TMI Blog2015 (8) TMI 909X X X X Extracts X X X X X X X X Extracts X X X X ..... of arithmetical inaccuracy. We, therefore, direct that the figure of ₹ 3,37,18,863/- appearing at Para 34 to 37 of the order be read as ₹ 3,57,18,363/-. Further, Para 37 of the order be read as under : To conclude, the addition of ₹ 10,00,00,000 sustained by the CIT(A), in respect of ‘Marketing Expenses’ is reduced to ₹ 4,42,81,637/- (Rs.4,11,61,718 + ₹ 31,19,319). In other words, the assessee gets relief of ₹ 5,57,18,363/- (Rs.2,00,00,000 + ₹ 3,57,18,363) - Decided in favour of assessee. Disallowance of Service charges - Held that:- Mere filing of vouchers in the box files in our opinion is not sufficient for allowability of the claim since the same has to be thoroughly verified by the Assessing Officer. We find the CIT(A) had given a finding that there are expenses which have been claimed by CCI Inc. under the garb of service charge but the same are not allowable as per law as business expenditure under different provisions of I.T. Act and has further observed that such expenditure contain foreign travel expenses of the spouse of the employees, capital expenditure and expenses incurred for other than business consideration includ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reciation on coolers disallowed - Held that:- Tribunal while deciding the issue has upheld the order of the CIT(A) on the ground that for claiming depreciation the asset must be owned by the assessee and must be used for the business purposes and held that in the instant case although coolers are owned by the assessee but these are not used by the assessee but used by vendors or bottlers who sold the beverages manufactured by concerns other than assessee. However, the alternate contention that once an asset is part of the block, the user of the block has to be seen and not that of individual asset has not been considered. Therefore, to this extent a mistake apparent from record has crept in the order of the Tribunal which in our opinion requires rectification.- Decided in favour of assessee. - MA No. 156 /PN/2010 Arising out of ITA Nos.1257, 1269/PN/2003), M.A. No.119/PN/2010 (Arising out of ITA No.1257/PN/2003, MA No. 150 /PN/2010 Arising out of ITA Nos.1258/PN/2003, 182 & 610/PN/2004, 256 and 144/PN/2007, 1103/PN/2005 and 896/PN/2008) - - - Dated:- 6-12-2013 - Shri Shailendra Kumar Yadav and Shri R.K. Panda, JJ. For the Appellant : Shri S.E.Dastur and Shri R. Murlidhar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of ₹ 17,99,74,343/- to ₹ 10,00,00,000/- computed as under : Particulars AO CIT(A) Diff (11 parties) 2,12,04,099 31,19,919 No Reply (14 parties) 3,90,28,917 Casher Year (7 parties) 9,97,41,327 4,11,61,718 Adhoc 2,00,00,000 2,00,00,000 Capital Expenditure -- 3,37,18,863 (Balancing figure) 17,99,74,343 10,00,00,000 Referring to the above, he submitted that the figure of ₹ 3,37,18,863 which is the balancing figure is wrong and the correct figure on account of disallowance of capital expenditure would be ₹ 3,57,18,363/-. 3.2 Referring to Para 36.9 of the order of the Tribunal, the Ld. Counsel for the assessee drew the attention of the Bench to the following observation of the Tribunal : 36.9 It appears that the CIT(A) first decided the quantum of addition that he w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s etc. We find the Tribunal while deciding the issue at Para 34 of the order has taken the balancing figure of ₹ 3,37,18,863/- as against ₹ 3,57,18,363/-. Thus, there is an apparent mistake in the order of the Tribunal in the shape of arithmetical inaccuracy. We, therefore, direct that the figure of ₹ 3,37,18,863/- appearing at Para 34 to 37 of the order be read as ₹ 3,57,18,363/-. Further, Para 37 of the order be read as under : To conclude, the addition of ₹ 10,00,00,000 sustained by the CIT(A), in respect of Marketing Expenses is reduced to ₹ 4,42,81,637/- (Rs.4,11,61,718 + ₹ 31,19,319). In other words, the assessee gets relief of ₹ 5,57,18,363/- (Rs.2,00,00,000 + ₹ 3,57,18,363). . . . The Miscellaneous Application filed by the assessee is accordingly allowed. M.A.No.119/PN/2010 (By Revenue) (A.Y. 1997-98): 6. The Revenue through this Miscellaneous Application requests the Tribunal to rectify certain mistakes which has crept in the order of the Tribunal. 6.1 The Ld. Special counsel for the Revenue drew the attention of the Bench to the Miscellaneous Application filed by the Revenue which reads as under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee and found not verifiable by A.O. These admissions of assessee are contained in information supplied by the assessee available as Annexure-2 to the order of the CIT(A) dated 14.08.2003. The actual figures of expenses fit for disallowance admitted by the assessee were: i) expenses of prior period Rs. 5,62,32,085/- ii) differences in expenses claimed and verified ₹ 65,64,134/- The Hon'ble CIT(A) while confirming the disallowance of ₹ 10,00,00,000/- has nowhere in the order given a complete bifurcation of prior period expenditures and difference on account of expenditures claimed by the assessee. On verification of the admissions mentioned