Lupin Internatioal, Mumbai vs Department Of Income Tax

आयकर अपीलीय अिधकरण, अिधकरण ए खंडपीठ मुंबई INCOME TAX APPELLATE TRIBUNAL,MUMBAI - A BENCH सव ौी आई पी बंसल , याियक सदःय एवं राजे ि, लेखा सदःय Before S/Sh. I P Bansal,Judicial Member & Rajendra,Accountant Member आयकर अपील सं/.ITA No.5553/Mum/2009,िनधा िनधा रण वष /Assessment Year-1998-99 ITO 19(2)(3), M/s Lupin International, 159, CST R.No.311, 3rd Floor, Road, kalian, Santacruz (E), Piramal Chambers, Lalbaug, Parel, Vs Mumbai-98 Mumbai-400012 PAN:AABFL2573J

(अपीलाथ$ /Assessee) (ू&यथ$ / Respondent) राजःव क' ओर से/ Revenue by :Shri Sachchidanand Dube िनधा )रती ओर से/Assessee by :Ms. Vasanti Patel सुनवाई क' तार+ख/ Date of Hearing : 09- 04 -2015 घोषणा क' तार+ख / Date of Pronouncement : 09-04-2015 आ यकर अ िधिनयम, िधिनयम 1961 क' धारा 254 ( 1 ) के अ तग त आदे श Order u/s.254(1)of the Income-tax Act,1961(Act) लेखा सदःय राजे ि के अनुसार PER RAJENDRA, AM-

Challenging the order dt.04.08.2009 of the CIT(A)-XIX, Mumbai, Assessing Officer (AO) has raised following Grounds of Appeal:

1.On the facts and in the circumstances of the case and in law, the Learned CIT(A) has erred in deleting the addition of Rs.1,32,08,738/-on account of discount charges made by A.O.

2.On the facts and in the circumstances of the case and in law, the learned CIT(A) failed to appreciate that the assessee firm had not been able to prove that the discounting charges have been paid wh o lly and exclu sively fo r the p u rp o se o f th e bu siness of th e assessee.

3.On the facts and in the circumstances of the case and in law, the learned CIT(A) failed to appreciate that the assessee was given opportunity to produce the copies of bills of discounting/finance charges which were not produced at the time of original assessment as well as at the time of fresh assessment.

4.The appellant prays that the order of the CIT(A) on the above ground be set aside and that of the AO be restored.

5.The appellant craves leave to amend or alter any ground or add a new ground which may be necessary.

2.Assessee-firm,engaged in the business of trading and investment in shares,filed its return of income on 02.11.1998,declaring total income of Rs. (-)1,33,47,190/-.The AO completed the assessment u/s.143(3) of the Act on 18.01.2001,determining the income of the assessee at Rs. (-)58,538/-.The AO disallowed assessee's claim of interest expense of Rs.1.32 Crores.Matter travelled up to the Tribunal and vide its order dated 26.06.2007,Tribunal restored back the matter to the file of the AO with following direction:

"If the position is that the assessee is continuously offering the same amount for taxation in earlier years, the principle of consistency would not permit to take a different view.However,if the facts of the instant case are similar those of M/s.Delta International and M/s.Alpha Corporation then the issue would require examination a t t h e A . O ' s e n d i n t h e l i g h t o f t h e d i r e c t i o n c o n t a i n e d i n s u c h order.We,therefore,set aside the impugned order and restore the matter to the file of the AO,who will decide this matter afresh in the light of our above observations."

However,the AO disallowed the discounting charges of Rs.1.32 Crores.

ITA/5553/Mum//2009,AY.1998-99-LI

3.Aggrieved by the order of the AO,the assessee preferred an appeal before the First Appellate Authority (FAA).Before him it was contented that the finding of the AO were in contradiction with the directions of the Tribunal,that the it had actually incurred finance charges and other expenses,that bill discounting transactions were in the nature of financial transactions,that all the transactions were routed through banking channels,that it had repaid the principle amount of funds borrowed from time to time,that it had produced the necessary documentary evidences in support of the claim,that the discounting charges were in nature of interest paid on monies borrowed,that same had to be allowed as a deduction u/s.36(1)(iii)of the Act, that the facts in the present appea1 were identical to the case of M/s. Delta International,that under identical circumstances disallowance of discounting charges/finance charges had been deleted in group cases by the FAA.After considering the submissions of the assessee and the assessment order,he held that that the issue for the appeal under consideration was identical to the facts of the c a s e o f M / s . D e l t a i n t e r n a t i o n a l - a g r o u p c o n c e r n , t h a t w h i l e d e c i d i n g t h e a p p e a l o f t h a t a s s e s s e e f o r t h e A Y . 1 9 9 6 - 9 7 the disallo - wance of discounting charges was deleted.Following the same,the FAA allowed the appeal filed by the assessee.

4.Before us,Departmental Representative(DR) left the issue to the discretion of the Bench. Authorised Representative (AR)stated that in the case of Delta International and East West Corporation and other group concerns the Tribunal had decided the identical issue in favour of the assessees.He referred to the orders of the Tribunal delivered on 25.09.2013, 24.07.2013 (ITA/5340 & others/Mum/2011-AY.1997-98 and others.-Paper book pg.6-12.)

