 2, Mumbai [the learned CIT(A)] dated 22.08.2016 for AY 2012-13.
The learned Assessing Officer has raised following five grounds of appeal:
“1. Whether, on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in allowing the claim of the assessee of Rs.14,18,22,496/- that on booking of contracts for financing of vehicles purchase, DMA commission incurred during the year be allowed in entirety in computing total income of the assessee, and thereby overruling the A.O. who held that the assessee would be entitled only to the lower amount actually debited by in its P&L account in accordance with its accounting policy of deferring the DMA Commission incurred, in its books over the period of the contract?"
"Whether, on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in appreciating the fact that allowing the entire expenditure in one
3. "Whether, on the facts and circumstances of the case and in Law, the Ld. CIT(A) has erred in admitting the additional ground for deduction of Rs.9,97,01,832/- towards Bad Debts when this ground was not raised during assessment proceedings and was not connected with any other grounds on which appeal was filed with CIT(A)against the assessment order?"
4. "Whether, on the facts and circumstances of the case and in Law, the Ld. CIT(A) erred in admitting the additional ground as above and also admitting additional evidence in the form of agreement entered into by the assessee with Tata Motors Ltd. in respect of loan repayment to the assessee, to decide the issue of deduction of Doubtful Debts in violation of Rule 46A?"
5. "Whether on the facts and circumstances of the case and in Law, the Ld. CIT(A) erred in allowing deduction of Rs.9,97,01,832/- treating the same as less of Bad Debts claimed by assessee on account of Delinquency Support when the same was shown in return as not allowable?" The appellant craves leave to add to, amend or withdraw the aforesaid ground of appeal.”
5. This disallowance was contested before the learned CIT (A), who allowed the claim of the assessee based on his own decision in case of the assessee for earlier years and following the decision of Hon’ble Delhi High Court in the case of CITI Financial Consumer Limited as well as decision of the Special Bench of ITAT in CIT Vs. Asima Synthetics Limited. This disallowance deleted by the learned CIT(A) is agitated by the Assessing Officer as per ground No.1 and 2 of the appeal.
The learned Departmental Representative supported the orders of the learned Assessing Officer. He further
The learned Authorized Representative submitted that the issue is squarely covered in favour of the assessee in its own case by the decision of the co-ordinate Bench for Assessment Years 2007-08, 2008-09 and 2011-12 and therefore, the ground raised by the learned Assessing Officer deserved to be dismissed.
We have carefully considered the rival contentions and perused the orders of the lower authorities. We find that identical issue arose in the case of the assessee for AY 2007-08, 2008-09 in ITAs no. 3476, 4353, 3119, 19th 4860/Mum/2013 and 1226/Mum/2016 dated September, 2018, where the claim of the assessee on total DMA commission accrued during the year based on the sanction of the loan amount was allowed as deduction of expenses incurred during the year as under :-
“8. We have considered rival contentions and found that Direct Marketing Agent’s Commission was allowed by CIT(A) after following the decision of Delhi High Court in the case of Citi Financial Consumer Finance Ltd., and ITAT Ahmedabad Special Bench in the case of Ashima Syntex 117 ITD 1. From the record we found that when the Assessee finalizes a vehicle financing
During the course of assessment, the AO has allowed only the amortized amount, on the ground that the Assessee, for the purpose of its accounts, has adopted amortization, and the AO has relied upon the Supreme Court decision in the case of Madras Industrial Investment Corporation. We found that in a subsequent decision, Hon’ble Supreme Court in the case of Taparia Tools Ltd., 372 ITR 605 after considering its decision in the case of Madras Industrial Investment Corporation [1997] 225 ITR 802, has held that notwithstanding the accounting treatment followed by an assessee, expenditure incurred during the year has to be allowed
9. LD Dr could not show any differentiating facts and circumstances. Therefore, we do not find any reason to deviate from the above decision. Therefore, respectfully following the same, the grounds no. 1 & 2 of the appeal of the Assessing Officer are dismissed.
Grounds no. 3 to 5 of the appeal are on the issue of disallowance of bad debts of Rs. 9,97,01,832/- deleted by ld CIT (A) . The facts relating to the above issue shows that the assessee has raised an additional ground of appeal. Before us, the learned CIT(A) claiming a deduction of Rs. 9,97,01,832/- being delinquency support
The learned Authorized Representative supported the order of the learned CIT (A).
