IN THE INCOME TAX APPELLATE TRIBUNAL
`H' : NEW DELHI
DELHI BENCH `H
G.D.AGRAWAL, VICE PRESIDENT AND
BEFORE SHRI G.D.AGRAWAL,
SIDHU, JUDICIAL MEMBER
SHRI H.S. SIDHU,
Nos.2663/Del/2012 & 2664/Del/2012
ITA Nos
Years : 2003-
Assessment Years 2004-05
2003-04 & 2004-
Assistant Commissioner of Vs. M/s Yamaha Motor India Pvt.Ltd.,
Income
Income Tax, First Floor, The Great Eastern
Circle-18(1),
Circle- Centre,
New Delhi. 70, Nehru Place, Behind IFCI
Tower,
New Delhi 110 019.
PAN : AAACE1647C.
(Appellant) (Respondent)
Appellant by : Shri Ved Jain, CA and
Shri V. Mohan, Advocate.
Respondent by : Shri R.S. Meena, CIT-DR.
ORDER
G.D.AGRAWAL, VP :
PER G.D.AGRAWAL,
2003-04) :-
ITA No.2663/Del/2012 (Revenue's appeal for AY 2003- :-
This appeal by the Revenue is directed against the order of
learned CIT(A)-XXI, New Delhi dated 27th March, 2012 for the AY 2003-
04.
2. The Revenue has raised the following grounds of appeal:-
"1. On the facts and in the circumstances of the case
and in law the learned CIT(A) erred in holding that the
rejection of books of account by the AO was not proper and
thereby deleting the addition of Rs.1,36,51,37,400/- made
by the AO on estimated profits.
1.1 On the facts and in the circumstances of the case
and in law the learned CIT(A) erred in following the
appellate order in assessee's own case for AY 2006-07
2 ITA-2663 & 2664/D/2012
without appreciating the fact that the Department has filed
appeal before the Hon'ble ITAT against the said appellate
order for the assessment year 2006-07.
1.2 On the facts and in the circumstances of the case
and in law the learned CIT(A) erred in deleting the addition
of Rs.1,36,51,37,400/- without appreciating the fact that
the Assessing Officer has given due allowance for the
change in product mix, competition and the assessee's
smaller scale of operation while estimating the average
profit of 4600/- per Motor Cycle sold and that logical and
acceptable comparison has been made with M/s Hero
Honda Motors Ltd. whose products are identical to that of
the assessee i.e. Motor Cycles and both these companies
are operating in the same market condition i.e. Indian Two
Wheeler Market.
2. On the facts and in the circumstances of the case
and in law the learned CIT(A) erred in deleting the
disallowance of Rs.19,06,59,918/- made on account of
royalty payments by the assessee company to its 100%
holding company viz M/s Yamaha Motor Co.Ltd., Japan
simply following its own order in the assessee's own case
for the assessment year 2006-07 without appreciating the
fact that there was no evidence and details of actual
services rendered by the said holding company to the
assessee company, in lieu of the royalty.
3. On the facts and in the circumstances of the case
and in law the learned CIT(A) erred in allowing the claim of
the assessee in respect of carry forward and set off of
brought forward business losses from AY 2001-02 onwards
and unabsorbed depreciation from AY 1997-98 onwards.
4. The appellant craves leave for reserving the right to
amend, modify, alter, add or forego any ground(s) of
appeal at any time before or during the hearing of appeal."
3. At the outset, it was pointed out by the learned counsel for the
assessee that all the three grounds raised in this appeal by the
Revenue are covered in favour of the assessee by the decision of ITAT
in assessee's own case for AY 2006-07 vide ITA No.3166/Del/2011. He
stated that the assessment of the year under consideration was
3 ITA-2663 & 2664/D/2012
reopened on the basis of the finding of the Assessing Officer for AY
2006-07 and in respect of all the three grounds while rejecting the
books of account and making the addition, the Assessing Officer relied
upon the finding of his predecessor for AY 2006-07. That the CIT(A)
has allowed the relief following his own order for AY 2006-07 which is
upheld by the ITAT.