in Annexure-2 forming part of the submissions made by the assessee company and the order of the CIT(A) the disallowances should have been of Rs .5,62,32,085/- as prior period expenditures and ₹ 65,64,134/- out of the differences on account of expenditures claimed and verified . The department had filed an appeal against this to the Hon'ble ITAT. The Hon'ble ITAT in its order at para 36.2 has dismissed the ground of department citing that the Id. D.R. did not make any particular submission to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 02-12-2010. Referring to the order of the Tribunal at Para 36.2 the Ld. Senior Counsel for the assessee submitted that the Tribunal had given a categorical observation that during the hearing the Departmental Representative did not make any particular submission to support the figure of ₹ 5,76,75,624/- in place ₹ 4,11,61,718/- for which the Tribunal dismissed the appeal filed by the Revenue. He submitted that when the matter was not argued before the Tribunal and when no affidavit has been filed by the department that they had argued and their argument was not considered by the Tribunal, then it is not fair on the part of the Tribunal to entertain the Miscellaneous Application filed by the Revenue. He submitted that originally the Tribunal passed the order on 05-10-2005. Subsequently, a Miscellaneous Application was filed by the assessee as well as the Revenue in relation to the order of the Tribunal dated 05-10-2005 which were disposed of by the Tribunal in its order dated 07-07-2006 and 05-07-2007 respectively. He submitted that the assessee then filed a Writ Petition before the Hon ble Bombay High Court challenging the order of the Tribunal dated 05-10- 2005 and 0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to support the figure of ₹ 5,76,75,624/- in place of ₹ 4,11,61,718/- and the Tribunal has not considered the same. Therefore, we find no apparent mistake in the order of the Tribunal. We accordingly dismiss the Miscellaneous Application filed by the Revenue being devoid of any merit. 10. The Miscellaneous Application filed by the Revenue is accordingly dismissed. MA No.150/PN/2010 (By Assessee) (A.Yrs. 1998-99 to 2004-05) : 11. At the time of hearing the Ld. Special counsel for the revenue raised a preliminary objection stating that the assessee as well as the Revenue have filed appeals before the Hon ble High Court against the order of the Tribunal. 11.1 Referring to the decision of the Special Bench of the Tribunal in the case of Tata Communications Vs. CIT reported in 121 ITD 384 the Ld. Special Counsel for the Revenue submitted that once an appeal is filed before the Hon ble High Court, the Tribunal becomes Functus Officio and has no jurisdiction to decide the Miscellaneous Application. Referring to the following decisions he submitted that the Miscellaneous Application field by the assessee should not be admitted since the same is not maintainable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the proper disposal of the appeal, the Miscellaneous Application should be first disposed of by the Tribunal. He submitted that the High Court would not have directed the Tribunal to dispose of the Miscellaneous Application even after the admission of the appeal by the High Court if it was contrary to law. 11.4 Referring to the decision of the Chandigarh Bench of the Tribunal in the case of Vesta Investment and Trading Co. Pvt. Ltd. Vs. ACIT reported in 104 TTJ 284 he submitted that the Tribunal in the said decision has laid down the law that there is no bar for the Tribunal to exercise its jurisdiction u/s.254(2) when the party has approached the High Court u/s.260A against the order of the Tribunal in an appeal on a substantial question of law yet to be admitted. 12. So far as the various decisions relied on by the Ld. Special Counsel for the Revenue are concerned he submitted that all those decisions are distinguishable and not applicable to the facts of the present case. He submitted that in the case of Tirupati Balaji Developers Pvt. Ltd. (Supra) the appeal was filed by the person who was not the party in the lower court. Therefore, the question in that case was whet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (2) when the party has approached the High Court u/s.260A against the order of the Tribunal in an appeal on a substantial question of law yet to be admitted. 13.2 Similarly, we find the Hon ble jurisdictional High Court in the case Accra Investment Pvt. Ltd.(Supra) has directed the Tribunal to dispose of the Miscellaneous Application even after the appeal was admitted. For the sake of clarity, the relevant order of the Hon ble High Court is reproduced which reads as under : This appeal against the order dated 25-04-2012 of the Tribunal for assessment year 2006-07 was admitted on 25-09-2012. The appellant had also taken out the above. Notice of Motion seeking a stay of recovery of the disputed tax and interest as a consequence of the impugned order of the Tribunal till the disposal of the appeal. 