Forum
Read and express views
× Latest Case Laws on Income Tax by various Income Tax Appellate Tribunals in India

These are the latest case laws decided by various Income Tax Appellate Tribunals (ITAT) of India on Income Tax which have been published recently. The case laws are open for discussion and we invite expert comments from our members on its applicability and effect on relevant issues.

09-07-2019, Mahle Behr India, Section 43B, 36(1)(ii), Tribunal Pune

  • amit
  • amit's Avatar Topic Author
  • Offline
  • Administrator
  • Administrator
More
3 months 3 days ago #10018 by amit
Section - 43B, 36(1)(ii), 37
Order Date - 09-07-2019
Favouring - Partly allowed for statistical purposes
Court - Tribunal Pune
Appellant - Mahle Behr India Limited
Respondent - DCIT
Justice - R.S.SYAL VP & PARTHA SARATHI CHAUDHURY, JM
Citation - 719Taxpundit112
Appeal No. - ITA No.1704/PUN/2014
Asstt. Year - 2009-10

Order

PER : PARTHA SARATHI CHAUDHURY

These cross appeals by the assessee and the Revenue emanates from the order of the Ld. Commissioner of Income Tax(Appeals)-IT/TP, Pune dated 14.07.2014 for the assessment year 2009-10 as per the grounds of appeal on record.

2. These cases were heard together. Since issues common, facts are similar, these cases are being disposed of vide this consolidated order. We would first take assessee‟s appeal in ITA No.1704/PUN/2014 for adjudication.

ITA No.1704/PUN/2014 (By Assessee)

A.Y.2009-10

3. At the time of hearing, the Ld. AR of the assessee appraised the Bench that apart from the regular grounds of appeal, there are some other grounds filed in the form of additional grounds of appeal which are on record. The Ld.AR sought permission to put forth his submissions with regard to the additional ground No.2 of additional grounds of appeal. The additional Ground No.2 filed by the assessee read as under:

“2. The learned CIT(A) erred in not allowing exclusion from the operating expenses the extra-ordinary expenditure on expats remuneration Rs.4.08 Cr. incurred by the appellant for the installation and commissioning new brazing furnace and implementation of new technology in place of discarded old round tube technology.”

4. Before the Ld. Commissioner of Income Tax(Appeals), the assessee submitted that the additional salary cost of expat technicians in respect of newly acquired technology and fixed assets acquired amounting to Rs.4.08 Crores which is embedded in the operating loss and it should be excluded for computation of Profit Level Indicator (PLI). The Ld. Commissioner of Income Tax(Appeals) on this issue has held as per detailed reasons given in his order which is on record that he did not find any basis for treating the additional salary cost of expat technicians and cost of fixed assets as non operating expenditure. This expenditure is operating expenditure and would be part of computation for arriving at the assessee‟s PLI. This action of the Assessing Officer was upheld by the Ld. Commissioner of Income Tax (Appeals).

5. The Ld. AR of the assessee vehemently argued that earlier there were some old technology and there was requirement for installing new equipments and for this reasons, the assessee had brought in expat technicians for installation of the new equipments. Therefore, the Ld. AR contended that such amount is for capital expenditure and cannot form any part of the Profit & Loss account of the assessee.

6. Per contra, the Ld. DR placed strong reliance on the orders of the Subordinate Authorities on this issue.

7. We have perused the case records and heard the rival contentions. On analyzing the facts of the case, we observe that it is an undisputed fact that the services of expat technicians were utilized by the assessee and that was for installation of new equipments. This amount is, therefore, part of the capital of the assessee and has to be taken to the Balance Sheet and it cannot be part of the Profit & Loss account either as operating or non operating expenditure. These expenditures have been incurred to improve the technology and installation of latest machineries which therefore, is part of the capital of assessee and is excluded from the Profit & Loss account. The Ld. AR candidly admitted that the said expenditure may be treated as capital expenditure. We, therefore, set aside the impugned order and direct the AO/TPO to re-compute the operating profit by excluding such expenditure from the overall expenses. In view of the fact that the expenditure in question stands removed from the total cost debited to P & L account, it will not figure in the list of operating expenses but simultaneously the operating profit stands increased to that extent. Hence additional ground No.2 of appeal of the assessee is allowed for statistical purposes.

8. The next issue in the assessee‟s appeal is with regard to “disallowance of good work reward amount to the senior level employees of the assessee under Management Incentive Bonus Plan (MIBP) Rs.1,07,60,167/-”. The Revenue Authority had invoked the provisions of Section 43B r.w.s.36(1)(ii) of the Income Tax Act, 1961 (hereinafter referred to as „the Act‟) and had concluded that the said amount was bonus in the hands of the said employees of the assessee and hence, disallowed accordingly.

9. The submissions of the assessee had been that it paid management incentive bonus on the basis of performance to the eligible employees. It is claimed that this payment is not covered under the payment of Bonus Act,

Click to view and download Full Free Judgement of Mahle Behr India Limited vs. DCIT

Unable to display Google Map.




Please Log in or Create an account to join the conversation.

Time to create page: 0.065 seconds

If You Appreciate What We Do Here On TaxPundit, You Should Consider:

We are thankful for your never ending support.

Latest Analysis - High Courts

Akrati Promoters And Developers vs. DCIT

Akrati Promoters And Developers vs. DCIT

Akrati Promoters And Developers vs. DCIT Read More
CIT vs. ANOOP JAIN

CIT vs. ANOOP JAIN

CIT vs. ANOOP JAIN Read More
PCIT vs. LALIT BAGAI

PCIT vs. LALIT BAGAI

PCIT vs. LALIT BAGAI  Read More
ROHIT KUMAR GUPTA vs. PCIT

ROHIT KUMAR GUPTA vs. PCIT

ROHIT KUMAR GUPTA vs. PCIT Read More
  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42

Forum Features

Latest Case Laws
Latest Case Laws are instantly updated in the Forum into their respective section
Latest from CBDT
Latest Circulars, Notifications, Orders etc. from CBDT is updated in the Forum
Ask Experts
You can ask questions to the community
Support
Support queries are either replied via mail or in the Forum so that others can be benefited
Press Releases
Latest Press Notes and Press Releases are updated in the Forum
Connect with Members
You can connect with our community members by replying to their queries

Recommended Articles

 

SITE INFORMATION

All content herein is the copyright of Taxpundit. No images, text, or any other content may be, reproduced or redistributed without the express written consent of Taxpundit.

All Rights Reserved. All Content Copyright.

Newsletter

Subscribe to our newsletter and stay updated on the latest developments and special offers!

Company Master Data Since 1900. More than 1.75 Million Records. Register/Login to get FREE access. Read more
Toggle Bar