4. Learned DR, on the other hand, relied upon the order of the
Assessing Officer.
5. We have carefully considered the submissions of both the sides
and perused relevant material placed before us. Ground Nos.1, 1.1 &
1.2 are against the rejection of books of account and the deletion of
addition of `1,36,51,37,400/- which was made by the Assessing Officer
on account of estimated profits. From a perusal of the assessment
order, we find that in paragraph 4.1, the Assessing Officer relied upon
the order of the Assessing Officer for AY 2006-07 and allowed an
opportunity to the assessee why the finding of his predecessor for AY
2006-07 may not be adopted in this year also. Though the assessee
objected to the Assessing Officer's proposal, however, the Assessing
Officer, after rejecting the assessee's objection, relied upon his own
finding for AY 2006-07 and made the addition of `1,36,51,37,400/-.
The conclusion of the Assessing Officer is recorded in paragraph 4.4 of
the assessment order as under:-
"4.4 On a careful consideration of the facts and
circumstances of the case and also in view of lack of
effective rebuttal to the findings as detailed in the
assessment order of A.Y. 2006-07, I am convinced that the
Books of A/cs and the details submitted does not reveal the
correct position of profit earned by the assessee company.
Therefore, I am constrained to estimate the suppression of
profits for the current year at Rs.136,51,37,400/- being
4 ITA-2663 & 2664/D/2012
average profit of Rs.4,600/- (based on average profits per
Bike of Hero Honda Motors Ltd) on the total no. of
Motorcycles sold by the assessee company. While arriving
at the average profit per bike of the assessee company, an
allowance @ 14% has been given to the assessee company
considering the difference in the level of activity and
market share of the assessee company vis-a-vis M/s Hero
Honda Motors Ltd."
6. Learned CIT(A) allowed the relief following his own order for AY
2006-07. We find that in AY 2006-07, the Revenue, aggrieved with the
order of CIT(A), had filed the appeal. However, the ITAT approved the
order of the CIT(A) on this point and rejected Revenue's ground of
appeal which was raised against the deletion of the trading addition
made by the Assessing Officer in that year by estimating the profit.
The relevant finding of the ITAT reads as under:-
"10. Thus, it is seen that apropos the first ground for
rejection of assessee's books of account, i.e., the alleged
difference in the quantity shown in Form No.3CEB and the
quantitative details furnished by the assessee, as per the
Assessing Officer, during the quarter April-June, 2005, as
per the 3 CEB report, the figure was of 3138 motorcycles,
whereas the quantitative details of 07.12.2009 showed a
figure of `1025 motorcycles, giving a discrepancy of 2113
motorcycles and there was a similar discrepancy for July-
December, 2005 and January-March, 2006. The assessee,
in its letter dated 17.12.2009, had stated that the details
contained in Form 3 CEB were with reference to the royalty
paid/payable by the assessee company and they were not
the details of production, i.e., not the number of
motorcycles produced by the assessee company. A
reconciliation had been filed by the assessee regarding the
sale on which royalty had been paid and the sales during
the year. The Assessing Officer did not meet this
explanation of the assessee and rather concluded, without
any basis, that the assessee was maintaining different sets
of books of account. Before the ld.CIT(A), Annexure V to
the Form 3CEB was pointed out to show that in the Form
3CEB, the number of motorcycles produced had nowhere
been stated. In its written submissions filed before the
5 ITA-2663 & 2664/D/2012
ld.CIT(A), the assessee requested for calling for a specific
comment by the Assessing Officer in this regard. The
CIT(A) called for a remand report from the Assessing
Officer. The Assessing Officer submitted not one, but two
remand reports. However, the contention of the assessee
was nowhere rebutted in either of these remand reports.
