MRF Limited Vs DCIT (ITAT Chennai)
The Chennai Bench of the Income Tax Appellate Tribunal disposed of the assessee’s appeals for Assessment Years 2017-18, 2018-19 and 2019-20 by a consolidated order, holding that the common issues would be decided for the lead year, A.Y. 2017-18, with the conclusions applying mutatis mutandis to the later years where the facts were similar.
The assessee, engaged in manufacturing and selling automobile tyres, tubes, flaps and other rubber products, challenged several additions and disallowances arising from assessments under section 143(3) read with section 144C(13) of the Income-tax Act, 1961. For A.Y. 2017-18, the assessment included, among other adjustments, an arm’s length price adjustment, disallowance relating to retention money, forward contract premium, section 14A disallowance, warranty provision, expenditure concerning MRF SG Pte. Ltd., club and entrance fees, employees’ contribution to ESI, deduction claimed under section 35(2AB), DDT credit and an additional section 115-O(1A) claim.
On retention money, the Tribunal followed its earlier decision in the assessee’s own case and held that, under the mercantile system followed by the assessee, the claims were in accordance with law. The Assessing Officer was directed to delete the addition and recompute the income.
On forward contract premium charges, the Tribunal again followed its earlier decision in the assessee’s own case. It allowed the claim and directed deletion of the addition, with consequential recomputation. The earlier decision referred to verification concerning foreign-currency loans and section 43A, and also held that premium charges on foreign currency loans were allowable over the contract period.
