9911796707
TMI Blog2010 (5) TMI 714X X X X Extracts X X X X X X X X Extracts X X X X ..... crores. Thereafter, the assessee filed an application under section 154 alleging that addition of excise duty reimbursement was a mistake apparent from record. Contention of the assessee was that the company had transferred its business of manufacturing compressors to Tecumseh Products India Ltd. (TPIL) as on March 31, 1997. The company had undertaken to reimburse any liability which may arise in respect of period up to March 31, 1997 as per agreement. During the year ended March 31, 2005, the company has reimbursed liability of Rs. 392 lakhs being the demand raised by the Excise Department against the TPIL in respect of the period from August 1990 to April 1992. The company had debited to its profit and loss account for the year ended Mar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ties below and found that in the assessment order framed under section 143(3), the Assessing Officer has added an amount of Rs. 392 lakhs on account of excise duty reimbursement by taking cognizance of note No. 7E of schedule 13 of the accounts by alleging that the reimbursement has no business connection with the assessee's business during the year under consideration. From the record, we found that the assessee has debited Rs. 90 lakhs in the profit and loss account for the year ending March 31, 2005 relevant to the assessment year 2005-06 and following note was appended as notes to account in schedule 13 at item (f) which reads as under : "(f) The company has provided bank guarantees aggregating Rs.1,260 lakhs to Tecumseh Products Indi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted for the maximum possible exposure of Rs. 90 lakhs in this regard in the profit and loss account in the previous year and the balance amount of Rs.302 lakhs has been included under 'loans and advances recoverable in cash or kind or for value to be received, in schedule 6'. From the above the Assessing Officer observed that the assessee company has sold its compressor business to Tecumseh Products India Ltd. (TPIL) in the financial year 1996-97 relevant to the assessment year 1997-98. TPIL has paid excise demand of Rs. 392 lakhs which was reimbursed by the assessee-company. This reimbursement has no connection with the assessee's business during the year under consideration. The assessee was therefore asked to explain as to why the same b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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