In the first remand report, as noted by the ld.CIT(A), the
assessee's contention was not even dealt with and even in
the second one, it was not rebutted. In response thereof,
the ld.CIT(A) found the stand taken by the assessee to be
correct. The Form 3CEB filed before the Assessing Officer
was found to be not about the number of motorcycles
produced by the assessee during the period, rather, it was
found to be concerning the royalty paid by the assessee
company during the relevant quarter. The ld.CIT(A) noted
that besides, the assessee had furnished a complete
reconciliation before the Assessing Officer, as also
incorporated in the assessment order. This reconciliation
had, however, been arbitrarily rejected by the Assessing
Officer. It was in these circumstances, that the ld.CIT(A)
held and, in our considered opinion, for the aforegoing
discussions, correctly so, that the Assessing Officer had
erred in concluding that there had been a difference in the
sales and quantitative details of the assessee.
11. Coming to the second ground for rejection of the
books of account, the Assessing Officer had observed that
the average sales of motorcycles by the assessee during
the year was low, as compared to the preceding
assessment year. The Assessing Officer, on figures
discussed, had computed a suppression of sale value by
`1,461 per motorcycle. This amounted to a total alleged
suppression of `33,77,32,063/-. The ld.CIT(A) noticed that
in response to this query by the Assessing Officer, the
assessee had replied vide letter dated 23.11.2009,
whereafter, no further query was raised by the Assessing
Officer in the show cause notice dated 11.12.2009, but in
the assessment order, the said reply of the assessee had
been totally ignored and the Assessing Officer had,
referring to other non-relevant replies of the assessee
company, drawn an adverse inference against the
assessee. This fact of reference to a wrong reply of the
assessee was nowhere rebutted in the remand report
dated 22.09.2010 by the Assessing Officer. Pertinently, in
the said reply dated 23.11.2009, the assessee had
maintained that there had been a change in the product
6 ITA-2663 & 2664/D/2012
mix during the year; that in the preceding year, the
motorcycle `Enticer' had been sold, which was not so in the
year under consideration; that there had been a decrease
in the sale price to meet the competition in the market;
that the figures were based on the books of account, in
which, no discrepancy had been found; that the assessee
had not been shown to have charged from its dealers any
price more than that stated in the sale invoice and the
books of account; and that the Assessing Officer had not
pointed out any error in respect of any sale. It was on the
basis of this, that the ld.CIT(A) observed that there was no
justification for the Assessing Officer to make an
assumption that the sale price charged by the assessee
during the year was lower than that in the preceding year.
Now, when the Assessing Officer has, neither in the
assessment order, nor in either of the remand reports,
been able to rebut the categorical assertions of the
assessee in this regard, as to how the ld.CIT(A) has erred in
accepting the assessee's contention, has not been made
out before us. Obviously, merely since the realization per
motor cycle for the year under consideration was low as
compared to that in the preceding year, this by itself
cannot lead the Assessing Officer to assume that the sale
price charged by the assessee company was under-stated
and the Assessing Officer evidently erred in making such
assumption. As correctly noted by the ld.CIT(A), unless
there is material evidence to disprove the contention of the
assessee, the sale stated in the books of account needs
must be accepted. Therefore, the ld.CIT(A) has rightly held
that on this score, the books were rejected by the
Assessing Officer merely by indulging in surmises.
