M/s. Sidwal Refrigeration Industries Ltd., New Delhi V. DCIT, New Delhi

CO 108/DEL/2012

• Counselvise Citation: [2012] 122 COUNSELVISE.COM (IT) 7170 (ITAT-DELHI)
• Duration Of Justice: 10 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 27-04-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2003-2004
• Appeal Filed On: 17-04-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S MOHANTHY
• Keywords: Depreciation; Audit objection; Tangible material
• Section: 143(3); 80IB; 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : G : NEW DELHI BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER ITA NO.857/DEL/2012 ASSESSMENT YEAR : 2003-04 DCIT, CIRCLE 8(1), ROOM NO.163, CR BUILDING, NEW DELHI. VS. SIDWAL REFRIGERATION INDUSTRIES LTD., 108, MADANGIR, NEW DELHI. PAN : AABCS2363L C.O. NO.108/DEL/2012 (ITA NO.857/DEL/2012) ASSESSMENT YEAR : 2003-04 SIDWAL REFRIGERATION INDUSTRIES LTD., 108A, MADANGIR, NEW DELHI. PAN : AABCS2363L VS. DCIT, CIRCLE 8(1), ROOM NO.163, CR BUILDING, NEW DELHI. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI BHARAT BERIWAL, ADVOCATE REVENUE BY : SMT. S. MOHANTHY, DR ORDER PER I.P. BANSAL, JUDICIAL MEMBER THE APPEAL IS FILED BY THE DEPARTMENT AND THE CO IS FILED BY THE ASSESSEE. THEY ARE DIRECTED AGAINST THE ORDER PASSED BY TH E CIT (A) DATED 28.11.11. THE GROUNDS OF APPEAL READ AS UNDER: - 1. THE LD. CIT (A) ERRED IN LAW AND ON FACTS OF TH E CASE IN DELETING THE ADDITION OF RS.43,17,398/- MADE BY THE A.O . BY DISALLOWING PROVISION FOR WARRANTY. ITA NO.857/DEL/2012 2 2. THE APPELLANT CRAVES TO AMEND, MODIFY, ALTER, ADD O R FOREGO ANY GROUND OF APPEAL AT ANY TIME BEFORE OR DUR ING THE HEARING OF THIS APPEAL. 1.1. THE GROUNDS OF CROSS OBJECTIONS READ AS UNDER:- 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-XXI II, NEW DELHI HAS ERRED IN NOT APPRECIATING THAT THE MANDATE OF S ECTION 147 R.W.S. 148 OF THE INCOME-TAX ACT, 1961 REQUIRES IN DEPENDENT APPLICATION OF MIND BY THE ASSESSING OFFICER WHILE RE -OPENING ANY ASSESSMENT, WHEREAS IN THE PRESENT CASE THE LD. DCI T, CIRCLE-8(1), NEW DELHI HAD RE-OPENED THE ASSESSMENT U /S 147 R.W.S. 148 OF THE INCOME TAX ACT, 1961 MERELY ON THE B ASIS OF AUDIT OBJECTION WITHOUT ANY APPLICATION OF MIND. 2. THE CROSS-OBJECTOR MAY BE ALLOWED TO ALTER/VARY/MOD IFY ANY OF THE GROUNDS RAISED OR TO WITHDRAW OR FILE ANY ADDITI ONAL GROUND PRIOR TO OR DURING THE HEARING. 2. THE SOLE ISSUE ON WHICH THE RE-ASSESSMENT PROCEEDINGS HA VE BEEN CARRIED OUT IN THE PRESENT CASE IS A SUM OF ` 43,1 7,398/- WHICH HAS BEEN ADDED TO THE EARLIER ASSESSED INCOME OF ` 2,30, 61,524/- AND, THUS, THE INCOME HAS BEEN ASSESSED BY THE IMPUGNED ORDER AT ` 2,73,78,922/-. THE SAID AMOUNT RELATES TO THE PROVISI ON OF WARRANTY WHICH HAS BEEN TREATED BY THE REVENUE AS UNASCERTAINED LIABILITY, WHICH, ACCORDING TO THE ASSESSING OFFICER, CANNOT BE AL LOWED. THE ADDITION WAS AGITATED IN AN APPEAL FILED BEFORE THE CIT (A). APART FROM CHALLENGING THE VALIDITY OF RE-ASSESSMENT PROCEEDINGS, I T WAS SUBMITTED BY THE ASSESSEE THAT THE PROVISION FOR LIABILIT Y COMPUTED DURING