ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE -7, , PUNE vs. TATA TOYO RADIATOR LIMITED,, PUNE

आयकर अपीलसं. / Assessment Year : 2015-16 The Assistant Commissioner M/s.Tata Toyo Radiator of Income Tax, Circle-7, Vs Limited, Pune. Plot No.1, S.No.235/245, Village Hinjewadi, Taluka Mulshi, Hinjewadi Phase-2, Pune – 411037. PAN: AAACT 5566 F Revenue Assessee Assessee by Shri Shrikant Kalantri – AR Revenue by Shri Sardar Singh Meena - DR Date of hearing 18/07/2022 Date of pronouncement 29/09/2022 आदेश/ ORDER

Per S.S.Godara, JM:

Heard both the parties. Case file perused.

2. Whether, on the facts and circumstance of the case and in law the learned CIT(Appeals) erred in deleting the addition made u/s 80IC amounting to Rs.2,88,48,000/-?”

2. In the Cross Objection Appeal the Assessee raised following Cross Objections: “Claim of Allowability of Education Cess:

1. The Respondent prays that the liability for education cess on income tax paid for the year ought to be allowed as tax- deductible expenses while computing its taxable income. General:

2. The Respondent craves leave to add, alter, amend, substitute and/or modify in any manner whatsoever all or any of the foregoing additional grounds of appeal at or before the hearing of the appeal”

A.Y.2015-16 M/s. Tata Toyo Radiators Ltd., [R]

4. Aggrieved by the order of the AO, the assessee filed appeal before the Commissioner of Income Tax (appeal). The ld.CIT(A) partially allowed appeal of the assessee . 5. Aggrieved by the same both Assessee and Department have filed Cross objection /appeal before this Tribunal. 6. The Ld.Authorised Representative(ld.AR) for the assessee explained at the outset that the issue of payment made to TACO has already been decided in assessee’s own case by ITAT Pune for earlier years. The Ld.AR submitted that the Ld.CIT(A) has followed the decision of ITAT Pune in assessee’s own case for earlier years. The Ld.AR further submitted that Hon’ble Bombay High Court has confirmed the said order of the ITAT in of 2017 & 354 of 2017. The Ld.AR filed copies of the said order. 7. Ld.DR fairly accepted that the issue is covered in favour of the assessee. ITA No.922/PUN/2017 for A.Y.2011-12 of the Revenue: Ground No. 1: 8. We have heard both the parties and perused the case file. It is observed that the ITAT Pune bench has held in Assessee’s own case as under : Quote, “ Admittedly, the issue arising before us is identical to the issue before the Tribunal in Tata Johnson Controls Automotive Ltd. Vs. DCIT (supra) and following the same parity of reasoning, we hold that the said expenditure is to be allowed in entirety in the hands of assessee being paid in accordance with the terms of the Agreement agreed upon between the parties and for the purpose of carrying on the business of assessee more efficiently. It may be pointed out herein that the assessee had initially entered into an Agreement with TACO in 1997 and the said expenditure had been allowed in the hands of assessee from year to year. However, the assessee renewed the Agreement in 2006 and the expenditure for the first time was not allowed in the hands of assessee in assessment year 2006-07. We find no merit in the orders of authorities below in this regard and accordingly, A.Y.2015-16 M/s. Tata Toyo Radiators Ltd., [R] we modify the order of CIT(A) and direct the Assessing Officer to allow the expenditure in entirety in the hands of assessee. It may be pointed out herein only that the issue vide grounds of appeal

No.1 and 2 raised by the assessee in assessment year 2006-07 and grounds of appeal No.1 and 2 raised by the Revenue are similarly raised by both the parties in assessment years 2007-08 to 2009-10. Accordingly, we allow the claim of assessee vis-à-vis the said expenditure in all the years i.e. assessment years 2006-07 to 2009-10. The grounds of appeal No.1 and 2 raised by the assessee in all the appeals are thus, allowed and the grounds of appeal No.1 and 2 raised by the Revenue in all the appeals is thus, dismissed.” Unquote.

9. The said order of the ITAT Pune has been upheld by Hon’ble Bombay High Court in appeal 343, 354, 358 of 2017 vide order dated 30/4/2019.