12. Coming to the next reason adopted by the Assessing
Officer for rejecting the books of account, according to the
Assessing Officer, the assessee's explanation regarding the
losses incurred by it as compared to the profits earned by
other competitors, was not acceptable. Here, the CIT(A)
has noted that the Assessing Officer downloaded the
balance sheets of Hero Honda Motors Ltd. and Bajaj Auto
Ltd., and by taking Hero Honda Motors as an example,
worked out the profit at `470 per motorcycle, where, on
applying a rate of `4,000/- to 2,65,212 motorcycles sold by
the assessee during the year, estimated a profit of
`106,08,48,000/-. The reasons for the loss suffered by the
assessee company, as contended, were low market share,
low capacity utilization, very high debtors' turnover ratio,
7 ITA-2663 & 2664/D/2012
high inventory ratio, shift in technology, higher personnel
cost due to VRS and labour unions problem, advertisement
and publicity cost, high material cost due to low volumes
and high overhead cost because of dealer network and
after sales service, etc. The Assessing Officer, it was taken
note of by the ld.CIT(A), had totally ignored all these
contentions of the assessee and in the remand reports, he
had not been able to rebut any of such contentions. These
contentions were dubbed by the Assessing Officer as being
general in nature. No other comment was made. The
ld.CIT(A) held such an approach to be no correct. Before
us, nothing has been brought to support this action of the
Assessing Officer. Obviously, profit can only be made
when there is ability to do so. The factors pointed out by
the assessee for not being able to make sales, have not
been refuted. Therefore, in the presence of the said
factors, without a doubt, the losses suffered by the
assessee cannot be said to be either bogus, or inflated.
The Assessing Officer did not prove otherwise. No
discrepancy was pointed out in the books of account of the
assessee company concerning the expenditure incurred
and claimed by the assessee. Nothing was brought to
establish that the assessee had been charging a sale price
higher than that noted in the books of account. Rather, the
Assessing Officer arbitrarily compared the case of the
assessee with other successful companies, which can
never lead to appropriate estimation of profit of a loss
bearing company like the assessee.
13. In view of the above, on this issue also, the ld.CIT(A)
has correctly held the rejection of the books of the
assessee by the Assessing Officer to be incorrect. About
the last ground raised by the Assessing Officer for rejecting
the assessee's books of account, it was held that the
assessee had been selling motorcycles at a lower price to
its holding and subsidiary companies as compared to its
domestic sales. The ld.CIT(A) has noted that the assessee,
in its reply dated 17.12.2009, had pointed out that the
export price was more than the domestic price, even in
spite of the fact that the domestic sale price was inclusive
of excise duty. A comparative chart, as follows, had been
submitted :-
Name of the motorcycle Average domestic sale Average Export price (Rs.)
model price (Rs.)
Fazer STD 5(YY5) 35,296/- 36,690/-
8 ITA-2663 & 2664/D/2012
Fazer STD (5YY9) 35,339/- 42,230/-
Crux (5KA3) 27,869/- 38,456/-
Libero (5TS3) 32,234/- 38,456/-
Crux FBD(5KA3) 27,283/- 38,456/-
Crux SJP (5KA3) 27,284/- 38,456/-
14. The assessee had stated that it was entitled to DEPB
benefits in respect of its export sales and if the total DEPB
benefits were added to the export sale price, the effective
export price would be substantially higher in comparison to
the domestic sale price. The TPO's order dated 13.11.2009
was also brought forth, wherein, on considering the export
sales made by the assessee company to its holding
company and subsidiary companies, the TPO had accepted
the price of export shown by the assessee as being at
arm's length. These contentions of the assessee as well as
the TPO's order were found by the ld.CIT(A) to have been
ignored by the Assessing Officer. The comparative charge
submitted by the assessee had also not been found by the
Assessing Officer to contain any discrepancy. In the
remand report dated 22.09.2010 also, the Assessing
Officer was not found to have entered any rebuttal to the
assessee's contentions. After rejoinder to the remand
report even in the second remand report, the Assessing
Officer was found to have passed only peripheral orders of
estimation of profit without answering the assessee's
submission. It was on this that the ld.CIT(A) correctly held
that in absence of material, the Assessing Officer could not
tinker with the price determined by the TPO.
15. It has gone unrebutted before us also, that if the
contention of the Assessing Officer were to be accepted,
the whole purpose of determination of arm's length price
by the TPO would get defeated. To reiterate, the TPO has
accepted, vide order dated 13.11.2009 (supra), the prices
of export shown by the assessee to be at arm's length.
16. In view of the above, even on this score, the rejection
of books of account of the assessee by the Assessing
Officer does not hold good and such action of the
Assessing Officer has correctly been cancelled by the
ld.CIT(A).
17. For the above discussion, finding no merit therein,
Ground Nos.1 and 2 raised by the Department are
rejected."
9 ITA-2663 & 2664/D/2012
7. Admittedly, the facts of the year under consideration are
identical to the facts in AY 2006-07, the Assessing Officer himself has
relied upon the finding recorded in the assessment order for AY 2006-
07 for rejecting the books of account and for estimating the profit. The
CIT(A) also relied upon his own order for AY 2006-07. Therefore, we do
not find any justification to take a view different than the view taken by
the ITAT in AY 2006-07. Respectfully following the same, we uphold
the order of learned CIT(A) on this point and reject ground Nos.1, 1.1 &
1.2 of the Revenue's appeal.
8. Ground No.2 of the Revenue's appeal is against the deletion of
the disallowance of `19,06,59,918/- made on account of royalty
payment by the assessee company to its 100% holding company viz.,
M/s Yamaha Motor Co.Ltd., Japan. With regard to this ground also, the
facts are identical to AY 2006-07. The Assessing Officer himself in
paragraph 5.1 of the assessment order recorded the following finding:-
"5.1 For the detailed reasoning given in the assessment
year 2006-07, the royalty paid, was disallowed and added
back to the returned income, by holding that the same was
paid to the holding company of the assessee, which was
owning the entire 100% of the assessee's shares, thereby
indicating that the said royalty was nothing but a
colourable device to reduce profits by making a payment
to own-self."
9. Thus, it is evident that the Assessing Officer, relying upon the
finding in the assessment order for AY 2006-07, disallowed the royalty
payment of `19,06,59,918/-. On appeal, the CIT(A) allowed the relief
following the appellate order for AY 2006-07. The Revenue's appeal
for AY 2006-07 on this ground was rejected by the ITAT with the
following finding:-
10 ITA-2663 & 2664/D/2012
"24. We do not find any error, as seen above, in the order
of the ld.CIT(A) in this regard. It cannot be gainsaid that
any expenditure incurred wholly and exclusively for the
purposes of business is an allowable expenditure, even
though, as in the present case, the payment is made to a
100% shareholding company of the payer. That apart, u/s
40A(2) of the Act, it is only the fair value of such
expenditure, which is allowable. Besides, the arm's length
price provisions take care of the payment in such
transactions being at arm's length, as has been done in the
present case by the TPO. The Assessing Officer proceeded
merely on assumptions, surmises and conjectures which,
undeniably, can never substitute hard evidence, which is
entirely absent here. Neither Section 40(a)(i) nor Section
2(22)(e) of the Act are applicable, as observed. Therefore,
finding no merit therein, Ground No.4 taken by the
department stands rejected."
10. When admittedly the facts of the year under consideration are
identical to the assessment year 2006-07, we do not find any
justification to take a view different than the view taken by the ITAT for
AY 2006-07. We, therefore, respectfully following the above finding of
the ITAT in assessee's own case, uphold the order of learned CIT(A) on
this point and reject ground No.2 of the Revenue's appeal.
11. Ground No.3 of the Revenue's appeal is against the set off of
brought forward business losses from AY 2001-02 onwards and
unabsorbed depreciation from AY 1997-98 onwards. On this point also,
the Assessing Officer relied upon the finding of the Assessing Officer
for AY 2006-07 and again, the CIT(A) allowed the relief following his
own order. On appeal, the learned Judicial Member decided the issue
in favour of the assessee by rejecting the Revenue's ground of appeal.
However, the learned Accountant Member did not agree with the same
and proposed that this issue needs to be set aside to the file of the
Assessing Officer because examination of relevant facts is required.
