DY COMMISSIONER OF INCOME TAX CIRCLE-7 , PUNE vs. MUBEA AUTOMOTIVE COMPONENTS INDIA PRIVATE LIMITED, PUNE

Facts of the case in brief, are that the assessee is a company engaged in the business of manufacturing of car suspension related products as well as trading of automotive parts. It filed its return of income on 30.11.2017 declaring total income of Rs.26,70,92,280/- (before set off of brought forward losses). The case of the assessee was selected for scrutiny through CASS for the following reasons: S.No. Issues i. Claim of “Any other amount allowable as deduction” in Schedule BP ii. Deduction and deposit of TDS iii. Investments/advances/loans iv. Sales turnover/receipts v. Custom duty paid

Accordingly notices u/s 143(2) and 142(1) of the Income Tax Act, 1961 (hereinafter referred to as „the Act‟) were issued and served upon the assessee, in response to which the assessee filed the requisite details from time to time. The Assessing Officer referred the matter to the Transfer Pricing Officer (TPO) for determination of the arm's length price of the international transactions entered into by the assessee. However, the TPO did not propose any adjustment.

During the course of assessment proceedings the Assessing Officer observed from the return of income filed by the assessee that it has claimed the deduction for certain claim of “Any other amount allowable as deduction” of Rs.5,95,66,948/- in Schedule BP ITR. On being questioned by the Assessing Officer, the assessee only submitted the amount and nature-wise breakup of the deduction claimed. However, in absence of any explanation to justify the basis for such deduction supported by rational / legislature behind the deduction, the Assessing Officer made addition of Rs.5,95,66,948/- to the total income of the assessee.

Before the CIT(A) / NFAC, the assessee filed certain details based on which the Ld. CIT(A) / NFAC deleted the addition.

Aggrieved with such order of CIT(A) / NFAC, the Revenue is in appeal before the Tribunal by raising the following grounds:

We have heard the rival arguments made by both the sides, perused the orders of the Assessing Officer and the Ld. CIT(A) / NFAC and the paper book filed on behalf of the assessee. A perusal of the order of the CIT(A) / NFAC shows that he has discussed the facts of the case and thereafter the order is silent regarding the finding portion. When the Bench pointed out this fact, both the sides agreed that the order of the CIT(A) / NFAC is cryptic one and needs to be restored to the file of the CIT(A) / NFAC for fresh adjudication of the issue.

The Ld. Counsel for the assessee however, submitted that the total amount of Rs.5,95,66,948/- includes an amount of Rs.9,40,000/- being the deduction of the reversal of provision of rent equalization disallowed in earlier years and amalgamation expenses incurred amounting to Rs.8,03,095/- which the Ld. CIT(A)/ NFAC has discussed thoroughly and therefore, these two amounts out of the amount of Rs.5,95,66,948/- need not be sent back to the file of the CIT(A) / NFAC for his adjudication.

We find merit in the above argument of the Ld. Counsel for the assessee. Admittedly, the total amount of Rs.5,95,66,948/- includes an amount of Rs.9,40,000/- being the reversal of provision of rent equalization disallowed in earlier years which the Ld. CIT(A) / NFAC has thoroughly discussed the issue and has given his finding. The Ld. DR could not controvert the findings given by the Ld. CIT(A) / NFAC to the extent of Rs.9,40,000/-. Therefore, the said amount need not be restored back to the file of the CIT(A) / NFAC for fresh adjudication.

Similarly, the disallowance of amalgamation expenses amounting to Rs.8,03,095/- is a part of deduction claimed u/s 35DD of the Act being 1/5th of total merger related expenses of Rs.40,15,475/-, which the CIT(A) / NFAC has thoroughly discussed and given his finding. Therefore, to this extent also, we are of the considered opinion that this amount need not be restored back to the file of the CIT(A) / NFAC for adjudication. Thus, out of the total amount of Rs.5,95,66,948/-, the Ld. CIT(A) / NFAC has discussed the amount relating to Rs.9,40,000/- and Rs.8,03,095/-, both totaling to Rs.17,43,095/- and deleted the addition which is in accordance with law and therefore, we uphold his order to this extent. Therefore, the balance amount of Rs.5,78,23,853/- is restored to the file of the CIT(A) / NFAC for his fresh adjudication. Needless to say the Ld. CIT(A) / NFAC shall give due opportunity of being heard to the assessee and decide the issue as per fact and law by passing a speaking order. The grounds raised by the Revenue are accordingly partly allowed for statistical purposes.

In the result, the appeal filed by the Revenue is partly allowed for statistical purposes.