10. The Ld.Departmental Representative(ld.DR) of the Revenue has not pointed out any distinguishing factor. We have observed that facts of the case are identical. Therefore, respectfully following the Order of Hon’ble Bombay High Court (supra) and ITAT Pune in assessee’s own case, the appeal of the revenue regarding Administrative service charges is dismissed. Thus, Ground Number 1 of the revenue is dismissed.”

3. There is hardly any dispute about the relevant factual position qua the Revenue’s latter substantive grievance seeking to restore section 80IC deduction disallowance of Rs.95,42,611/- wherein the very co-ordinate bench has rejected the its arguments as follows: “11. With reference to Ground No.2 of the revenue, the Ld.DR submitted a written submission. Submission of the Ld.DR is reproduced here as under : Quote “ 2.0 During the year under consideration which is the first year for the Pantnagar Plant the appellant claimed deduction u/s 80IC of the Act. During the course of assessment proceedings the AO vide Notice u/s 142(1) dated 20.03.2015 asked the assessee to substantiate its claim u/s 80IC with necessary proofs which is clear from point No. 1 of assessee’s submission before the AO dated 26.03.2015 and 31.03.2015 [copies placed at Page 37 and 38 of appellant’s paperbook]. The AO has observed that on verification of fixed asset schedule it is seen that there was A.Y.2015-16 M/s. Tata Toyo Radiators Ltd., [R] miniscule addition to the fixed asset during the year under consideration, that was not sufficient for starting manufacturing. Thus, the AO has observed that at Pantnagar Plant the company did not have sufficient infrastructure in the form of plant and machinery during the year under consideration to claim itself as manufacturing undertaking. He observed that the Pantnagar Plant was receiving different parts / goods from the different sites of the company and claimed that it involved in just assembling those parts at Pantnagar unit. Thus, considering the overall facts of the case during the year, the AO observed that the appellant had not proved with sufficient evidences that the undertaking was involved in the manufacturing activities as required under provisions of section 80IC of IT Act. He has thus, held that in the absence of proper apparatus of Plant and Machinery, the activity of assembling the parts claimed during the year did not constitute to be a manufacturing activity and thus, he rejected the claim of deduction u/s 80IC of the IT Act. The findings of the AO are discussed in Para 8 of the Assessment Order. 3.0 The Ld. CIT(A) has dealt with the issue of deduction u/s 80IC in para 6 of the order. She has discussed the Ao’s findings on the issue in Para 6.1 [Page 34 & 35] of the Order. the real issue which facts of the case suggest “whether any manufacturing activities were at all taken up during the year or the activity of assembling taken up by the appellant as claimed, during the year were of the nature of the manufacturing, so as to make the appellant eligible to claim deduction u/s 80IC during the year” was diverted to a limited academic discussion that the activity of assembling which results into a new product is tantamount to manufacturing, without taking the facts of the case into consideration. 6.1 Therefore, to analyse the issue whether the assessee has actually taken up manufacturing activities of assembling / manufacturing of ECS during the year under consideration, the facts of the case needs to be taken into consideration. It is seen from the index of the appellant’s paperbook that documents placed at Pages 632 to 672 are relevant documents on this issue. These documents were filed by the appellant before the Ld. CIT(A) as clear from the note placed by the appellant below the index which is reproduced as follows: “Certified that the page nos. 1 to 55, 555 to 597 and 630 to 672 were filed before / available with the Commissioner of Income Tax(Appeals)- 5, Pune”. This note also clarifies that the said submissions were not filed during the course of assessment proceedings before the AO. ” Unquote.

A.Y.2015-16 M/s. Tata Toyo Radiators Ltd., [R] “Perform leak test operation for radiator including visual check for no damage and forward the same for next manufacturing process. Install top channel RH(With green color product sticker) & LH (With blue color product sticker) to the radiator with member side support RH & LH by tightening 4nos (2nos for each side) M10X1.5X20L hex bolt assy with tightening torque of 18+2 NM. And from top with pre-welded M6 bolt by tightening 1 each of M6 hex nut, spring washer and plain washer with tightening torque of 6.4 + 1.5NM.”

Order pronounced in the open Court on 29th September, 2022.