11 ITA-2663 & 2664/D/2012
The matter was referred to the Third Member to give his opinion on the
following question:-
"1. Whether the issue challenging the CIT(A)'s action in
allowing the assessee's claim of carried forward and set off
brought forward losses and unabsorbed depreciation
(Ground No.5 in the Department's Appeal in ITA
No.3166/Del/2011) requires to be remitted to the Assessing
Officer to examine the record maintained under the
Companies Act and record a finding as to the percentage
of shares held by M/s Yamaha Motor Co., Japan in the year
of occurrence of loss and in the year of setting off of loss."
12. The Third Member, vide his order dated 29th April, 2014, agreed
with the learned Judicial Member with the following finding:-
"2.5. Now I espouse the issue for my opinion on merits.
From the above conflicting opinions of my ld. Brothers,
one thing is vivid that both of them have agreed on the
legal prescription of sec. 79 of the Act by holding that the
benefit of set off of the brought forward loss from
assessment year 2001-02 be allowed if the claim of the
assessee about YMC holding 74% of the share capital on
26.5.2000 turns out to be correct. Whereas the ld. JM
upheld the order of the CIT(A) by accepting that, in fact,
YMC held 24% of the shares of the assessee's company on
26.5.2000, the ld. AM remitted the matter to the file of the
A.O for necessary verification in this regard with suitable
direction. The question which looms large before me is as
to whether the contention of the assessee about YMC
holding 74% shares on 26.5.2000 should be accepted
without any further verification or the matter should be
sent back to the Assessing Officer for a de novo
examination. In this regard, it is relevant to note that when
the A.O raised query as to why brought forward loss should
not be disallowed, the assessee submitted its reply, the
relevant part of which is on page 536 of the paper book.
The following is the extract of the reply advanced by the
assessee before the Assessing Officer :
"In this regard, we would like to mention that initially the
Assessee Company was incorporated as a 50:50 joint
12 ITA-2663 & 2664/D/2012
venture between Escorts Ltd. and Yamaha Motor Co., Ltd,
Japan (YMC) in 1995. On may 26, 2000, 64,80,000 equity
shares of the Assessee Company representing 24% of its
total issued and paid up equity share capital were
transferred by Escorts Ltd. in favour of YMC. Accordingly,
with effect from May 26, 2000, the equity shares of the
Assessee Company were held by 70,20,000 equity shares
representing balance 26% of the total issued and paid up
equity share capital of the Assessee Company, and the
Assessee Company became a wholly owned subsidiary of
YMC. Accordingly, from the assessment year 2001-2002
onwards, the Assessee Company is entitled to claim
accumulated losses, since with effect from May 26, 2000,
(at all times) more than 51% of the total issued and paid
up equity share capital of the Assessee Company is being
held by YMC."
2.6. It can be clearly seen from the above reply that the
assessee made it unequivocal that 64,80,000/- equity
shares of the assessee company, representing 24% of its
total paid up capital, were transferred by M/s Escorts Ltd.
in favour of YMC Japan on 26.5.2000 and as such the total
shareholding of YMC Japan swell to 74% on that date.
Remaining 26% were claimed to have been acquired by
YMC on 15.6.2001. Despite this categorical submission, the
Assessing Officer chose to brand the assessee's
explanation as a `cooked up story' without showing as to
how the same was incorrect. There is no semblance of any
verification having been carried out by the AO to examine
the correctness of the assessee's version. The assessee
reiterated its stand before the ld. CIT(A) through written
submissions, the relevant part of which is available on
page 775 of the paper book. It was again stated that
on26.5.2000, 24% of the shareholding of the assessee
company was transferred by M/s Escorts Ltd. in favour of
YMC Japan. The ld. CIT(A), instead of directly acting on the
same, chose to seek remand report from the Assessing
Officer by sending such written submissions to him. The
Assessing Officer dealt with this issue in his first remand
report with the following observations as are extracted
below from page 823 of the paper book:
" No further comment is being made now on this issue, as
all contentions of assessee need an independent
adjudication by the ld. CIT(A)."
