Tribunal held to re-consider Warranty Claim by MRF Tyres in terms of Supreme Court decision

MRF Limited Vs DCIT (ITAT Chennai)

Conclusion:  Assessee had given the scientific basis for the warranty in respect of tyres sold to the truck segment and non-truck segment and further the issue was pending with the AO because AO had to verify the details in term of the decision of the Supreme court in the case of Rotork Controls India Pvt. Ltd., vs. CIT,314 ITR 62(SC). Therefore,  the matter need to go back to the file of AO.

Held: Assessee was engaged in the business of manufacturing of tyres. It was noted that this matter travelled up to ITAT and ITAT in ITA Nos.641 to 645/Chny/2018 dated 09.05.2018 set aside the matter back to the file of the AO to follow the principle laid down by Hon’ble Supreme Court in the case of Rotork Controls India Pvt. Ltd., vs. CIT,314 ITR 62(SC). AO while giving appeal effect to the order of ITAT passed order and confirmed the disallowance reiterating the original findings. Aggrieved assessee preferred appeal before CIT(A). CIT(A) adjudicated the issue and confirmed the disallowance. On appeal before Tribunal. It was noted from the order of CIT(A) that neither the AO nor CIT(A) had examined the details filed before them during the set aside assessment proceedings or even remand proceedings by AO and simply noted that assessee could not establish that all the conditions prescribed in the decision of Hon’ble Supreme Court in the case of Rotork Controls India Pvt. Ltd., were satisfied. The authorities below had  neither examined the issue nor gone into the details and just simpliciter confirmed the disallowance. Assessee could not produce before the AO or the CIT(A) as to how the provision was made based on historical trend and a reliable estimate as held by Hon’ble Supreme Court. Assessee had filed the details but there was no mechanism to verify the same and accordingly, the matter need to go back to the file of AO.

FULL TEXT OF THE ORDER OF ITAT CHENNAI

These appeals by the assessee are arising out of the common order of Commissioner of Income Tax (Appeals)-12, Chennai in ITA Tr. Nos.192, 193 & 194/CIT(A)-9/2018-19 dated 31.07.2019. The assessments were framed by the DCIT, LTU-II, Chennai for the assessment years 2011-12, 2012-13 & 2013-14 u/s.143(3) r.w.s. 92CA(3) of the Income Tax Act, 1961 (hereinafter the ‘Act’) vide orders of different dates 19.03.2014, 31.12.2014 & 29.12.2016 respectively.

Please become a Premium member. If you are already a Premium member, login here to access the full content.