CIT Vs. DENSO HARYANA (P) LTD

JUDGEMENT

(1.) The revenue is in appeal against the order dated 29-4-2009 passed by the Tribunal in ITA No. 1952/Del/2008 relating to the assessment year 2003-04.

(2.) The Assessee was before the Tribunal in the aforesaid appeal being aggrieved by an order passed under Section 263 of the Income Tax Act, 1961 (hereinafter referred to as the said Act) by the CIT. The provisions of Section 263 had been invoked by the CIT on the ground that the assessment order was erroneous and was prejudicial to the interest of the revenue. According to the CIT, while calculating the book profits under Section 115JB of the said Act, sales commission of Rs. 241.90 lacs claimed in the P&L a/c was not added back, even though this claim had been disallowed in calculating the total income under the normal provisions of the Act. The CIT was of the opinion that the mistake had resulted in underassessment of income under Section 115JB to the said extent. It was also observed by the said CIT that the assessment was made by the assessing officer without an adequate enquiry or investigation.

(3.) The Tribunal, after hearing the parties, noted that the Assessee company, which was a 100 per cent subsidiary of Denso Corporation, Japan, was in the business of trading and manufacturing of gasoline engine management systems. During the year in question, a payment of Rs. 2,41,89,190 had been made by the Assessee on account of the commission to its sole selling agent under an agreement which was duly approved by the department of Company Affairs. A copy of the Central Government approval for appointing the said sole selling agent under Section 294 of the Companies Act, 1956 was also placed on record.