We have carefully considered the rival contentions and perused the orders of the learned Commissioner of Income Tax (Appeals). To state the error committed by the assessee for Assessment Year 2012-13 was that the assessee debited in the profit and loss account provision for doubtful debts of Rs. 7000.66 lakhs, the bad debts written off was debited of Rs. 30012.30 lakhs which was reduced by delinquency support of Rs. 3,684.05 lakhs and thus, debited net bad debts written off of Rs. 26,328.25 lakhs. At the time of preparation of computation of total income, gross provision of doubtful debt of Rs. 7000.66 lakhs was reduced by securitization receipt and further increased by provision for standard asset of Rs. 1,492 lakhs resulting into the sum of Rs. 3,995.78 lakhs, which was disallowed, in the computation of total income. Thus, it is apparent that the amount of delinquencies support pertaining to (1) provision for doubtful debts and (2) of bad debts written off was inadvertently reduced from the bad debts written off which should have been claimed as deduction completely. Further, the gross provision for doubtful debts was added back to the total income in the computation of total income. Thus, apparently, the delinquency support income pertaining to the provision for
We do not find any infirmity in the order of the learned CIT(A) as he has correctly granted the relief to the assessee of the income inadvertently computed higher by Rs. 9,97,01,832/-. We do not find any fetters on the right of the assessee to raise any additional ground of appeal during the pendency of the appeal before the appellate forum provided the facts are available on record. The appellate forum is duty bound to admit such ground on appeal, if the facts of the claim are available on record and no further investigation of the facts are required. While adjudicating the above ground if the appellate authority was presented with some additional evidences, which are necessary for adjudicating the above ground, the same must be admitted. However, the learned CIT (A) is duty bound to follow Rule 46A of the Income-tax Rules. There is no dispute on this. In this fact of the case, the claim of the Assessing Officer in the ground of appeal is that by admitting the additional evidence as such as agreement with Tata Motors Limited, the learned CIT (A) has violated provisions of Rule 46A of the IT Rules. However, looking at the amount of delinquency support allowed by the learned CIT (A), we find that it is merely a simple arithmetic analysis about the computation of total income
15. Even on the merits, the learned Departmental Representative could not point out infirmity in the orders of the LD CIT (A) in allowing the claim, which is merely a computational exercise. Accordingly, we dismiss grounds no. 3 to 5 of the appeal and confirm order of the learned Commissioner of Income Tax (Appeals).
In the result, Assessing Officer is dismissed.
AY 2013-14 ITA 2640/M/2019 [By Revenue] & [By Assessee] 017. Now, we come to ITA No. 2640/Mum/2019 filed by the ld AO for AY 20102-13 against the order passed by the learned CIT(A)-3, Mumbai dated 26.09.2018 raising following grounds of appeal:-
“1. "Whether on the facts and in the circumstances of the case and in law, the CIT(A) erred in directing the Assessing Officer to allow the provision of Rs. 75,67,000/- created towards 'Bhavishya Kalyan
2. "Whether on the facts and in the circumstances of the case and in law, the CIT(A) erred in directing the Assessing Officer to allow the entire DMA commission, as a deduction in the year under consideration "without appreciating that the assessee has itself amortized the said expenditure in its accounts on a matching principle – i.e. Revenue is recognised and expenses are claimed on a matching principle".
3. "Whether on the facts and in the circumstances of the case and in law, the CIT(A) erred in directing the assessing officer to allow the entire DMA commission as deduction against the income of the year, without appreciating the ratio of the decision of the Apex Court in the case of Madras Industrial Investment Corporation (225 ITR 802) in which it was held that only proportionate expenditure vis. a vis. revenue on a matching principle should be allowed since allowing the entire expenditure in one year should give a distorted picture of the profit of a particular year.
Whether on the facts and in the circumstances of the case and in law, the CIT(A) erred in not following the settled legal position in the case of Keshav Mills Limited Vs. CIT 23 ITR 2301 (Supreme Court) and in CIT Vs. Sarangpur Cotton Manufacturing Co. Limited 6 ITR 36 (Gujarat High Court) that there cannot be
"Whether on the facts and circumstances of the case and in law, the Hon'ble CIT(A) erred in partly allowing the appeal of the assessee on the ground of "provision for non performing assets" to the extent of Rs. 26,23,40,000/-, despite the fact that the details/ information called for by the assessing officer, were not produced either before the Assessing officer or before CIT(A).”
For this year the assessee filed return of income on 29.09.2013 at Rs. 395,64,67,960/-, which was revised on 30.03.2015 at Rs. 346,95,04,300/- and assessed u/s 143(3) of the Act at Rs. 400,51,99,550/- as per order dated 30.03.2016.