2. The appeal was placed on board today for final hearing of the appeal along with the notice of motion. During the course of the hearing today it was pointed out to us that consequent to the impugned order of the Tribunal, the appellant had on 13-08-2012 filed a Misc. Application under section 254(2) of the Income Tax Act, 1961 seeking to rectify some inadvertent errors which ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion raised by the Special counsel for the department is dismissed. 14. The first issue raised by the assessee through this Miscellaneous Application is regarding the order of the Tribunal in restoring the issue to the file of the Assessing Officer to decide the issue afresh regarding service charges. The Ld. Senior Counsel for the assessee referring to the Miscellaneous Application submitted that service charges and marketing expenses paid by the assessee to CCI Inc. were claimed for A.Y. 1998-99 to 2004-05 as deduction. Identical claims were also made in A.Y. 1997-98 which was allowed by the Tribunal following the direction of the Hon ble Bombay High Court to dispose of the grounds challenging the basis of disallowance as sustained by the CIT(A). Although the basis of the disallowance for A.Y. 1998-99 to 2004-05 and for A.Y. 1997-98 was the same, the Tribunal did not follow the order passed by it for A.Y. 1997-98 by overlooking the crucial facts which were considered while allowing deduction for service charge in A.Y. 1997-98 pursuant to the order and direction of the Hon ble Bombay High Court but has sent back the matter to the file of the Assessing Officer for verifying the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r and the issue of genuineness of the expenditure was never in dispute before the lower authorities. It was also not the grievance of the Revenue that the vouchers were not produced. Therefore, instead of following the order of the Tribunal for A.Y. 1997-98 under similar facts the Tribunal has committed the error by restoring the matter to the file of the Assessing Officer. 15.1 He submitted that pursuant to the order of the High Court the Tribunal passed the order on 30-06-2008 for the A.Y. 2007-08 in which it has considered all the findings of the CIT(A) and the submission of the department and concluded that the expenditure on service charges was for the business purpose of the assessee and the fact that some benefit had been derived by the bottlers and TCCC did not mean that the expenditure could be disallowed in the assessee s hands. He submitted that the Tribunal at Para 76 (Page 62 of the order) has rejected the contention of the department that the facts for A.Y. 1997-98 are distinguishable from the facts for A.Y. 1998-99 to 2004-05 and has held that there were no reasons to deviate from the findings given by the Tribunal for A.Y. 1997-98. Having held so, the Tribunal ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unal had held that the reasons given by the Ld. DR not to follow the order of the Tribunal for A.Y. 1997-98 are not at all convincing in view of the point-wise counter reply given by the Ld. Counsel for the assessee to prove that those objections have already been considered by the Tribunal. Accordingly, the disallowance of marketing expenses was deleted. However, as regards the service charges the Tribunal after considering the fact that assessee has not furnished the full details before the Assessing Officer in respect of the copy of the service agreement and the debit notes and after considering the observation given by the Ld.CIT(A) at para 8.1 of his order that the claim of the assessee in various submissions that all expenses by the CCI Inc. would have to be incurred by the assessee company in running the business is not entirely correct as has been separately brought out at different places of the appeal orders has restored the issue to the file of the Assessing Officer with a direction to decide the issue afresh after giving an opportunity to the assessee to substantiate the claim with evidence. The Ld. Counsel for the assessee was giving unnecessary emphasis to the word g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rect as has been separately brought out at different places of the appeal orders. We, therefore, in the interest of justice, deem it proper to restore the issue relating to service charges to the file of the Assessing Officer with a direction to decide the issue afresh after giving an opportunity to the assessee to substantiate the claim with evidence. The Assessing Officer shall also keep in mind the order of the Tribunal for A.Y. 1997-98 while deciding the issue. We hold and direct accordingly. The ground raised by the assessee on marketing expenses are accordingly allowed whereas the ground relating to service charges is allowed for statistical purposes . 