INDIA PISTONS LIMITED,CHENNAI vs. DCIT CORPORATE CIRCLE 2(2), CHENNAI

This is an appeal filed by the assessee company directed against the Order of the Commissioner of Income Tax (Appeals)-9, Chennai, dated 31.07.2017 for the AY 2005-06.

Briefly the facts of the case are that the assessee company, M/s.India Pistons Ltd., is duly registered under the provisions of Companies Act, 1956. It is engaged in the business of manufacturing pistons, piston assemblies, liners, etc. The return of income for the AY 2005-06 was filed on 31.10.2005 disclosing total income of Rs.4,62,96,600/- and the same was revised on 21.08.2006 at total income of Rs.3,06,76,464/-. Against the said return of income, the assessment came to be completed by the AO vide an order dated 01.12.2008 passed u/s.143(3) of the Act at total income of Rs.5,78,99,150/- after making the following additions to the returned income:

Being aggrieved by the above Assessment Order, the assessee preferred an appeal before the Ld.CIT(A), who vide impugned order partly allowed the appeal by confirming the disallowance of cash discount of Rs.17,94,317/- and export promotion expenses Rs.22,67,560/- and also disallowance on marketing expenditure, incentive under the head repairs & maintenance of Rs.24,16,262/- by following the decision of the Tribunal in the assessee’s own case for the AY 2006-07. The Ld.CIT(A) granted relief in respect of the disallowance of royalty of Rs.16,60,657/- and disallowance of gift expenses of Rs.94,900/-, etc. Thus, the appeal filed by the assessee is came to be partly allowed.

Being aggrieved, the assessee is in appeal before us. The Ld.counsel has fairly conceded that the issues in the present appeal are squarely covered by the decision of the co-ordinate Bench of this Tribunal in the assessee’s own case in & 1948/Mds/2011 for the AYs 2006-07 & 2007-08 dated 30.09.2016. The issue in Ground No.2 of appeal relates to the disallowance of 20% of cash discounts. The AO as well as the Ld.CIT(A) made the addition for want of evidence. This issue is squarely covered against the assessee in the assessee’s own case, referred to supra, wherein, it has been held as under:

Per contra, the ld. DR supported the orders of the authorities below.

We have considered the rival contentions and perused the orders of the authorities below. It is not in dispute that assessee had claimed discount of Rs.3,19,55,499/-. The details filed by the assessee was only in relation to 11 parties totalling to Rs.1,75,48,192/- . Assessee was given number of opportunities by the Assessing Officer as well as DRP for proving its claim of discount of Rs.3,19,55,499/-. In our opinion, claim of the ld. AR that Assessing Officer did not call for the details to prove the expenditure is incorrect. This is because of the reason that Assessing Officer had specifically required the assessee to give details of the claim in the format provided by him, but assessee failed to furnish it. In such circumstances, we find that the lower authorities were justified in making the disallowance of 20% of such discount. We do not find any reason to interfere with the order of the Assessing Officer. Ground No.5 is dismissed.

Similarly, Ground No.3 of the assessee’s appeal challenges the disallowance of export promotion expenses Rs.22,67,560/-. This issue is squarely covered against the assessee in the assessee’s own case, referred to supra, wherein, it has been held as under:

Per contra, the ld. DR supported the orders of the authorities below.

We have considered the rival contentions and perused the orders of the authorities below. The disallowance of share of expenditure of London Liaison Office was made by the lower authorities for the reason that assessee could not produce any evidence towards expenditure by the said London Liaison Office. Explanation of the assessee was that Liaison Office worked on behalf of all the group companies and M/s Amalgamations Pvt Ltd one of the group companies made payment to London Liaison Office and recovered share of expenditure from the individual companies. We are of the opinion that except for giving this explanation, which was not supported by any evidence, assessee had not given any details of the services rendered by the London Liaison Office nor any correspondence with them. Assessee also could not show the need of Liaison Office and why the payments were routed through a holding company. In such circumstances, the disallowance was rightly made. We do not find any reason to interfere with the orders of the lower authorities. Ground No.6 is dismissed”.

Similarly, Ground No.4 of the assessee’s appeal relates to the disallowance of marketing incentives under the head repairs & maintenance Rs.24,16,262/-. This issue is squarely covered against the assessee in the assessee’s own case, referred to supra, wherein, it has been held as under:

Ld. AR submitted that assessee had printed market incentive coupons valued at ` 2,41,62,616/- and distributed amongst its dealers during the relevant previous year. As per the assessee, the ultimate customer who opened the product and obtained these coupons were reimbursed by its dealers to the extent of value of the coupons. When the coupons were produced by the dealers, as per the ld. AR, credit notes were given to such dealers. This as for the ld.AR was purely a customer centric market expenditure and the lower authorities erred in making the disallowance.

Per contra, the ld. DR supported the orders of the authorities below.

We have considered the rival contentions and perused the orders of the authorities below. Claim of the assessee that every pack containing a set of pistons were pasted with a coupon which would give the buyers a right to a cash discount. As per the assessee, dealer was required to give the cash discount to such customers. Though the assessee claimed that it was having evidence in this regard it could not produce dealerwise details of the reimbursement and how the sum of ` 2,41,62,616/- was arrived at. When no evidence in support of the claim was produced by the assessee, lower authorities, in our opinion, was justified in making a disallowance of 10%. We do not find any reason to interfere with the orders of the lower authorities. Ground No.7 is dismissed.

In the result, appeal of the assessee for assessment year 2006-07 is partly allowed”.

Thus, we do not find any merit in the grounds of appeal.

In the result, the appeal filed by the assessee stands dismissed.