M/S Jay Bharat Maruti Ltd. vs Commissioner Of Income Tax
2010 Latest Caselaw 924 Del

             THE HIGH COURT OF DELHI AT NEW DELHI

%                                           Judgment delivered on: 17.02.2010

+      ITA 628/2009

M/S JAY BHARAT MARUTI LTD.                                   ..... Appellant

                                        - versus -


COMMISSIONER OF INCOME TAX                                   ..... Respondent

Advocates who appeared in this case:-

For the Appellant            : Mr Santhanam
For the Respondent           : Mr Sanjeev Sabharwal

CORAM:
HON'BLE MR JUSTICE BADAR DURREZ AHMED
HON'BLE MR JUSTICE SIDDHARTH MRIDUL

1. Whether Reporters of local papers may be allowed to see the judgment?

2. To be referred to the Reporter or not?

3. Whether the judgment should be reported in Digest?

BADAR DURREZ AHMED, J (ORAL)

1. We have heard the counsel for the parties. The assessee is in appeal

before us against the order of the Income-tax Appellate Tribunal dated

15.04.2004 in respect of the assessment year 1995-96. One of the issues

sought to be raised is with regard to the deduction claimed by the assessee

under Section 80-I of the Income-tax Act, 1961 (hereinafter referred to as

'the said Act') on interest received on letters of credit and bank guarantee

money. A similar claim has been made by the assessee in respect of the

interest earned on deposits, under sales tax rules, in Kisan Vikas Patras,

interest received on income-tax refund as also the interest received on inter-

corporate deposits. The Tribunal has decided these issues against the

assessee and, therefore, the assessee is in appeal before us. We may

straightaway say that these issues no longer survive after the decision of this

court in Commissioner of Income-tax v. Sriram Honda Power Equip: 289

ITR 475, wherein the said issue has been decided in favour of the revenue

and against the assessee. Consequently, these issues do not arise any further

and the decision of the Tribunal is correct.

2. The second aspect of the matter is with regard to travelling expenses,

which have been incurred by the assessee in connection with the purchase of

some plant and machinery. The Assessing Officer had claimed these

expenses on the revenue account. However, the Assessing Officer treated

the same as 'capital expenditure' and disallowed the same. This was upheld

by the Commissioner of Income-tax (Appeals) as well as by the Income-tax

Appellate Tribunal. The Tribunal held the said expenditure to be directly

connected with the purchase of the plant and machinery and, therefore, the

same was to be treated as capital expenditure. We see no reason to interfere

with this finding.

3. The third issue sought to be canvassed before us pertains to the

deduction claimed under Section 43-B of the said Act. The said amount was

disallowed by the Assessing Officer but allowed by the Commissioner of

Income-tax (Appeals) and was confirmed by the Tribunal. The Tribunal,

while considering the appeal of the revenue on this aspect of the matter,

rejected the revenue's contention and upheld the views of the Commissioner

of Income-tax (Appeals) that the petitioner was entitled to deduction under

Section 43-B of the said Act. The Tribunal, after following the decision of

the Supreme Court in the case of Berger Paints India Ltd v. Commissioner

of Income-tax, Calcutta: 266 ITR 99, concluded that the details of the

additions of the said amount of Rs 51,06,391/- on account of excise duty

paid by the assessee was correct. The Tribunal, however, went further to

observe that as the said amount of Rs 51,06,391/- was also loaded on the

closing stock of the year in question, the opening stock of the succeeding

year would have to be reduced so as to avoid a double deduction.

4. The learned counsel for the appellant submitted that a rectification

application had been moved before the Tribunal being M.A.

No.404/Del/2004, inter alia, pointing out that the Tribunal had committed a

mistake in directing the Assessing Officer to reduce the amount of excise

duty from the opening stock of the next year, while allowing the deduction

of Rs 51,06,391/- on account of excise duty paid. However, the Tribunal, by

its order dated 31.08.2005, rejected the contention of the appellant / assessee

and once again observed that if the amount had been loaded on the closing

stock, in order to avoid double deduction, the direction was necessary.

5. Now, before us, the learned counsel for the appellant / assessee

submits that the finding of the Tribunal that the sum of Rs 51,06,391/- had

been loaded on the closing stock is factually incorrect and, therefore, there

was no need for deducting the said sum from the opening stock of the

succeeding year. We feel that this aspect of the matter can be adequately

addressed by directing the Assessing Officer to verify as to whether the said

amount of excise duty paid during the year had been loaded on the closing

stock or not. In case it was loaded, then the observations of the Tribunal

would stand. However, if it was not so loaded, then there would be no need

for reducing the said amount from the opening stock of the succeeding year.

6. In view of the foregoing discussion, we find that no other issue

remains to be considered by us. The appeal stands disposed of in terms of

the observations made above as also the direction to the Assessing Officer.

BADAR DURREZ AHMED, J

SIDDHARTH MRIDUL, J February 17, 2010 dutt