Facts of the Case

The Revenue filed two appeals under Section 260A of the Income-tax Act, 1961 being ITA Nos. 321/2025 and 323/2025, challenging the common order dated 09.02.2023 passed by the Income Tax Appellate Tribunal in ITA Nos. 961/Del/2015 and 1507/Del/2015 for Assessment Year 2010–11.

The assessee, Maruti Suzuki India Ltd., is engaged in the manufacture and sale of automobiles and related activities. The assessment was framed under Section 143(3) read with Section 144C pursuant to directions issued by the Dispute Resolution Panel. Both the assessee and the Revenue preferred appeals before the ITAT on multiple issues including deductions under Section 43B, allowability of royalty and R&D cess, disallowance of CSR expenditure, treatment of foreseen price increase liability, transfer pricing adjustment on royalty, and deduction under Section 35(2AB).

The ITAT partly allowed the assessee’s appeal and dismissed the Revenue’s appeal. Aggrieved, the Revenue approached the High Court.

Issues Involved

Whether the ITAT erred in deleting multiple additions and disallowances relating to excise duty, customs duty, CVD, CSR expenditure, royalty (including TP adjustment), and deductions under Sections 43B and 35(2AB), and whether the Revenue’s appeals raised any substantial question of law under Section 260A.

 

Appellant’s Arguments

The Revenue proposed numerous questions of law challenging the ITAT’s findings on allowability of statutory duties under Section 43B, treatment of royalty as revenue expenditure, deletion of transfer pricing adjustment on royalty, allowability of CSR expenditure, and deduction under Section 35(2AB). It was argued that the ITAT erred in law in following earlier decisions without appreciating changed economic circumstances and factual nuances.

Respondent’s Arguments

The assessee contended that all issues raised by the Revenue were squarely covered by binding judgments of the Delhi High Court in the assessee’s own case for earlier assessment years, many of which had also been affirmed by the Supreme Court. It was submitted that the Revenue itself did not dispute during hearing that the proposed questions were covered against it by earlier decisions.

Court Order / Findings

The Delhi High Court examined the proposed questions of law and noted that each of them stood conclusively covered by earlier judgments of the Court in the respondent’s own case for prior assessment years, including AYs 1994–95, 1999–2000, 2000–01, 2005–06, 2007–08, 2008–09 and 2009–10. The Court also recorded that several of these decisions had been affirmed by the Supreme Court, including by orders dated 27.03.2025.

The Court observed that the Revenue fairly conceded that the issues relating to excise duty, customs duty, CVD, foreseen price increase liability, CSR expenditure, royalty and transfer pricing adjustment on royalty were fully covered by earlier binding precedent. In respect of deduction under Section 35(2AB), the Court noted that the issue was covered by its own earlier judgment reported in Maruti Suzuki India Ltd. vs. Union of India (397 ITR 728).

In view of the settled legal position, the Court held that no substantial question of law arose for consideration in either of the appeals.

Important Clarification

The Court clarified that where issues raised by the Revenue are consistently decided in favour of the assessee in earlier assessment years and such decisions have attained finality, the Revenue cannot seek re-agitation of identical issues in subsequent years under Section 260A in the absence of any distinguishing facts or change in law.

Final Outcome

Both appeals filed by the Revenue, ITA Nos. 321/2025 and 323/2025, were dismissed. The Delhi High Court upheld the order of the Income Tax Appellate Tribunal and held that all issues raised by the Revenue were covered by binding precedent, thereby deciding the matter entirely in favour of Maruti Suzuki India Ltd. and against the Revenue.

Link to download order - https://www.mytaxexpert.co.in/uploads/1769678782_PRINCIPALCOMMISSIONEROFINCOMETAX4DELHIVsMARUTISUZUKIINDIALTD.pdf

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