TOSHIBA INDIA PVT LTD v. DEPUTY COMMISSIONER OF INCOME TAX

1. Admit. ITA 173/2018&ITA 591/2018 p^gg/of[3] 2019:DHC:7396-DB

2. These are two appeals by the same Assessee. Appeal No. 173/2018 is directed against an order dated 1®' September 2017 passed by the Income Tax Appellate Tribunal (TTAT') in ITA No. 1357/Del/2017 for the Assessment Year(AY)2012-13. Appeal No.591/2018 is directed against an order dated 30'*^ November 2017 passed by the ITAT in ITA NO. 6531/Del/2017 for the Assessment Year 2013-14.

3. A common question oflaw that arises in both appeals is as under: "Did the ITAT err in not allowing the deduction for interest paid on customs duty?"

4. Relevant to the above question, are the admitted facts are that the Appellant imports completely built units as well as parts ofLCD/LED TVs from Toshiba Singapore Pvt. Ltd. A search was conducted by the Directorate ofRevenue Intelligence('DRI')on 23'"'^ July 2014 and following which a show cause notice was issued to the Assessee regarding wrongfully availing higher concession ofimport duty. The Assessee filed an application before the Settlement Commission for Customs and Central Excise. By an th order dated 24 June 2016, total demand of customs duty and penalty an interest was settled. These amounts were paid by the Assessee in March 2016 and they were accordingly booked in the financial statements of the financial year 2015-16 relevantto AY 2016-17.

5. The disallowance ofthe above interest componentis the subject matter of the orders ofthe ITAT for the two AYs under consideration.

6. Mr. Ruchir Bhatia, learned senior standing counsel for Revenue has ITA 173/2018&ITA 591/2018 Page2of[3] produced a letter dated 13^^ November 2018 written to him by the Deputy Commissioner of Income Tax with written instructions on the stand to be taken by the Revenue in respect ofthe above issue. The stand taken is that the above interest component would be allowed as a deduction under Section 43B ofthe Act, in the year in which it was actually paid, which is financial year 2015-16 relevant to AY 2016-17 subject to the provisions of Section 37 ofthe Act.

7. In that view ofthe matter,the question is answered ofby holding thatthe Assessee would be allowed the above interest payment as deduction in AY 2016-17.ITA 591 of2018 is accordingly disposed of. / ^ OrderinITA 173of2018

8. Admit.

9. The following questions are framed for consideration: (i)Is there any international transaction involving the Assessee and its Associated Enterprises forthe year in question i.e. AY 2012-13?

(ii) Was the ITAT justified in remanding to the TPO the issue concerning determination ofthe ALP ofthe AMP expenses.

10. ITA 173/2018 is set downfor hearing on 27^*^ September2019 s.muka6ohar,j. J may 15,2019/«J LS.MEHTA,J.