17.1 So far as the disallowance of service charges for other years are concerned, it is the submission of the Ld. Counsel for the assessee that he had filed various vouchers in 19 box files. Mere filing of vouchers in the box files in our opinion is not sufficient for allowability of the claim since the same has to be thoroughly verified by the Assessing Officer. We find the CIT(A) had given a finding that there are expenses which have been claimed by CCI Inc. under the garb of service charge but the same are not allowable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0. Indeed for the A.Y. 1997-98 to 1999-00 the travel expenses were allowed as a part of the Service Charges and 5% mark-up was made. For A.Y. 2000-01 to 2004-05 also the travel expenses were reimbursed as in the earlier years but without a mark-up. 18.2 He submitted that since by restoring the issue to the file of the Assessing Officer for fresh adjudication the Tribunal has not considered the said clause of the agreement, therefore, this is an apparent mistake which has occurred in the order of the Tribunal. He accordingly submitted that the order of the Tribunal on this issue be recalled for fresh adjudication or the expenditure be allowed by suitably modifying the order. 19. The Ld. Special counsel for the Revenue on the other hand strongly opposed the ground raised by the assessee. He submitted that the Tribunal has correctly restored the issue to the file of the Assessing Officer with a direction to give an opportunity to the assessee to substantiate its claim. Therefore, any further order on this issue will amount to review of its own order by the Tribunal which is not permissible. He accordingly submitted that this ground by the assessee should be dismissed. 20. We ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 22. The Ld. Special counsel for the Revenue on the other hand heavily relied on the order of the Tribunal and submitted that there is no apparent mistake and therefore this ground in the Miscellaneous Application should be dismissed. 23. After hearing both the sides, we find the Tribunal while deciding the issue has simply upheld the order of the CIT(A) holding that this is a capital loss and not an allowable expenditure. However, the various arguments including the decision of the jurisdictional High Court in the case of Richardson Hindustan Ltd. (Supra) which was relied upon by the Ld. Counsel for the assessee at the time of hearing have not been considered. Non-consideration of submission including decision of jurisdictional High Court cited at the time of hearing in the order passed by the Tribunal constitute apparent mistake. We, therefore, recall the order of the Tribunal for the limited purpose of adjudicating issue No.III of the Miscellaneous Application, i.e. disallowance of security deposit as per ground of appeal No.4 for A.Y. 1998-99. This ground by the assessee is accordingly allowed in terms indicated above. 24. The Fourth issue in the grounds raised by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (i) First, the Hon'ble Tribunal appears to have lost sight of its own finding in AY 1997-98 in the context of service expenses that It is an admitted fact that the bottlers manufacture beverages from the 'concentrates' purchased from the assessee company. An increase in the volume of business of the bottlers has a direct effect of increasing the volume of business of the assessee. It can be nobody's case that the volume of the business of the assessee company and of the bottlers was not intricately linked with each other ... (see para 26 of the AY 1997-98 order at page 148 of the Compilation); (ii) The principle that anything done in respect of beverages has a direct nexus towards concentrate has been accepted by the Tribunal also in the context of marketing and advertisement expenses. It was held that expenses for advertisement of beverages is incurred for the business of manufacture of concentrate and deductible (page 63 of the order for A.Y. 1998-99 to 2004-05); (iii) The Bombay High Court in the Applicant's own case (Coca Cola India Pvt. Ltd vs. CCE 242 ELT 168 - copy handed over at the time of hearing and referred to at page 27 of the order for A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts and find some force in the argument of the Ld. Counsel for the assessee. It was urged at the time of hearing by the Ld. Counsel for the assessee that once an asset is part of the block, the user of the block has to be seen and not that of individual assets. We find the Tribunal while deciding the issue has upheld the order of the CIT(A) on the ground that for claiming depreciation the asset must be owned by the assessee and must be used for the business purposes and held that in the instant case although coolers are owned by the assessee but these are not used by the assessee but used by vendors or bottlers who sold the beverages manufactured by concerns other than assessee. However, the alternate contention that once an asset is part of the block, the user of the block has to be seen and not that of individual asset has not been considered. Therefore, to this extent a mistake apparent from record has crept in the order of the Tribunal which in our opinion requires rectification. Therefore, the Fourth issue in the Miscellaneous Application by the assessee, i.e. depreciation on coolers for A.Y. 2000-01 to 2004-05 requires fresh adjudication. The order of the Tribunal is recall ..... X X X X Extracts X X X X X X X X Extracts X X X X
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