The Ld Assessing Officer made the following adjustment to the returned income of the assessee.
a. disallowed the provision made in the books of employees welfare in respect of Bhavishya Kalyan Yojna amounting to Rs. 49,74,000/- and provision for medicare of Rs. 25,93,000/-. b. Disallowed provision of doubtful debts of Rs. 49,94,83,557/-. d. There was also a difference of Rs. 1,91,5,842/- in dealers commission which was further disallowed.
Assessee preferred an appeal against the order of learned Assessing Officer before the learned CIT (A). The learned CIT(A) passed the order on 26.09.2018 wherein he allowed the provision of Rs. 75,67,000/- towards Bhavishya Kalyan Yojna and Medicare Scheme following decision of the coordinate bench in assessee’s own case for assessment year 2007 – 08. He also deleted disallowance with respect to the dealers commission of ₹ 9,498,849/– and further Rs 1,91,45,842/– following the decision of the coordinate bench in assessee’s own case for assessment year 2007 – 08. He also deleted the disallowance/addition of ₹ 262,340,000 with respect to the delinquency support based on noted number 25 of the annual accounts.
During the course of appellate proceedings, assessee submitted that in relation to delinquency support pertaining to provision for doubtful debts which are already taxed in the earlier years amounting to ₹ 237,143,556/– pertaining to assessment year 2008 – 09 to 2012 – 13. The assessee submitted that for assessment year 2008 – 09 and amount of ₹ 4,890,358/– has already been taxed and therefore an additional ground
Grounds in are as Under:-
“Based on the facts and circumstances of the case, TMF Holdings Limited (earlier known as Tata Motors Finance Limited). (hereinafter referred to as the Appellant) respectfully prefers an appeal against the order of the Honorable Commissioner of Income-tax (Appeals) - 3, Mumbai [CIT(A)] issued under section 250 of the Income-tax Act, 1961 (the Act') on the following ground -
1. On the facts and in the circumstances of the case and in law, the Hon'ble CIT(A) erred in upholding the disallowance of a part of the Delinquency Support claim aggregating to Rs 23,71,43,556/-.
The Appellant prays that the learned Assessing Officer be directed to delete the said disallowance.”
The learned departmental representative, contesting the appeal of the learned assessing officer relied upon the order of the learned assessing officer.
On the appeal of the learned AO, the learned authorised representative supported the order of the learned CIT – A.
Ground number two is with respect to the direction of the learned CIT – A to allow the entire direct marketing agents expenses and dealer commission of ₹ 9,498,849/– and Rs. 1, 91,45,842/– respectively. We find that this disallowance has also been deleted by the learned CIT – A following the decision of the coordinate bench in assessee’s own case for assessment year 2007 – 08. He further noted that in the computation of total income of appellant has actually added the sum of ₹ 9,498,849/– and further Rs 1,91,45,842/– to the total income of the assessee which the assessing officer has failed to appreciate. He further noted the fact that the assessee itself has submitted that it has disallowed ₹ 9,498,849/–
Coming to ground number 5 where the learned that AO is aggrieved by the order of the learned CIT – A where a sum of ₹ 262,340,000/– being delinquency support receipts allowed. The fact shows that in the computation of total income in its return of income the assessee has added back sum of ₹ 529,164,982/– being provision for non-performing assets and standard assets. This sum was added in the computation of the total income. In the revised return the assessee claimed two new deductions, 1 delinquency support receipts against the provision of ₹ 262,340,000/–, 2. Delinquency support receipts already offered to tax in earlier years amounting to ₹ 237,143,556/–. The delinquency support receipt of ₹ 262,340,000/– was pertaining to the assessment year 2013 – 14 whereas ₹ 237,143,556 was pertaining to earlier years i.e. prior to assessment year 2013 – 14. On analysis of not number 25 the learned and CIT – A noted that in schedule of other expenses the assessee has reduced the expenditure and therefore the income has
Accordingly, we dismiss appeal filed by the learned assessing officer in ITA number 2640/M/2019 four assessments year thousand 13 – 14.
Coming to the appeal of the assessee in ITA number 244/M/2019 raising solitary ground of appeal challenging the action of the learned CIT – A where the addition to the extent of ₹ 237,143,556/– is not deleted. The facts of the case clearly shows that as assessee has entered into an agreement with Tata motors Ltd for delinquency support as soon as the Finance made by the assessee becomes bad and is actually return of by the assessee. The assessee makes provision for doubtful debts and makes
In the result, for assessment year 2013 – 14 of appeal of the AO as well as the assessee are dismissed.
Order pronounced in the open court on 13.04.2022.