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
Aayakar Bhavan, M.K. Road Main Street, Powai
Mumbai 400020 Mumbai 400076
PAN - AAACC4309B
Appellant by: Shri R.K. Sahu
Respondent by: Shri Arvind Sonde
Date of Hearing: 08.052014
Date of Pronouncement: 08.05.2014
Per D. Manmohan, V.P.
This appeal is filed at the instance of the Revenue and it pertains to
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
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.
(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.
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
ITAT, Mumbai Benches, Mumbai