THE YEAR IS ONLY A SUM OF ` 3,15,090/-. THE A MOUNT OF ` 43,17,398/- DOES NOT REPRESENT THE PROVISION FOR THE Y EAR UNDER CONSIDERATION AND IT INCLUDE THE BROUGHT FORWARD BA LANCE OF ` 40,02,308/-. EVEN FOR THE SUM OF ` 3,15,090/- THE SU BMISSIONS OF THE ASSESSEE AS RELEVANT TO DECIDE THE PRESENT APPEAL WERE AS UNDER:- 3.2 HOWEVER, AS A NECESSARY CLARIFICATION IT IS SUBM ITTED THAT SINCE THE APPELLANT HAS TWO UNDERTAKINGS ONE IN FARID ABAD, ITA NO.857/DEL/2012 3 HARYANA AND THE OTHER IN KALA AMB, HIMACHAL PRADESH, THE PROVISIONS ARE BOOKED SEPARATELY FOR BOTH THE UNDERTAKI NGS. IT IS SUBMITTED THAT THE PROVISION IN R/O FARIDABAD UNIT WAS RE DUCED DURING THE YEAR FROM RS.23,71,058/- TO RS.23,32,258/- AND THE DIFFERENCE OF RS.47,800/- WAS REDUCED FROM THE PROFI T OF FARIDABAD, WHICH IS EXPLICIT IN THE COMPUTATION OF INCO ME AND THE ASSTT ORDER DATED 15.12.10 U/S 143 (3) ANNEXED HERE WITH. WHEREAS THE PROVISION IN RESPECT OF KALA AMB UNIT WAS INCREASED DURING THE YEAR BY RS.3,62,890/- FROM RS.16,31,250/- TO RS.19,94,140/-. IT IS SUBMITTED THAT SINCE THE PROFIT OF K ALA AMB UNIT WAS 100% DEDUCTIBLE U/S 80IB OF THE ACT, THERE WAS NO IMPACT OF THE SAME ON THE SAID COMPUTATION OF INCOME. 3.3 HOWEVER, IT IS FURTHER USEFUL TO NOTE THAT SUBSEQUENT TO DECISION OF THE SS RENDERED ON 07/05/10 IN THE APPELL ANTS CASE FOR ASSESSMENT YEAR 03-04, THE APPELLANT WAS HELD ENTITL ED TO ONLY 30% DEDUCTION U/S 80IB OF THE ACT IN RESPECT OF ITS KALA AMB UNIT. IN THIS RESPECT, IT IS SUBMITTED THAT THE A.O. IS YET TO GIVE APPEAL EFFECT OF THE ORDER OF THE HONBLE SC, IN WHICH THE EFFECT OF PROVISION WILL ALSO BE GIVEN. 3.4 IT IS, THEREFORE, RESPECTFULLY SUBMITTED THAT THE REOPE NING IS BAD IN LAW AND THE REASSTT ORDER DATED 30.11.10 IS W ITHOUT JURISDICTION BECAUSE FIRSTLY, THE REASONS TO BELIEVE DO NOT DISCLOSE ANY TANGIBLE MATERIAL, WHICH IS NECESSARY TO COME TO THE CONCLUSION THAT THERE IS ESCAPEMENT OF INCOME FROM A SSTT AND SECONDLY, THE MANDATORY CONDITION OF SEC.147 OF TH E ACT THAT INCOME HAS ESCAPED ASSTT BY REASON OF THE OMISSI ON OR FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY A ND TRULY ALL MATERIAL FACTS NECESSARY DURING THE ASSTT U/S 143(3) OF THE ACT, IS NOT FULFILLED. 3. CONSIDERING THESE SUBMISSIONS OF THE ASSESSEE, LEARNED CIT (A) HAS CONCLUDED THAT ONLY A SUM OF ` 3,15,090/- WAS PRO VISION CREATED BY THE ASSESSEE FOR WARRANTY DURING THE YEAR UNDER CONSI DERATION AND THE AMOUNT OF ` 40,02,308/- REPRESENT THE BROUGHT FO RWARD BALANCE. HE ALSO FOUND THAT SUBSEQUENT DECISION OF HONBLE SUPRE ME COURT DATED 7 TH MAY, 2010 IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2003- 04 CITED SUPRA, THE ASSESSEE IS ENTITLED TO CLAIM 30% DED UCTION U/S 80IB IN RESPECT OF ITS UNIT AT KALA AMB AND THE ASSESSING OFFICER HAS GIVEN EFFECT TO THIS ORDER AND THE SAID AMOUNT HAS BEE N ADDED IN THAT COMPUTATION OF THE ASSESSING OFFICER AND, IN THIS MANNER , LEARNED CIT ITA NO.857/DEL/2012 4 (A) HAS ACCEPTED THE CLAIM OF THE ASSESSEE ON MERITS AND HAS DELETED THE ADDITION. 