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Income Tax Appellate Tribunal, KOLKATA ‘D’ BENCH, KOLKATA
Before: Sri J. Sudhakar Reddy & Sri Aby T. Varkey]
ACIT, Circle-11(2), Kolkata………………………….…………………………………….…….……...Appellant Aaykar Bhawan P-7, Chowringhee Square Kolkata – 700 069 M/s. WPIL Ltd………………………………….………………………………..……………………..…. Respondent 84/1A, Trinity Plaza Topsia Road (S) Topsia Kolkata – 700 046 [PAN : AAACW 2892 B] Appearances by: Shri R.P. Agarwal, Sr. Advocate & Shri Manoj Kataruka, AR , appeared on behalf of the assessee. Shri Arindam Bhattacharya, Addl. CIT, Sr. DR, appearing on behalf of the Revenue. Date of concluding the hearing : January 25th, 2018 Date of pronouncing the order : February 7th , 2018
O R D E R Per J. Sudhakar Reddy :-
This appeal filed by the revenue is directed against the order of the ld. Commissioner of Income Tax (Appeals)-18, (hereinafter the ‘ld. CIT (A)’), passed u/s 250 of the Income Tax Act, 1961 (the ‘Act’), dt. 17/08/2016, for the Assessment Year 2011-12, on the following grounds:- “i. That on the facts and in circumstances of the case the Ld. CIT(A) has erred in allowing the claim u/s 35(2AB) of the Act even in absence of a revised return. ii. That on the facts and in circumstances of the case the Ld. CIT(A) has erred in allowing the claim u/s 35(2AB) of the Act without verifying the merits of such claim. iii. That on the facts and in the circumstances of the case the order of the CIT(A) is erroneous in allowing provision of warranty charges Rs.
Assessment Year: 2011-12 M/s. WPIL Ltd 86,51,758/-, without having any basis on records to warrant such allowance. iv. That on the fact and in the circumstances of the case the order of the CIT(A) is erroneous in allowing provision of warrant charges Rs. 86,51,758/-, in spite of the failure of the assessee to provide any reasonable basis for computation of a reliable estimate. v. That the appellant craves leave to add, alter/or amend any of the grounds of appeal during the course of hearing.”
After hearing rival contentions, we hold as follows:-
Ground No. 1 & 2, are against the grant of deduction u/s 35(2AB) of the Act. The Assessing Officer has restricted the allowance to 100 per cent of the capital expenditure. Thus, the facts are not in dispute. What is in dispute is the percentage of expenditure that is allowable. The Assessing Officer refused deduction @ 200 percent u/s 35(2AB) of the Act, on the ground that the claim has not been made in the return of income filed, by following the decision in the case of Goetze (India) Ltd. vs CIT(2006) 204 CTR SC 182. The ld. CIT(A) held that as an Appellate Authority he has the power to admit an additional claim by the assessee when the facts are on record. He applied the decision of the Hon’ble Supreme Court in the case of National Thermal Power Co. Ltd. vs Commissioner Of Income Tax 1998 229 ITR 383 SC, and allowed this ground of the assessee.
We find no infirmity in the same and dismiss Ground No. 1 & 2 of the revenue.
Ground No. 3 & 4, are against the allowance of a provision made by the assessee of warranty charges by the ld. CIT(A). 5.1. After hearing the rival contentions, we find that the issue is covered in favour of the assessee by the decision of the Hon’ble Supreme Court in the case of Rotork Controls India P. Ltd. v. CIT , 314 ITR 62 (SC). In fact the table produced by the ld. CIT(A) at page 4 of its order shows that the estimate has be created on a Assessment Year: 2011-12 M/s. WPIL Ltd scientific basis, that there is an outflow by way of expenses and the estimate is a fair estimate. In fact during the year, the provision for warranty was Rs.85.12 Lakhs and whereas the expenditure incurred was Rs.81.28 Lakhs. Thus, we uphold this finding of the ld. CIT(A) and dismiss Ground No. 3 & 4 of the Revenue. 6. Ground No. 5 is general in nature. 7. In the result, the appeal of the revenue is dismissed.