DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE - 14, PUNE vs. M/S ADIENT INDIA P LTD (FORMERLY M/S. JOHNSON CONTROLS AUTOMOTIVE LIMITED), PUNE

This is an appeal filed by the Revenue directed against the order of ld. Commissioner of Income Tax (Appeals)-7, Pune [‘the CIT(A)’] dated 30.01.2017 for the assessment year 2009-10.

The Revenue raised the following revised grounds of appeal :- “

The Assessing Officer had disallowed the same by holding that the claim of the respondent-assessee cannot be allowed merely on the basis of agreement, as the respondent-assessee had failed to furnish any evidence regarding the services availed by it from TACO with cogent evidence.

Being aggrieved by the order of assessment, an appeal was filed before the ld. CIT(A) who vide impugned order while upholding the disallowance invoking the provisions of section 40A(2)(b) of the Act, directed the Assessing Officer to delete the Tribunal in assessee’s own case for earlier assessment year 2008-09 in order dated 14.06.2017.

Being aggrieved, the Revenue is in appeal before us in the present appeal.

The ld. Sr. DR submits that the ld. CIT(A) without discussing any evidence as to the receipt of the services from TACO, merely followed the decision of the Tribunal in assessee’s own case for earlier assessment year (supra) and decided the issue in favour of the assessee. The ld. Sr. DR brought our notice in the succeeding years i.e. assessment years 2010-11 to 2012-13, this matter was restored to the file of the Assessing Officer by Tribunal for a fresh adjudication in accordance with law.

On the other hand, ld. AR submitted that the payment was made out of business consideration for availing the services from TACO in respect of services listed in the agreement entered by the respondent-assessee. She submitted that the respondent-assessee filed evidence in the form of email etc before the Assessing Officer showing the receipts of the actual services from the TACO. The Assessing Officer without referring to any evidence had come to the conclusion that the services are not received by the respondent- assessee company. She further submitted that this Tribunal in assessee’s own case for the earlier assessment year (supra) decided this issue in favour of the assessee. In view of the fact that there is no change of facts as well as in law, the issue be decided in favour of assessee.

We heard the rival submissions and perused the material on record. The issue in the present appeal relates to the allowability of administrative service charges paid to TACO of Rs.2,60,47,891/-. The said service charges were disallowed by the Assessing Officer on two counts i.e. (i) there was no proof of receipt of the services from TACO and (ii) service charges paid by the respondent- assessee are excessive or unreasonable. However, the ld. CIT(A) deleted the addition following the decision of the Tribunal in assessee’s own case for the earlier assessment year (supra). We have carefully gone through the order of the ld. CIT(A) and find that the ld. CIT(A) while upholding the applicability of the provisions of section 40A(2)(b), however, deleted the addition by stating that it is tax neutral transactions. The ld. CIT(A) nowhere addressed the reasoning of the Assessing Officer nor attempted to gather the evidence, if any, to show that the respondent-assessee had TACO. Further, we notice that the ld. CIT(A) while following the decision of the Tribunal in assessee’s own case for the earlier assessment year (supra), had not dealt with as to how the ratio of the decision of the Tribunal (supra) has application to the facts of the present case. Furthermore, the reasoning adopted by the Tribunal in assessee’s own case in earlier assessment year (supra) is totally different from the reasoning adopted by the ld. CIT(A). Therefore, the ld. CIT(A) ought not to have applied the decision of the Tribunal in assessee’s own case in earlier assessment year (supra) blindly without discussing as to how the factual situation of the earlier assessment year fits into facts of the present assessment year under consideration. We find from the records, for the subsequent assessment years, the same issue was remanded by this Tribunal to the Assessing Officer for fresh adjudication. In the circumstances, we are of the considered opinion that ends of justice would be met this issue is remanded to the file of the Assessing Officer with direction to adjudicate the issue afresh in accordance with law after affording reasonable opportunity of being heard to the respondent-assessee. Thus, the ground of appeal filed by the Revenue stands partly allowed for statistical purposes.

In the result, the appeal filed by the Revenue stands partly allowed for statistical purposes. Order pronounced on this 21st day of June, 2022.