5.We have heard the rival submissions and perused the material before us.We find that the issue of discounting charges have been extensively deliberated upon by the Tribunal in the group cases and it had dismissed the appeals filed by the AO.s for the AY.1997-98.We would like to reproduce the decisions of Delta International,delivered by the Tribunal on 25.09.2013(supra) and it reads as under:

"Ground Nos. I to 3 relate to disallowance of discounting charges/ interest of Rs. 46, 32,

752.Briefly stated the facts of the case are that the original assessment in this case was completed, making addition, inter-alia, of Rs.46,32,752/- on account of discounting charges/interest.When the matter finally came up before the Tribunal, the Tribunal vide order dated 28.11.2006 passed in ITA No.639/M12004 restored the issue to the file of A.O. with a direction to examine as to whether such discount/interest was incurred by the assessee in carrying on of its business. This order was passed by the Tribunal by following another order by the Tribunal in the case of another group concern of the assessee the"Fellowship corporation vs.JCIT[ITA No.4352/MumI2001]. Pursuant to the direction given by the Tribunal, the Assessing Officer repeated the addition towards finance charges in the present case. The learned CIT(A), however deleted the said addition. The Revenue has come up in appeal against such deletion.The ld. AR has brought to our notice that the issue under consideration is squarely covered with the findings of the co-ordinate bench of the tribunal given in the own case of the assessee for A.Y.1996-97 passed in ITA No.5028/Mum/2009 vide order dt.24.07.2013. The operating part of the order,for the sake of convenience is reproduced as under:

"From the body of the assessment order it can be seen that the Assessing Officer simply repeated the assessment and first appellate authority's order without discussing anything new about the matter on which the Tribunal gave direction.He simply noticed that the assessee did not produce any additional evidence to co-relate the financing charges with the business expenditure.As against that, the learned AR invited our attention towards various details furnished before the Assessing Officer during the course of such fresh proceedings. First letter of the assessee in the fresh proceedings is dated 05.09.2006 by which it furnished Fund flow statement, Balance sheet and profit and loss account for the year in question and for the earlier year,details of discount charges paid,statement of account, parties in support of receipt payment of discounting charges, copies of account of parties tracing the original funds, user of funds and repayment of charges with discounting charges etc. Another letter was filed before the Assessing Officer on 2 ITA/5553/Mum//2009,AY.1998-99-LI

24.11.2006 producing complete books of account, details of finance charges paid with bifurcation of parties and rate of interest and a copy of assessment order passed by the A.O. for the preceding year in which similar deduction was allowed.The present assessment order was passed by the AO on 18.12.2006 after filing of the above referred documents by the assessee.It is surprising that the Assessing Officer did not make a whisper, in the assessment order of such details having been filed by the assessee What to talk of adversely commenting ,the A.0.even did not bother to incorporate or discuss such facts in the assessment order. This fact has been elaborately considered by the learned CIT(A), the discussion on which has been made in par as 1.10 to 1.14 of the impugned order. On the appreciation of the entire material /evidence placed by the assessee before the A.O. in the fresh round of proceedings,the learned CIT(A) has recorded a categorical finding that these expenses were incurred during the course of business. Apart from relying on the assessment order, the learned Departmental Representative could not controvert the findings given by the learned CIT(A)in support of the grant of deduction. We, therefore, uphold the impugned order in deleting the said addition."

3.Ld. D.R. has not brought before us any distinguishable fact which may justify departure from the flndings of the co-ordinate bench of the tribunal given for the preceding year based on similar facts and circumstances. So respectfully following the findings of the co ordinate bench of the tribunal for the earlier year, the issue is decided against the Revenue and the order of the Id. CIT(A) deleting the disallowance relating to the issue is upheld."

As the facts of the case under appeal and that of Delta International are identical,therefore, respectfully,following it we are upholding the order of the FAA.Effective ground of appeal is decided against the AO.

As a result,appeal filed by the AO stands dismissed.

फलतः िनधा )रती अिधकार+ ;ारा दा<खल क' गई अपील नामंजूर क' जाती है .

Order pronounced in the open court on 9th,April,2015. आदे श क' घोषणा खुले यायालय मA Bदनांक 9 अूैल,2015 को क' गई ।

Sd/- Sd/- आई पी बंसल/I (आई ल P Bansal) (राजे ि / RAJENDRA) याियक सदःय / JUDICIAL MEMBER लेखा सदःय / ACCOUNTANT MEMBER मुंबई/Mumbai,Bदनांक/Date:09.04.2015 SK आदे श क' ूितिलFप अमेFषत/Copy षत of the Order forwarded to : 1.Appellant /अपीलाथ$ 2. Respondent /ू&यथ$

3.The concerned CIT(A)/संबH अपीलीय आयकर आयुI, 4.The concerned CIT /संबH आयकर आयुI

5.DR "A" Bench, ITAT, Mumbai /Fवभागीय ूितिनिध, ए खंडपीठ,आ.अ. याया.मुंबई

6.Guard File/गाड फाईल स&याFपत ूित //True Copy// आदे शानुसार/ BY ORDER,

उप/सहायक पंजीकार Dy./Asst. Registrar आयकर अपीलीय अिधकरण, मुंबई /ITAT, Mumbai.

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