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TMI Blog2020 (6) TMI 564X X X X Extracts X X X X X X X X Extracts X X X X ..... of ITA No.1449/Mum/2016 for A.Y.2011-12. ITA No.7382/ Mum/2017 (Assessment Year : 2013-14) This appeal in ITA No.7382/Mum/2017 for A.Y.2013-14 preferred by the assessee against the final assessment order passed by the Assessing Officer dated 30/11/2017 u/s.143(3) r.w.s.144C(13) of the Income Tax Act, hereinafter referred to as Act, pursuant to the directions of the ld. Dispute Resolution Panel (DRP in short) u/s.144C(5) of the Act dated 22/09/2017 for the A.Y.2013-14. SA No.461/Mum/2019 (Assessment Year 2013-14) This stay application is arising out of ITA No.7382/Mum/2017 for A.Y.2013-14. ITA No.1797/ Mum/2016(Assessment Year : 2011-12) This appeal in ITA No.1797/Mum/2016 for A.Y.2011-12 preferred by the revenue against the final assessment order passed by the Assessing Officer dated 29/01/2016 u/s.143(3) r.w.s.144C(13) of the Income Tax Act, hereinafter referred to as Act, pursuant to the directions of the ld. Dispute Resolution Panel (DRP in short) u/s.144C(5) of the Act dated 18/12/2015 for the A.Y.2011-12. ITA No.719/ Mum/2017 (Assessment Year : 2012-13) This appeal in ITA No.719/Mum/2017 for A.Y.2012-13 preferred by the assessee against the final assessment order pass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny in United Kingdom) 26,74,724 Navistar Valuation (For buying out stake in Navistar Inc.) 8,42,700 43,83,684 4) Rates & Taxes -Competition commission of India Application for obtaining their approval for the buyout of Navistar shares in the 2JVs 10.00,000 5) Year-end Provision for M&A Activities Legal Fees / Professional Fees -Bamford (Acquisition of automobile company in United Kingdom) 2,57,09,756 Legal Fees for SYMC (In connection with further equity investment in SYMC) 44,38,800 Legal Fees / Professional Fees -Navistar (For buying out stake in Navistar Inc.) 42,71,600 3,44,20,156 B Head Office i) Legal fees Project Moon (For strategic alliance of systech companies) 34,20,421 Project Vacation (In connection with sale of MHRIL) 7,00,000 Total Legal Fees 41,20,421 ii) Professional Fees Project Moon (For strategic alliance of systech companies) 3,10,00,000 Project Amphere (Launch of electrically powered 2 Wheel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s revenue expenditure since it has not resulted in the generation of any capital asset unlike the first set of expenditure which resulted in acquisition of investments and hence the expenditure incurred could be added to the cost of investments as directed by the Tribunal in AY 2009-10 and earlier years. c) For this proposition reliance is placed on the following two decisions:- (i) Commissioner of income tax v/s. M/s. Magnese Ore India Limited (Income tax Reference No. 150 of 1993). The relevant paras of the order are Para 8 in which facts have been set out. The expenses were incurred for setting up a plant but which was never set up. The disputed expenditure was towards travelling expenses which was held by the Department to be capital in nature (para 14). In Para 20 the High Court has referred to the order of the SC in the case of Madras Auto Services (P) Ltd. (233 ITR 468) in which certain expenditure was held to be revenue in nature because no capital asset was generated by spending the amount in question. Concluding the issue in para 23 and applying the ratio in the case of Madras Auto (supra), the High Court held that the subject expenditure could not be directly related w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he records of the lower authorities that, the assessee whenever each and every vehicle / tractor is sold, the said sale is covered by warranty clause and the buyer is entitled to enforce this clause within specified period / mileage provided, the defects in vehicle / tractor noticed by the buyer are covered by the warranty. It was stated that the warranty period extends from six months to 30 months. Pursuant to this warranty clause, the assessee during the year had made provision for warranty in the sum of Rs. 50,11,63,331/- as under:- (Rs. In lakhs) Division Provision for warranty for the year AY 2012-13 Provision for warranty for the year AY 2013-14 Incremental Provision for Warranty Automotive Division 19,053.01 24,637.71 5,584.70 Tractor Division 6,341.93 5,727.76 -614.17 Swaraj Division 1,640.55 1,673.44 32.89 Defense 5.49 0 -5.49 Total 27,040.98 32,038.91 4,997.93 Incremental Provision 4,997.93 Add: Warranty taken over as per Scheme of Arrangement 14.00 Net Incremental Provision 5,011.93 3.2. The said provision for warranty expenses on vehicles / tractors sold during the year was stated to be ascertained by the assessee on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore the lower authorities and hence, we find that the issue is squarely covered by the decision of the Hon'ble Supreme Court in the case of Rotork Controls India Pvt. Ltd., vs CIT in 314 ITR 62. We also find that this issue has been allowed by the Tribunal in assessee's own case for the A.Y.1989-1990 to A.Y.1998-1999. Later in A.Y.2009-10, this issue was remitted back to the file of the ld. AO to decide the samein the light of the aforesaid Supreme Court decision. We find that the decision for A.Y.2009-10 was rendered by this Tribunal by placing reliance on the decision rendered in assessee's own case for the A.Y.2006-07 to 2008-09. For A.Y.2006-07 to 2008-09, the ld. AR submitted that the ld. AO had duly accepted the fact that the provision for warranty schemes have been made based on the analysis of past data of actual warranty expenditure incurred but repeated the same disallowance on the reason that details of reversal of provision made in earlier years were not provided. The appeal against that order is pending. Meanwhile, against the order passed by this Tribunal for A.Y.1997-98 allowing the claim of warranty, the revenue had preferred the appeal to the Hon'ble Jurisdictio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,256/- by the ld. TPO. 5.1. We have heard rival submissions and perused the materials available on record. We find that the assessee had given guarantee / letter of consent to Mahindra Overseas Industries Company (Mauritius) Ltd., (MOICML in short), Mahindra USA Inc (MUSA) and Mahindra Forgings Europe AG (MFEA) to expand the business operations and achieve overall growth in the business of the assessee. MOICML needed funds to make equity investments in other group companies. MUSA and MFEA needed the loan for working capital and to augment the growth of the business operations. There was no cost incurred to provide corporate guarantee. We find that assessee had voluntarily disallowed 1% of the corporate guarantee fee in the return of income. The ld. TPO determined the Arm's Length Price (ALP) of international transaction in respect of corporate guarantee fee at 3% which was upheld by the ld. DRP also. We find that the ld. AR fairly submitted that for the A.Y.2009-10, this Tribunal in assessee's own case had upheld the ALP adjustment of 3% towards corporate guarantee fee. The ld. AR also drew the attention of this Bench that the Hon'ble Jurisdictional High Court in several cases suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loans given in the said year and made ALP adjustment accordingly. We find that the ld. DRP directed the ld. AO to adopt LIBOR rate of the year in which the loan was given in case the loan had been granted at fixed rate for the entire tenure of the loan. However, if the loan had been granted for a floating / flexible rate of interest, the ld DRP directed the ld AO that LIBOR rate to be applied would be LIBOR for the year under consideration. The ld. DRP also directed the ld. AO to adopt the LIBOR as directed above and further add 5% towards basis points. 6.2. Aggrieved by this direction, the assessee is in appeal before us. The ld. DR submitted that let the ld. TPO be directed to adopt LIBOR + 300 basis points for benchmarking international transaction in respect of loan given to AE. But we find that this Tribunal in assessee's own case for the A.Y.2009-10 in para 21 had specifically directed to consider only LIBOR rate at the relevant time and determined the ALP of the said transaction accordingly. Respectfully following the said judicial precedent, we direct the ld. AO accordingly. Accordingly, the concise ground No.4B raised by the assessee is partly allowed. 7. The next issue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e is allowed. 8. The next issue to be decided in this appeal is with regard to allowance of weighted deduction u/s.35(2AB) of the Act. 8.1. We have heard rival submissions and perused the materials available on record. We find that assessee has several research and development (R & D) units which were even approved by the Department of Scientific and Industrial Research (DSIR) for the purpose of claiming weighted deduction u/s.35 (2AB) of the Act as under:- a) For the period 01/04/2011 to 31/03/2013 - Mahindra Research Valley Centre. b) For the period 01/04/2010 to 31/03/2015 i) Kandivali R & D Service division ii) Kandivali IDAM Centre iii) Nashik Centre 8.2. We find that the gross amount of expenditure incurred in eligible R & D units during the year was Rs. 1015.71 Crores. In the return of income, the assessee on conservative basis claimed deduction of Rs. 844.32 Crores. In Form 3CL issued on 06/10/2015, a sum of Rs. 950.91 Crores towards expenditure was approved by DSIR. The evidences in this regard are enclosed in pages 241-242 of the paper book filed before us. The ld. AR stated that though the assessee had claimed only Rs. 844.32 Crores in the return of income, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tended that the transaction between the dealer and the assessee manufacturer is of a sale of the vehicle on a principal to principal basis, whereas the revenue had been holding that the dealers are agents of the assessee, who had rendered services in the course of buying and selling of goods. According to the revenue, since the dealer is merely an intermediary between the assessee and final customer, the provisions of Section 194H of the Act are applicable and since the assessee had failed to deduct the tax at source, disallowance u/s.40(a)(ia) of the Act need to be made in respect of dealer incentive. The said action of the ld. AO was upheld by the ld. DRP. We find that this issue has been consistently decided in favour of the assessee by this Tribunal in its own case in various assessment years. We also find that in respect of assessment year 2008-09, the revenue had preferred an appeal before the Hon'ble Jurisdictional High Court against the order of this Tribunal and the same was dismissed by the Hon'ble Jurisdictional High Court in ITA No.1148/Mum/2014 dated 06/02/2017. We also find that the Hon'ble Supreme Court had even dismissed the Special Leave Petition (SLP) preferred by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l sectors and further improving the conducive industrial climate in the State, for providing the global competitive edge to the State's industry. The policy envisages grant of fiscal incentives to achieve higher and sustainable economic growth with emphasis on balanced regional development and employment generation through greater private and public investment in industrial development. In other words, the Scheme was meant to correct regional imbalance in the industrial development of the State and also achieve higher and sustainable economic growth. (b) It is clear from the scheme that IPS incentive was granted not for carrying on day-to-day business of the unit more profitably but to ensure sustainable economic growth with emphasis on balanced regional development and employment generation. The Sales Tax Payment is only a measure or yardstick to determine the quantum of incentive. 10.3. We find that the ld. AO placed reliance on the decision of Hon'ble Supreme Court in the case of Sahney Steel and Press Ltd., reported in 228 ITR 253 and the decision of Hon'ble Punjab and Haryana High Court in the case of Abhishek Industries Ltd., reported in 286 ITR 1 and rejected the clai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee. 11.1 We have heard rival submissions and perused the materials available on record. We find that assessee had claimed a sum of Rs. 119,85,01,118/- for the industrial promotion subsidy incentive received on the basis of 'Package Scheme of incentive 2007 declared by Government of Maharashtra' for setting up of industry in certain backward areas (Chakan). The said incentive was given by Directorate of Industries for locating in a backward area and sales tax payment is only a measure or yard stick to determine the quantum of incentive. We find that the main objective of the Scheme was to ensure sustained industrial growth through innovative initiatives for development of key potential sectors and further improving the conducive industrial, climate in the State, for providing the global competitive edge to the State's industry. The policy envisages grant of fiscal incentives to achieve higher and sustainable economic growth with emphasis on balanced regional development and employment generation through greater private and public investment in industrial development. In other words, the Scheme was meant to correct regional imbalance in the industrial development of the Stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . AO to treat the receipt of industrial promotion subsidy incentive of Rs. 119,85,01,118/- under the 2007 incentive scheme as capital receipt. Accordingly, the concise ground No.9 raised by the assessee is allowed. 12. The next issue to be decided in this appeal is with regard to disallowance of deduction of difference in exchange rate of Rs. 119,37,27,592/-. 12.1. We have heard rival submissions and perused the material available on record. We find at the outset that the difference in exchange rate arises out of the repayment of foreign currency loans / valuation of foreign currency loans as on 31/03/2013 amounting to Rs. 119,37,27,592/- which was claimed as revenue expenditure by the assessee in the return of income. The basis of arriving at this exchange rate difference is enclosed in page 407 of the paper book filed before us. We find that assessee company had taken foreign currency loans from HSBC , Bank of America, Sumitomo Mitsui banking Corporation, SBI - Hongkong, Mizho Corporate bank for acquisition of capital assets and working capital purposes. 12.2. The Company has also given Inter Corporate Deposits (ICD's) to Bristlecone Limited, Mahindra Overseas Investment C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed locally in India, the Company has claimed the Difference in Exchange of Rs. 63,02,52,539/- to the Fixed assets / Capital work- in- progress and Rs. 56,34,75,052/- carried forward in the 'Foreign Currency Monetary Item Translation Difference Account' as deductible revenue expenditure. 12.10. We find that the ld. AO had disallowed the aforesaid exchange fluctuation loss as notional and contingent and also capital in nature and accordingly, disallowed the same in the assessment which was upheld by the ld. DRP before us. The ld. DR stated that this issue is covered against the assessee by the order of this Tribunal for A.Y.2009-10 in assessee's own case and drew the attention of the Bench to the relevant portion of the order. 12.11. Per contra, the ld. AR stated that this Tribunal while rendering the decision for A.Y.2009-10 had not considered the principles laid down by the Hon'ble Apex Court in the case of CIT vs. Woodward Governor India Ltd., reported in 312 ITR 254 (SC). Further he stated that the foreign exchange gain or loss incurred on acquisition of capital asset had to be adjusted with the cost of capital assets. The ld. AR fairly stated that this decision of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fter acquisition of investments and therefore, be allowed as revenue expenditure according to the ld. AR. We find that the decision taken by this Tribunal in A.Y.2009-10 may not be fully applicable to the facts of the instant case and we hold that the said decision would hold good with some modifications as suggested below based on factual developments that had happened later:- (a) Foreign currency loans utilised for acquiring fixed assets and overseas investments is to be capitalised and correspondingly depreciation need to be granted to the assessee. In this, the exchange loss pertaining to the period till the asset was put to use should alone be capitalised and thereafter, the same should be allowed as revenue expenditure. (b) Foreign exchange loss attributable to other monetary items debited to FCMITA as per AS 11 of ICAI should be allowed as revenue expenditure. Accordingly, the concise ground No.10 raised by the assessee is disposed off in the aforesaid manner. 13. The next issue to be decided in this appeal is with regard to the allowability of expenses on Employees Stock Options (ESOP) amounting to Rs. 47,03,67,525/-. 13.1. We have heard rival submissions and perused ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aim of deduction in the light of the Special Bench decision in the case of Biocon Ltd., We find that the ld. AR fairly submitted that in principle, this issue is decided in favour of the assessee by the Special Bench in the case of Biocon Ltd., but still in the interest of justice, a specific direction need to be given to the ld. AO to allow deduction in respect of all options exercised during the year equal to the difference between the exercise price and the market price at the time of exercise of the option, as held in the case of Biocon Ltd, instead of the market price at the time of grant of option. We find lot of force in the said argument of the ld. AR and direct the ld. AO accordingly. Accordingly, the concise ground No.11 raised by the assessee is allowed for statistical purposes. 14. The next issue to be decided in this appeal is with regard to deduction of provision for post retirement scheme for housing in the sum of Rs. 751,45,000/- and for post retirement medical schemes in the sum of Rs. 206,30,000/-. 14.1. We have heard rival submissions and perused the material available on record. We find that during the year under review, the company has claimed deduction for R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an Petroleum Corporation Ltd., in ITA No.1294/Mum/2011 vs. JCIT dated 26/09/2012. We have gone through the said Tribunal order and find that this issue is squarely decided in favour of the assessee on similar facts and circumstances. We also find that assessee had filed a modified ground of appeal before us on 'without prejudice basis' that in any case, at least the actual payment made during the year towards post retirement scheme for housing and post retirement medical benefit should be allowed as deduction. We find that assessee is indeed entitled for deduction on provision basis itself and hence, it is not required to adjudicate the modified ground of appeal filed before us and the ld. AO is hereby directed to grant deduction for provision for post retirement scheme for housing in the sum of Rs. 7,51,45,000/- and post retirement medical scheme in the sum of Rs. 2,06,30,000/- while giving effect to this order. Accordingly, the concise ground No.12 raised by the assessee is allowed. 15. The next issue to be decided in this appeal is with regard to scheme of reduction for legal fees recovered but disallowed on gross basis amounting to Rs. 3,33,56,000/-. 15.1. We have heard rival ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nds amounting to Rs. 529,12,192/-. 16.1. We have heard rival submissions and perused the materials available on record. During the year under review, the company has offered to tax interest on long term and current investments amounting to Rs. 39,48.03,120 under the head 'income from other sources'. 16.2. Out of the above amount, Rs. 6,33,76,065/- relates to interest on current investments (as per clause 22(a)(ii) of Annual Accounts). This includes interest on tax free bonds amounting to Rs. 5,29,12,192/- which was wrongly offered to tax. Therefore, interest of Rs. 5,29,12,192/- should be excluded from interest income i.e. from 'income from other sources', while computing total income of the assessee. 