TRUETZSCHELER INDIA P.LTD,MUMBAI vs. ASST CIT 2(3), MUMBAI

The only issue in the appeal of the assessee is that the Ld. CIT (Appeals) erred in confirming the disallowance of special discount of Rs.5,79,940/- on the ground that the same is not claimed by filing revised return and claimed by way of a letter during the course of assessment proceedings.

Briefly stated the facts are that the issue of allowability of claim for special discount of Rs.4,75,161/- and Rs.5,29,570/- came up before the tribunal and the tribunal by order dated 25.11.2011 in ITA 3464/Mum/2010 disposed off the appeal with the following observations. “6. We have considered the issue and rival submissions. As seen from the documents placed on record, there seems to be special discount scheme allowing additional discount on the turnover to various customers. Additional evidence in the form of document placed before the CIT (A) is a communication by the ATE Marketing to one of the customers about the special discount to be allowed for the turnover of the year under consideration. However, the assessee had not placed anything on record to establish that M/s ATE Marketing (P) Ltd, was authorized to communicate/allow the special discount on behalf of the assessee company to the customers and nothing was placed on record to establish that it is the liability of the assessee company. Even though it was stated that the credit notes were issued regarding the additional/ special discount allowed, details of the credit notes and the actual amount allowed were not placed on record except making the claim and giving tabulated statement for the turnover and working of the discount. Moreover it is also not explained why part of the discount was claimed in Assessment Year 2006-07 and balance in Assessment Year 2007-08 in the books of account and why the same was not made in the year itself, if the scheme was in operation during the year. These details were not filed either before the Assessing Officer or before the CIT (A) or before us to consider the claim in its correct perspective. Considering the fact that the 3 M/s Truetzschler India Pvt. Ltd. Assessing Officer, we are of the opinion that the issue can be reexamined by the Assessing Officer to establish whether the assessee has indeed formulated the scheme for the special discount and how the liability arose to the assessee. Considering the income declared by the assessee, the additional discount seems to be small percentage but the claims are to be examined properly by the Assessing Officer. Therefore, we are of the opinion that the issue can be restored to the file of the Assessing Officer who should examine these aspects, without prejudice to the stand already taken by him and determine the claims afresh and decide accordingly. Therefore, the orders of the Assessing Officer and CIT (A) to that extent are set aside and matter restored to the file of the Assessing Officer. The Assessing Officer is free to make necessary enquiries and the assessee is free to submit the necessary documents in support of the claim. The assessee should be given proper opportunity by the AO before deciding the issue. With these directions the issue of Ground No.1 is restored to the file of the Assessing Officer.”

Consequential assessment was made u/s 143(3) r.w.s. 254 of the Act by the assessing officer, wherein claim of Rs.4,75,161/- was allowed and the claim of Rs.5,79,940/- was rejected on the ground that the assessee made this claim by way of letter in the assessment proceedings but not in the revised return or in the original return. The assessing officer placed reliance on the decision of the Hon’ble Supreme Court in the case of Goetze (India) Ltd. Vs. CIT [284 ITR 323] and denied the claim for special discount of Rs.5,79,940/-observing that claim made during assessment proceedings are not considered for relief. On appeal, the Ld. CIT (Appeals) sustained the action of assessing officer in not allowing the claim against which the assessee is in appeal before us.

The Ld. Counsel for the assessee submits that the claim for special discount was rejected only on the ground that this was not made in the original or revised return but in the course of assessment proceedings by way of a letter. He submits that the Ld. CIT (Appeals) has the power to entertain the claim of the assessee which is not there in the return. He placed reliance on the decision of the jurisdictional High Court in the case of CIT Vs. Pruthvi Brokers and Share Holders Pvt. Ltd (349 ITR 336). Therefore he submits that in view of this decision, the claim of the assessee should have been allowed by the Ld. CIT (Appeals).

The Ld. DR supported the orders of the lower authorities.

We have heard the rival submission and perused the orders of the lower authorities. From the record and the tribunal order, we find that the assessee claimed special discount of Rs.4,75,161/- stated to have been paid in assessment year 2006-07 and an amount of Rs.5,79,940/- paid in assessment year 2007-08 claimed as deduction before the assessing officer as pertaining to the assessment year under consideration i.e. 2005-2006. We find the reason for the claim is on the basis that the assessee allowed special discount of 3% to certain customers if the quantum of sales exceed Rs.5 lakh during April 2004 to March 2005 and 5% on sales exceeding Rs.10 lakhs. In the original return filed, the assessee has not claimed deduction of Rs.4,75,161/-, however, revised return was filed claiming the said amount as pertaining to the year under consideration. Subsequently by a letter a further claim of additional discount of Rs.5,29,570/- was claimed. The assessing officer denied the special discount

5 M/s Truetzschler India Pvt. Ltd. claimed by the assessee, i.e., both the claim made in the revised return as well as claim made in the course of assessment proceedings by way of letter, which was confirmed by the Ld. CIT (Appeals). When the matter came up before the tribunal, the tribunal restored back the matter to the assessing officer to examine the issue afresh with various observations.

In the course of assessment proceedings, consequent to the order of the tribunal, the assessee claimed special discount of Rs.10,55,105/- as deduction consisting of Rs.4,75,161/- which was claimed in the revised return and Rs.5,79,940/- which was made by way of letter in the course of assessment proceedings. The assessing officer on examination of the allowability of the claims allowed the assessee’s claim of Rs.4,75,161/- only but denied the claim of the assessee for Rs.5,79,940/- for the reason that this claim was made by way of a letter and not in the way of revised return. The Ld. CIT (Appeals) sustained the action of the assessing officer holding that since the claim was not made in the revised return, the same is not allowable.

The jurisdictional High Court in the case of CIT Vs Pruthvi Brokers and Share Holders Pvt. Ltd (349 ITR 336) has examined the aspect of the matter as to whether the claim made by the assessee in the course of assessment proceedings but not either in the original return or in the revised return can be entertained by the Appellate Authorities and after considering the decision of the Hon’ble Supreme Court in the case of Goetze (India) Ltd (Supra) held that assessee is entitled to raise not merely additional legal submissions before Appellate Authorities, but is also entitled to raise additional claims before them.

In the result, appeal of the assessee is allowed.