Scania Commercial Vehicles India Private Limited Vs DCIT (ITAT Bangalore)
Bangalore ITAT granted substantial relief to the Assessee on multiple corporate tax issues after noting that transfer-pricing adjustments had already been resolved under MAP.
For AY 2017-18, the Tribunal deleted the disallowance of depreciation on fixed assets holding that ownership, user & actual cost were undisputed and mere suspicion about source of funds could not justify denial of depreciation. The addition on account of warranty provision was held to be wrongly computed; the matter was restored to the AO to allow deduction on a scientific & correct basis in line with settled law. Rental income from leasing of trailers & sub-letting of exhibition space was directed to be taxed as business income, observing that mere deduction of TDS u/s 194I does not automatically convert such receipts into income from house property. The AO was also directed to allow correct carry-forward of losses.
For AY 2018-19, the Tribunal held that no disallowance u/s 40(a)(ia) could be sustained without proper verification where lower-deduction certificates existed, and restored the issue to the AO for fresh verification. A massive addition of ₹198 crore u/s 56(2)(viib) on share premium received from a non-resident holding company was deleted, holding that the provision applies only where consideration is received from a resident. Ad-hoc disallowances on vehicle settlement costs, residual value obligation & technical goodwill repairs were deleted, noting that detailed evidence was already on record and partial disallowance without rejecting books was impermissible. On depreciation of leased ethanol buses, the issue was restored to the AO to verify actual use, holding that once lease income is taxed, depreciation cannot be denied mechanically.
Overall, the appeals were allowed / partly allowed with significant deletions and remands, reinforcing that ad-hoc additions, jurisdictional overreach & mechanical disallowances cannot survive appellate scrutiny.
FULL TEXT OF THE ORDER OF ITAT BANGALORE