16.3. We find that the ld. AO had rejected the aforesaid claim of the assessee on the ground that the said claim of exemption was not made by the assessee in the return of income. In support of this proposition, the ld. AO placed reliance on the decision of Hon'ble Supreme Court in the case of Goetze India Ltd., reported in 284 ITR 323. This action of the ld. AO was upheld by the ld. DRP. We find that there is absolutely no dispute that a sum of Rs. 5,29,12,192/- re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e in terms of Section 50C(2) of the Act and pleaded that the report of the Departmental Valuation Officer (DVO) in respect of subject mentioned properties were received after the order of the ld. DRP and hence, he pleaded that let these DVO reports be examined by the ld. AO and let AO recompute the capital gains in terms of Section 50C(2) of the Act. The ld. DR fairly agreed that this argument of the ld. AR. 17.3. We have heard rival submissions and perused the materials available on record. We find that the ld. AR made elaborate arguments disputing the valuation report given by the DVO by suggesting various reasons. He also pleaded that any variation in full value of consideration between the DVO report and the actual sale consideration cannot be automatically treated as income and tolerance limit of 5% to 10% range should be granted to the assessee. We find that valuation report of DVO had been received after the order of ld. DRP and hence, the ld. AO did not have the benefit of the said DVO report either while framing the assessment or while giving the effect to the order of ld. DRP. Hence, in the interest of justice and fair play, we deem it fit and appropriate to remand this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee. He specifically submitted that the transactions relating to Rudrapur Unit included purchase and sale of raw materials and consumables and also payment of expenses. With regard to the total transactions of Rudrapur unit, he drew our attention to the transfer pricing study report enclosed in pages 552 to 562 of the paper book filed before us. He stated that for benchmarking the purchase and sales transactions of Rudrapur unit, Internal Transactional Net Margin Method (TNMM) was adopted by due comparison with noneligible Nagpur unit. He further submitted that the Profit Level Indicator (OP/OR) of eligible Rudrapur unit was worked out at 22.55% and that of Nagpur unit at 21.28%. These details are available in page 558 of the paper book filed before us. He further submitted that for allocation of R & D expenses, head office expenses and distribution expenses, interest cost and other allocations, "other method" was utilized to demonstrate the arm's length price (ALP). These workings are available in pages 561 to 562 of the paper book filed before us. He submitted that the ld. TPO in the transfer pricing adjustment on verification of all these workings enclosed in the TP st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing recorded either by the ld. AO / ld. TPO / ld. DRP during the year under appeal and hence, the finding of this Tribunal in A.Y.2009-10 cannot be made applicable to the year under appeal. 19.4. Per contra, the ld. DR submitted that this issue should be remitted back to the file of the ld. AO in light of order of this Tribunal in assessee's own case for A.Y.2009-10 referred to supra. 19.5. We have heard rival submissions and perused the materials available on record. From the detailed facts narrated above and from the various arguments advanced by both the sides, we are of the considered opinion that for the year under appeal, the decision rendered by this Tribunal for A.Y.2009-10 cannot be made applicable in as much as there is absolutely no adverse finding at all by the lower authorities as was done in A.Y.2009-10. With regard to assessing profits that were disclosed by the assessee for Rudrapur unit, it is not in dispute that the assessee for the year under appeal had duly submitted his audit report in form 10CCB for claim of deduction u/s.80IC of the Act for Rudrapur unit alongwith computation of income, profit and loss account and balance sheet including the workings for al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ept with variance in figures. The Ld. AO is directed to suitably replace the figures based on the facts provided by the assessee in the fact sheet before us. This direction is given for the sake of brevity and to avoid repetition and especially in view of the fact that the ld DR had not disputed the primary facts and figures applicable for the Asst Year 2011-12 mentioned in the assessee's fact sheet filed before us. 23. The concise ground No.9 raised by the assessee for A.Y.2011-12 is with regard to disallowance of deduction u/s.80IC of the Act in respect of Rudrapur unit. We find that for A.Y.2011-12, the transaction of Rudrapur unit were not subjected to transfer pricing adjustment under the category (Specified Domestic Transactions) as the same was not provided in the statute. Hence, we deem it fit and appropriate to follow the directions given by this Tribunal for A.Y.2009-10 in ITA No.1956/Mum/2014 dated 10/04/2019 vide para 55-59 thereon. Accordingly, the concise ground No.9 raised by the assessee is allowed for statistical purposes. 