Federal Mogul Goetze (India) Ltd. Vs ACIT (ITAT Delhi)
Summary: The Delhi Bench of the Income Tax Appellate Tribunal considered two appeals filed by Federal Mogul Goetze (India) Ltd. for Assessment Year 2011-12. The first appeal, ITA No.1909/Del/2016, challenged the assessment order dated 30.01.2016 passed under sections 143(3) read with 144C of the Income-tax Act, 1961, pursuant to the Dispute Resolution Panel’s directions. The assessment involved, inter alia, an adjustment of Rs.5,24,63,542/- on account of arm’s length price and disallowance of advances written off of Rs.52,53,000/-. The second appeal, ITA No.3186/Del/2017, challenged the rectification order dated 27.03.2017 under section 154 read with sections 143(3) and 144C, by which Rs.10,40,25,237/- was added under section 40(a)(i).
In the first appeal, the Tribunal dealt with the additional grounds relating to the write-off of advances and MAT credit after the Delhi High Court had directed the Tribunal to adjudicate those issues. The assessee submitted that advances, earnest money deposits and security deposits amounting to Rs.52,53,000/- had been made in the ordinary course of business and subsequently written off when they became irrecoverable. It sought deduction under section 36(2), alternatively under section 37(1) as business loss. Reliance was placed on the Supreme Court decision in T.R.F. Ltd. v. CIT, reported in 323 ITR 397 (SC). The Revenue submitted that complete details had not been furnished and that the assessee had failed to establish that the amounts were incurred for business purposes.