4. AFTER NARRATING THE FACTS, IT WAS SUBMITTED BY THE LEARNED DR THAT THE ASSESSING OFFICER WAS RIGHT IN MAKING THE ADDITION A ND LEARNED CIT (A) HAS WRONGLY DELETED THE ADDITION. 5. ON THE OTHER HAND, THE LEARNED AR REFERRING TO T HE FOLLOWING DOCUMENTS FROM THE PAPER BOOK:- PAGE 13 - SCHEDULE TO THE BALANCE SHEET AS ON 31 ST MARCH, 2003 AND 31 ST MARCH, 2002. IN SCHEDULE NO.11, THE DETAILS OF PROVISIONS ARE GIVEN. THE BALANCE AS ON 31 ST MARCH, 2002 HAS BEEN SHOWN AT ` 40,02,308 AND THE BALANCE AS ON 31 ST MARCH, 2003 IS SHOWN AT ` 43,17,398/-. THIS PAPER WAS RELIED UPON TO SHOW THAT THE FIGURE RELATING TO THE YEAR UNDER CONSIDERATION IS ONLY A SUM OF ` 3,15,090/-. PAGE 23 - THE DETAILS GIVEN ARE AS UNDER:- PROVISION FOR WARRANTY 31.03.2003 31.03.2002 DIFFERENCE KALA AMB 1,994,140.00 1,631,250.00 362,890.00 FARIDABAD 2,323,258.00 2,371,058.00 (47,800.00) TOTAL 4,317,398.00 4,002,308.00 315,090.00 PAGE 27 - TO SHOW THAT THE ENTIRE SUM OF ` 3,62 ,890/- WITH RESPECT TO THE WARRANTY CHARGES WAS ADDED TO THE INCOME. ITA NO.857/DEL/2012 5 A.Y. 2003-04 INCOME ASSESSED AS PER ORDER U/S 250 DATED 19.03.2007 3199970 ADD: EXCESS DEDUCTION CLAIMED U/S 80IB. NET PROFIT FROM KALA AMB UNIT 28752827 ADD:- DEPRECIATION AS PER COMPANIES ACT 244082 WARRANTY CHARGES 362890 606972 29359799 LESS: DEPRECIATION AS PER IT ACT 623261 28736538 DEDUCTION U/S 80-IB @ 30% 8620961 20115577 23315547 PAGE 24 - THE COMPUTATION MADE BY THE ASSESSING OF FICER IN WHICH HE HAS ACCEPTED THE AFOREMENTIONED CALCULATION IN WHICH THE INCOME HAS BEEN DETERMINED AT ` 2,33,15,597/-. THUS, HE PLEADED THAT FROM THE ABOVE DOCUMENTS IT IS CLEAR THAT THE SAID AMOUNT HAS ALREADY BEEN ADDED TO THE INCOME OF THE ASSESSEE VIDE ORDER PASSED U/S 154/250 DATED 25 TH NOVEMBER, 2011, THE COPY OF WHICH IS PLACED AT PAGE 24-25 OF THE PAPER BOOK. 6. IN THIS VIEW OF THE SITUATION, AFTER HEARING BOTH THE PARTIES, WE FIND THAT THE AMOUNT WHICH IS RELEVANT TO BE ADDED T O THE INCOME OF THE ASSESSEE FOR THE PRESENT YEAR IS ONLY A SUM OF ` 3,15, 090/- WHICH HAS ALREADY BEEN ADDED TO THE INCOME OF THE ASSESSEE VID E AFOREMENTIONED ORDER DATED 25 TH NOVEMBER, 2011 VIDE WHICH THE EFFECT HAS BEEN GIVEN TO THE DECISION OF HONBLE SUPREME COU RT. THEREFORE, THE IMPUGNED ADDITION HAS RIGHTLY BEEN DELETED BY LE ARNED CIT (A). WE DECLINE TO INTERFERE IN THE RELIEF GRANTED TO THE A SSESSEE. THEREFORE, ON MERITS THE APPEAL FILED BY THE REVENUE IS DISMISSED. 7. IN THE CROSS OBJECTIONS, THE LEARNED AR HAS CONTESTED THE ORDER OF THE CIT (A) ON THE GROUND THAT RE-ASSESSMENT PROCEEDING S HAVE ITA NO.857/DEL/2012 6 WRONGLY BEEN UPHELD BY LEARNED CIT (A). AT THE TIME OF HEARING THE LEARNED AR DID NOT PRESS HIS CROSS OBJECTIONS, THEREFORE, THE SAME ARE DISMISSED BEING NOT PRESSED. 8. IN THE RESULT, BOTH THE APPEAL FILED BY THE REVEN UE AND THE CROSS OBJECTIONS FILED BY THE ASSESSEE ARE DISMISSED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 27.04.20 12. SD/- SD/- [SHAMIM YAHYA] [I.P. BANSAL] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED, 27.04.2012. DK COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT, DELHI BENCHES