24. The concise ground No.10 is with regard to long term capital loss of Rs. 27,25,59,579/- on account of capital reduction in Mahindra Shubhl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Jupiter Capital Pvt. Ltd., in ITA No.445/Bang/2018 dated 29/11/2018 in support of the proposition that reduction in share capital amounts to transfer of capital asset u/s.2(47) of the Act and accordingly pleaded that capital loss arising on account of share capital could be allowed to be carried forward in the hands of the assessee. We find that the Bangalore Tribunal had placed reliance on the Hon'ble Supreme Court in the case of Kartikeya vs. Sarabhai vs CIT reported in 228 ITR 163. On perusal of the facts before the Hon'ble Supreme Court in Kartikeya vs. Sarabhai case, we find that assessee had purchased 90 non-cumulative preference shares in Sarabhai Ltd., each of the face value of Rs. 1000/- at a price of Rs. 420 per share. In the year 1965, a sum of Rs. 500 per share was paid off to the shareholder upon reduction of share capital, which was effected by reducing the face value of each share from Rs. 1000 to Rs. 500/- and by paying of Rs. 500 in cash. As a result thereof, the assessee became a holder in respect of 90 preference shares of value of Rs. 500 per share, in place of being the holder of shares of the face value of Rs. 1000/- per share. Subsequently, in the year 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is right stood reduced to receiving Rs. 50 per share only. Even though the appellant continues to remain a shareholder, his right as a holder of those shares clearly stands reduced with the reduction in the share capital. 12. The Gujarat High Court had in another case as Anarkali Sarabhai v. CIT [1982] 138 ITR 437 followed the judgment under appeal. That was a case where there had been redemption of preference share capital by the company and money was paid to the shareholders. It was held therein that difference between the face value received by the shareholder and the price paid for preference share was exigible to capital gains tax. In coming to this conclusion, the Gujarat High Court had followed the judgment under appeal in the present case. 13. The aforesaid decision of the Gujarat High Court in Anarkali Sarabhai's case (supra) was challenged and this Court in the Anarkali Sarabhaiv. CIT [1997] 224 ITR 422 upheld the High Court's decision. It had been contended in Anarkali Sarabhai's case (supra) on behalf of the assessee that reduction of preference share was not a sale or relinquishment of asset and, therefore, no capital gains tax was payable. Repelling th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te Bench of Bangalore Tribunal in the case of Jupiter Capital supra is factually distinguishable with that of the assessee herein. We find that in the facts before the Hon'ble Special Bench of Mumbai Tribunal referred supra, there was no receipt of consideration. Needless to mention that the Special Bench decision would have binding precedent over the Division Bench decision. We find that the ld. DRP had followed the aforesaid Special Bench decision which are applicable to the facts of the instant case as narrated hereinabove, on which we do not find any infirmity. No arguments were advanced before us to distinguish the said Special Bench decision either on facts or on law. Hence, we do not deem it fit to interfere in the order of the ld. DRP in this regard. Accordingly, the concise ground No.10 raised by the assessee is dismissed. 25. The concise ground No.11 raised by the assessee was stated to be not pressed and accordingly, the same is dismissed as not pressed. 26. We find that the assessee company had raised an additional ground for non-taxability of interest on tax free bonds in the sum of Rs. 3,47,19,107 for computation of income for both under normal provisions of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovisions to the dealer incentives and service coupon reimbursed to the dealers. The assessee responded that basically there must be a relationship of a service provider and the service receiver pursuant to which payment is made by the receiver to the provider in order to attract the provisions of Section 194H of the Act. The assessee explained that it sells vehicles to the dealers as its customers and not as agent within the meaning of Section 194H of the Act. It was explained categorically that the transaction with the dealer is of a sale and when the vehicles are sold to the dealer, ownership of the vehicle is transferred to the dealer and the dealer further sells the vehicle to the ultimate customer. The vehicle sold by the dealer to the customer is owned by the dealer before it is sold and the sale executed by the dealer is not on behalf of the assessee company. The said sale transaction attracts sales tax under relevant sales tax laws. Dealer does not render any service to the company which could be said to be in the course of buying or selling of vehicles. In order to encourage dealer from buying more vehicles from the company, dealer incentive is paid to the dealers on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee for A.Y.2012-13 are exactly similar to concise grounds No.1-11 raised for A.Y.2013-14 in ITA No.7382/Mum/2017. The decision rendered for A.Y.2013-14 would apply with equal force for A.Y.2012-13 also except with variance in figures. The Ld. AO is directed to suitably replace the figures based on the facts provided by the assessee in the fact sheet before us. This direction is given for the sake of brevity and to avoid repetition and especially in view of the fact that the ld DR had not disputed the primary facts and figures applicable for the Asst Year 2012-13 mentioned in the assessee's fact sheet filed before us. 31. The concise ground No.12 raised by the assessee for A.Y.2012-13 is exactly similar to concise ground No.9 raised by the assessee for A.Y.2011-12 and the decision rendered thereon would apply with equal force for A.Y.2012-13 also except with variance in figures. 32. The concise ground No.13 raised by the assessee for A.Y.2012-13 is exactly similar to concise ground No.10 raised by the assessee for A.Y.2011-12 and the decision rendered there on would apply with equal force for A.Y.2012-13 also except with variance in figures. 33. The concise ground N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amounting to Rs. 4,47,57,189/-. This additional ground No.12 is exactly similar to additional ground No.2 raised by the assessee for A.Y.2011-12 and the decision rendered thereon would apply with equal force for A.Y.2012-13 also except with variance in figures. 37. In the result, appeal of the assessee in ITA No.719/Mum/2017 for A.Y.2012-13 is partly allowed for statistical purposes. 38. It is pertinent to mention here that this order is pronounced after a period of 90 days from the date of conclusion of the hearing. In this regard, we place reliance on the decision of co-ordinate bench of this Tribunal in the case of JSW Ltd in ITA Nos. 6264 & 6103/Mum/2018 dated 14.5.2020, wherein this issue has been addressed in detail allowing time to pronounce the order beyond 90 days from the date of conclusion of hearing by excluding the days for which the lockdown announced by the Government was in force. The relevant observations of this tribunal in the said binding precedent are as under:- 7. However, before we part with the matter, we must deal with one procedural issue as well. While hearing of these appeals was concluded on 7th January 2020, this order thereon is being pronounced ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... these directions, the expression "ordinarily" has been inserted in the requirement to pronounce the order within a period of 90 days. The question then arises whether the passing of this order, beyond ninety days, was necessitated by any "extraordinary" circumstances. 9. Let us in this light revert to the prevailing situation in the country. On 24th March, 2020, Hon'ble Prime Minister of India took the bold step of imposing a nationwide lockdown, for 21 days, to prevent the spread of Covid 19 epidemic, and this lockdown was extended from time to time. As a matter of fact, even before this formal nationwide lockdown, the functioning of the Income Tax Appellate Tribunal at Mumbai was severely restricted on account of lockdown by the Maharashtra Government, and on account of strict enforcement of health advisories with a view of checking spread of Covid 19. The epidemic situation in Mumbai being grave, there was not much of a relaxation in subsequent lockdowns also. In any case, there was unprecedented disruption of judicial wok all over the country. As a matter of fact, it has been such an unprecedented situation, causing disruption in the functioning of judicial machinery, that H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er. Law is not brooding omnipotence in the sky. It is a pragmatic tool of the social order. The tenets of law being enacted on the basis of pragmatism, and that is how the law is required to interpreted. The interpretation so assigned by us is not only in consonance with the letter and spirit of rule 34(5) but is also a pragmatic approach at a time when a disaster, notified under the Disaster Management Act 2005, is causing unprecedented disruption in the functioning of our justice delivery system. Undoubtedly, in the case of Otters Club Vs DIT [(2017) 392 ITR 244 (Bom)], Hon'ble Bombay High Court did not approve an order being passed by the Tribunal beyond a period of 90 days, but then in the present situation Hon'ble Bombay High Court itself has, vide judgment dated 15th April 2020, held that directed "while calculating the time for disposal of matters made time- bound by this Court, the period for which the order dated 26th March 2020 continues to operate shall be added and time shall stand extended accordingly". The extraordinary steps taken suo motu by Hon'ble jurisdictional High Court and Hon'ble Supreme Court also indicate that this period of lockdown cannot be treated as an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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