13 ITA-2663 & 2664/D/2012
2.7. It can be seen that when the position about YMC
acquiring 24% of shares from M/s Escorts Ltd. on 26.5.2000
was restated in remand proceedings, the AO did not make
any adverse comment on the same. When the assessee
submitted its rejoinder to the AO's remand report, the ld.
CIT(A) once again sent such rejoinder to the AO for a
second remand report. The Assessing Officer made the
following comments in the second remand report, as are
available on page 836 of the paper book :
"VIII. Set-off of accumulated losses/unabsorbed
depreciation (Ground No. 11)
No further comments is required on this issue, as the
assessee has only reiterated its earlier contentions, which
has been duly answered to in the Assessment Order."
2.8. There is no dispute on the legal position that on YMC
holding 74% shares of the assessee company on 31.3.2001
and continuing to hold so up to 31.3.2006, there can be no
bar on the claim of set off of brought forward loss for the
assessment year 2001-02 against the income for the
assessment year 2006-07. From the above narration of
facts, it is palpable that the Assessing Officer got three
opportunities to examine the assessee's contention about
YMC acquiring further 24% shares on 26.5.2000 apart from
its original holding of 50%., firstly during the course of
assessment proceedings and then during two remand
proceedings. The assessee's pointed submission in this
regard came to be rejected by the Assessing Officer during
the original assessment proceedings without any reason
worth the name and the same position continued during
the two remand proceedings as well. It is trite that when an
assessee furnishes an explanation on a specific query, the
same is treated as accepted unless some inconsistencies
are found by the AO on its vetting or the assessee fails to
substantiate the same on being called upon to do so. If the
Officer does not dispute the correctness of the specific
explanation tendered by the assessee, the same is
considered as correct and binding of the AO. It is totally
impermissible to dub the explanation given by the
assessee as a cooked up story without any evidence to the
contrary. Here is a case in which the Assessing Officer got
three opportunities of examining the assessee's
contention in this regard. If he was not satisfied with the
same, he was duty bound to bring the investigation to a
14 ITA-2663 & 2664/D/2012
higher level and call for further corroboration. Having not
done so, he could not have characterized the assessee's
explanation as false. Even if it is presumed without
agreeing that the AO was under some misconception qua
the assessee's explanation during the assessment
proceedings, he could have verified the same when
remand reports were called for. Restoration to the A.O.
would have been justified if despite his requiring the
assessee to lead further evidence in support of its
explanation, the assessee had failed to do so and the ld.
CIT(A) had accepted the assessee's contention without
getting comments from the AO. But in the facts of the
instant case, the Assessing Officer did not raise any further
query on the submissions repeatedly made before him in
this regard. Even the ld. DR has brought no material on
record to demonstrate any fallacy in the explanation
tendered on behalf of the assessee. Since the ld. CIT(A)
has accepted the same explanation as was given to the AO
and both the ld. Members agree that the claim of the
assessee is acceptable if such explanation is correct, I am
of the considered opinion that no useful purpose will be
served in once again sending the matter back to the AO for
carrying out the examination of the claim for the fourth
time. I, therefore, agree with the opinion expressed by the
ld. JM on the first question."
13. In view of the above, the issue raised by the Revenue vide
ground No.3 is also covered in favour of the assessee by the decision
of Third Member of ITAT. Respectfully following the same, we uphold
the order of learned CIT(A) on this point and reject ground No.3 of the
Revenue's appeal.
2004-05 :-
ITA No.2664/Del/2012 Revenue's appeal for AY 2004- :-
14. In this year, the Revenue has raised the following grounds:-
"1. On the facts and in the circumstances of the case
and in law the learned CIT(A) erred in holding that the
rejection of books of account by the AO was not proper and
thereby deleting the addition of Rs.1,17,69,78,000/- made
by the AO on estimated profits.
15 ITA-2663 & 2664/D/2012
1.1 On the facts and in the circumstances of the case
and in law the learned CIT(A) erred in following the
appellate order in assessee's own case for AY 2006-07
without appreciating the fact that the Department has filed
appeal before the Hon'ble ITAT against the said appellate
order for the assessment year 2006-07.
1.2 On the facts and in the circumstances of the case
and in law the learned CIT(A) erred in deleting the addition
of Rs.1,36,51,37,400/- without appreciating the fact that
the Assessing Officer has given due allowance for the
change in product mix, competition and the assessee's
smaller scale of operation while estimating the average
profit of 4400/- per Motor Cycle sold and that logical and
acceptable comparison has been made with M/s Hero
Honda Motors Ltd. whose products are identical to that of
the assessee i.e. Motor Cycles and both these companies
are operating in the same market condition i.e. Indian Two
Wheeler Market.
2. On the facts and in the circumstances of the case
and in law the learned CIT(A) erred in deleting the
disallowance of Rs.18,23,80,966/- made on account of
royalty payments by the assessee company to its 100%
holding company viz M/s Yamaha Motor Co.Ltd., Japan
simply following its own order in the assessee's own case
for the assessment year 2006-07 without appreciating the
fact that there was no evidence and details of actual
services rendered by the said holding company to the
assessee company, in lieu of the royalty.
3. On the facts and in the circumstances of the case
and in law the learned CIT(A) erred in allowing the claim of
the assessee in respect of carry forward and set off of
brought forward business losses from AY 2001-02 onwards
and unabsorbed depreciation from AY 1997-98 onwards.
4. The appellant craves leave for reserving the right to
amend, modify, alter, add or forego any ground(s) of
appeal at any time before or during the hearing of appeal."
15. Ground No.1 & 1.1 are identical to ground Nos.1 & 1.1 of the
Revenue's appeal for AY 2003-04. Ground No.1.2 appears to be
misconceived because in this year, the Assessing Officer made the
16 ITA-2663 & 2664/D/2012
addition of `1,17,69,78,000/- on account of estimated profits which
was deleted by the CIT(A) and deletion is challenged by the Revenue in
ground No.1 & 1.1. In ground No.1.2, the Revenue has challenged the
deletion of addition of `1,36,51,37,400/-. No such addition was made
by the Assessing Officer in this year. So, the question of deletion of
above addition in AY 2004-05 did not arise. The addition of
`1,36,51,37,400/- was made by the Assessing Officer in AY 2003-04
and which was deleted by the CIT(A) in that year. It seems that
grounds for both the years have been drafted simultaneously on 29th
May, 2012 and, therefore, in AY 2004-05, by mistake, ground No.1.2 is
raised. So far as ground Nos.1 & 1.1 are concerned, the same are
rejected for the detailed discussion in paragraph Nos.5 to 7 above.
Ground No.1.2 is rejected being misconceived and not arising from the
order of the CIT(A) for AY 2004-05.
16. Ground No.2 is identical to ground No.2 for AY 2003-04 and, for
the detailed discussion in paragraph Nos.8 to 10 above, this ground is
rejected.
17. Ground No.3 is similar to ground No.3 for AY 2003-04 and, for the
detailed discussion in paragraph Nos.11 to 13 above, this ground of the
Revenue's appeal is rejected.
18. In the result, both the appeals of the Revenue are dismissed.
Decision pronounced in the open Court on 24th June, 2014.
Sd/- Sd/-
SIDHU)
(H.S. SIDHU) (G.D.AGRAWAL)
JUDICIAL MEMBER VICE PRESIDENT
Dated : 24.06.2014
VK.
17 ITA-2663 & 2664/D/2012
Copy forwarded to: -
1. Appellant : Assistant Commissioner of Income Tax,
Circle-
Circle -18(1), New Delhi.
2. Respondent : M/s Yamaha Motor India Pvt.Ltd.,
First Floor, The Great Eastern Centre,
70, Nehru Place, Behind IFCI Tower,
New Delhi 110 019.
3. CIT
4. CIT(A)
5. DR, ITAT
Assistant Registrar
|
