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ACIT - 10(3) M/s. Colgate Palmolive (India) Ltd. Room No. 451, 4th Floor Aayakar Bhavan, M.K. Road Mumbai 400020 Vs. Colgate Research Centre Main Street, Powai Mumbai 400076
May, 12th 2014
                 IN THE INCOME TAX APPELLATE TRIBUNAL
                            "J" Bench, Mumbai

                  Before Shri D. Manmohan, Vice President
                 and Shri Sanjay Arora, Accountant Member


                           ITA No. 1855/Mum/2011
                           (Assessment Year: 2004-05)

     A C I T - 10(3)                  M/s. Colgate Palmolive (India) Ltd.
     Room No. 451, 4th Floor          Colgate Research Centre
                                  Vs.
     Aayakar Bhavan, M.K. Road        Main Street, Powai
     Mumbai 400020                    Mumbai 400076
                             PAN - AAACC4309B
                Appellant                        Respondent

                     Appellant by:      Shri R.K. Sahu
                     Respondent by:     Shri Arvind Sonde

                     Date of Hearing:       08.052014
                     Date of Pronouncement: 08.05.2014


                                    ORDER

Per D. Manmohan, V.P.

       This appeal is filed at the instance of the Revenue and it pertains to
A.Y. 2004-05.

2.      The following grounds were urged before us: -

       "1. On the facts and in the circumstances of the case and in law, the
           Ld. CIT(A) ought to have upheld the action of the Assessing
           Officer in taxing the remission/cessation of sales tax liability of
           Rs.32,59,000/- under section 41(1) of the Income Tax Act, 1961.
       2.   On the facts and in the circumstances of the case and in law, the
            Ld. CIT(A) erred in holding that the differential amount of
            Rs.32,59,000/- representing the actual loan amount and the
            present value of the future liability paid by the assessee is on
            capital account and not taxable u/s 41(1) or any other provision
            of the Income Tax Act, 1961."




3.      At the time of hearing the learned counsel for the assessee submitted
that identical issue has come up before the ITAT "C" Bench, Mumbai in
                                        2                  ITA No. 1855/Mum/2011
                                                   M/s. Colgate Palmolive (India) Ltd.

assessee's own case for A.Y. 2003-04 (ITA No. 5485/Mum/2009 dated 25th
October, 2011) wherein the Bench, following the decision of the ITAT Special
Bench, Mumbai in the case of Sulzer India Ltd. vs. DCIT 134 TTJ 385,
accepted the plea of the assessee. It may also be noted that even the learned
CIT(A) followed the decision of the ITAT in the case of Sulzer India Ltd. and
decided in favour of the assessee by observing as under: -

     "1.6    I have perused the facts of the case. The Special Bench of
             Mumbai Tribunal in the case of Sulzer India Ltd. vs. Jt. CIT ­
             Range 8(3) (Appeal No. I.T.A. No. 2994/MUM/2007) dated
             November 10, 2010 had held that payment of net present value
             of the future liability cannot be classified as remission or
             cessation of the liability so as to attract provisions of section
             41(1)(a) of the Income Tax Act, 1961.
     1.7     The assessee's case is squarely covered by the above referred
             decision of Special Bench of the Mumbai Tribunal and the facts
             of the above case are pari material to the appellant's case. Thus,
             relying upon the principles laid down by the Jurisdictional
             Tribunal in the above referred case, I hold that the differential
             amount of `32,59,000/- representing the actual loan amount
             and the present value of the future liability paid by the company
             is on capital account and not taxable under section 41(1) or any
             other provision of the IT Act. Accordingly, the AO's action stands
             reversed."

4.    No contrary view was brought to our notice by the Revenue while
challenging the order passed by the CIT(A). Having regard to the
circumstances of the case, we are of the view that the order passed by the
CIT(A) does not call for any intervention.




5.    In the result, the appeal filed by the Revenue is dismissed.

Order pronounced in the open court on 8th May, 2014.

                   Sd/-                                   Sd/-
              (Sanjay Arora)                         (D. Manmohan)
           Accountant Member                         Vice President

Mumbai, Dated: 8th May, 2014
                                       3                    ITA No. 1855/Mum/2011
                                                    M/s. Colgate Palmolive (India) Ltd.

Copy to:

   1.   The   Appellant
   2.   The   Respondent
   3.   The   CIT(A) ­ 15, Mumbai
   4.   The   CIT­ 10, Mumbai City
   5.   The   DR, "J" Bench, ITAT, Mumbai

                                                        By Order

//True Copy//
                                                    Assistant Registrar
                                            ITAT, Mumbai Benches, Mumbai
n.p.

 
 
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