CIT Vs. SAUER DANFOSS PVT. LTD

JUDGEMENT

(1.) This appeal by the Revenue under Section 260A of the Income Tax Act, 1961 (Act, for short) in the case of Sauer Danfoss (P) Limited relates to Assessment Year 2002-03. At the outset, we may notice that the learned counsel for the Revenue has not pressed question No. (h) regarding interest under Section 234D of the Act and submits that this question may be left open with liberty to the Revenue to file an application under Section 254(2) of the Act before the tribunal in case the proposed amendment is enacted and the Finance Bill is passed. We accept the said statement and clarify that we have not expressed any opinion and gone into the said question and the doctrine of merger will, therefore, not apply on the said issue/question.

(2.) There are four other issues raised in the present appeal. The first issue relates to the date on which the business of the respondent assessee was set up. The Assessing Officer has held that the business of the respondent assessee was set up on 1st June, 2001. The Assessing Officer, therefore, disallowed expenses to the extent of Rs. 19,37,773/-, which include salaries, wages, bonus, staff welfare expenses, recruitment and training etc. for the period prior to 1st June, 2001. Similar expenses have been also disallowed on power and fuel, i.e., electricity and water.

(3.) On the said aspect/question, we find that the tribunal has dealt with the issue in depth and has recorded several factual findings. We would like to reproduce here paragraph 6 of the order passed by the tribunal, which reads as under: