M/s Tikaula Sugar Mills Ltd., Muzaffarnagar V. ACIT, Muzaffarnagar

CO 398/DEL/2010

• Counselvise Citation: [2017] 123 COUNSELVISE.COM (IT) 3329 (ITAT-DELHI)
• Duration Of Justice: 6 year(s) 11 month(s) 30 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 13-12-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 05-06-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 14-12-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Depreciation; Capital receipt
• Section: 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : D : NEW DELHI BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NO.1714/DEL/2009 ASSESSMENT YEAR : 2006-07 CO NO.398/DEL/2010 (ITA NO.4984/DEL/2010) ASSESSMENT YEAR : 2007-08 TIKAULA SUGAR MILLS LTD., 25-B, GHER KHATI (OLD 118-B), NEW MANDI, MUZAFFARNAGAR. PAN: AACCT5818B VS. DCIT, CIRCLE-1, MUZAFFARNAGAR. ITA NOS.2027/DEL/2009 & 4984/DEL/2010 ASSESSMENT YEARS : 2006-07 & 2007-08 DCIT, CIRCLE-1, MUZAFFARNAGAR. VS. TIKAULA SUGAR MILLS LTD., 25-B, GHER KHATI (OLD 118-B), NEW MANDI, MUZAFFARNAGAR. PAN: AACCT5815B ITA NOS.1714 & 2027/DEL/2009, 4984/DEL/2010 CO NO.398/DEL/2010 2 ASSESSEE BY : SHRI AKHILESH KUMAR, ADVOCATE DEPTT. BY : SHRI AMIT JAIN, SR. DR DATE OF HEARING : 12.12.2017 DATE OF PRONOUNCEMENT : 13.12.2017 ORDER PER R.S. SYAL, VP: OUT OF THIS BATCH OF FOUR APPEALS (INCLUDING ONE CR OSS OBJECTION), TWO CROSS APPEALS EACH RELATE TO THE AS SESSMENT YEARS 2006-07 & 2007-08. SINCE SOME OF THE ISSUES RAISED IN THESE APPEALS ARE COMMON, WE ARE, THEREFORE, DISPOSING TH EM OFF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE . ASSESSMENT YEAR 2006-07 2. THE FIRST ISSUE RAISED BY THE ASSESSEE IN ITS AP PEAL IS AGAINST NOT ALLOWING FULL DEDUCTION OF RS.2,48,27,490/- ON ACCOUNT OF INCENTIVE ON SALE OF LEVY SUGAR IN OPEN MARKET. 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE REDUCED ITS INCOME BY RS.2.48 CRORE, BEING, INCENTI VE ON SALE OF LEVY SUGAR AS FREE SUGAR. ON BEING CALLED UPON TO EXPLAIN THE ITA NOS.1714 & 2027/DEL/2009, 4984/DEL/2010 CO NO.398/DEL/2010 3 REASONS FOR SUCH A CLAIM, IT WAS STATED THAT INCENT IVE WAS AVAILABLE TO NEW SUGAR FACTORIES FOR TEN YEARS AS P ER THE SCHEME OF THE GOVERNMENT OF INDIA TO WHICH THE ASSESSEE WA S ELIGIBLE. SUCH INCENTIVE WAS CLAIMED TO HAVE BEEN ALLOWED FOR REPAYMENT OF LOANS RAISED FOR ERECTION OF FACTORIES. NOT CONV INCED, THE ASSESSING OFFICER ADDED SUCH AMOUNT OF RS.2.48 CROR E TO THE ASSESEES INCOME. THE LD. CIT(A), FOLLOWING HIS DE CISION FOR THE ASSESSMENT YEAR 2005-06, ALLOWED RELIEF OF RS.1 .90 CRORE AND CONFIRMED THE ADDITION FOR THE REMAINING AMOUNT OF RS.57.87 LAC, AGAINST WHICH THE ASSESSEE HAS COME UP IN APPE AL BEFORE THE TRIBUNAL. 4. WE HAVE HEARD THE PARTIES AND PERUSED THE RELEVA NT MATERIAL ON RECORD. IT IS OBSERVED THAT THE ASSESSING OFFICE R FOLLOWED HIS DECISION TAKEN FOR THE ASSESSMENT YEAR 2005-06 IN R ESTRICTING THE ASSESSEES CLAIM TO THIS LEVEL. THE LEAD ORDER IN THE CASE OF THE ASSESSEE CAME TO BE PASSED BY THE TRIBUNAL FOR THE ASSESSMENT YEAR 2000-01, A COPY OF WHICH HAS BEEN PLACED AT PA GE 32 ITA NOS.1714 & 2027/DEL/2009, 4984/DEL/2010 CO NO.398/DEL/2010 4 ONWARDS OF THE PAPER BOOK. SIMILAR ISSUE RAISED FO R SUCH YEAR WAS DETERMINED IN THE ASSESEES FAVOUR VIDE DISCUSS ION MADE AT PAGE 35 OF THE PAPER BOOK. THE TRIBUNAL IN ACCEPTI NG SUCH A CLAIM FOR THE ASSESSMENT YEAR 2005-06, HAS FOLLOWED THE LEAD ORDER PASSED FOR THE ASSESSMENT YEAR 2000-01. IN V IEW OF THE CONSISTENT VIEW TAKEN BY THE TRIBUNAL ON THIS ISSUE , WE SET ASIDE THE IMPUGNED ORDER TO THIS EXTENT AND ORDER FOR THE DELETION OF THE REMAINING ADDITION SUSTAINED IN THE FIRST APPEA L. THIS GROUND IS ALLOWED. 5. THE SECOND GROUND IS AGAINST THE CONFIRMATION OF ADDITION OF RS.1 LAC ON AD HOC BASIS. THE FACTS APROPOS THIS GROUND ARE THAT THE ASSESSEE CLAIMED DEDUCTION FOR EXPENSES AM OUNTING TO RS.27,29,249/-. THE ASSESSING OFFICER OBSERVED THA T THOUGH THE EXPENSES WERE VOUCHED, BUT, SOME OF THE EXPENSES WE RE CLAIMED ON THE BASIS OF SELF MADE VOUCHERS. HE, THEREFORE, MADE A DISALLOWANCE OF RS.5 LAC ON AD HOC BASIS. THE LD. C IT(A), FOLLOWING HIS ACTION FOR THE PRECEDING YEAR, REDUCE D THE ITA NOS.1714 & 2027/DEL/2009, 4984/DEL/2010 CO NO.398/DEL/2010 5 DISALLOWANCE TO RS.1 LAC, AGAINST WHICH THE ASSESSE E HAS COME UP IN APPEAL BEFORE THE TRIBUNAL. 6. WE HAVE HEARD THE PARTIES AND PERUSED THE RELEVA NT MATERIAL ON RECORD. IT IS OBSERVED, AS AN ADMITTED POSITION, THAT SOME OF THE EXPENSES WERE MADE ON THE BASIS OF SELF MADE VO UCHERS. TO THIS EXTENT, THE EXPENSES CANNOT BE CONSIDERED AS B ACKED BY THE RELEVANT EVIDENCE, REQUIRING PRO TANTO ADDITION. THE LD. CIT(A) FOLLOWED HIS DECISION FOR THE PRECEDING YEAR AND, A CCORDINGLY, SUSTAINED THE ADDITION AT RS.1 LAC OUT OF TOTAL EXP ENSES OF RS.27.29 LAC CLAIMED BY THE ASSESSEE. THE LD. AR A DMITTED THAT THE ADDITION SO MADE FOR THE PRECEDING YEAR WAS ACC EPTED BY THE ASSESSEE AND NO FURTHER APPEAL WAS FILED. IN VIEW O F THE FOREGOING DISCUSSION, WE ARE SATISFIED THAT THE SUS TENANCE OF ADDITION AT RS.1 LAC IS IN ORDER, WHICH DOES NOT RE QUIRE ANY INTERFERENCE. THIS GROUND FAILS. 7. THE ONLY ISSUE RAISED IN THE REVENUES APPEAL IS AGAINST COMPUTATION OF BOOK PROFITS U/S 115JB OF THE ACT BY DIRECTING TO ITA NOS.1714 & 2027/DEL/2009, 4984/DEL/2010 CO NO.398/DEL/2010 6 REDUCE A SUM OF RS.15,61,78,204/- ON ACCOUNT OF THE AMOUNT OF EXCESS DEPRECIATION DUE TO CHANGE OF METHOD FROM ST RAIGHT LINE TO WRITTEN DOWN VALUE. SUCCINCTLY, THE ASSESSEE CLA IMED DEPRECIATION OF RS.15.61 CRORE PERTAINING TO EARLIE R YEARS ON ACCOUNT OF CHANGED METHOD FROM STRAIGHT LINE TO WRI TTEN DOWN VALUE, EFFECTED IN THE YEAR UNDER CONSIDERATION. T HE ASSESSING OFFICER DID NOT ALLOW THE CLAIM AND ADDED BACK THE SAME FOR COMPUTING BOOK PROFITS UNDER SECTION 115JB OF THE A CT. THE LD. CIT(A), HOWEVER, OVERTURNED THE ASSESSMENT ORDER ON THIS SCORE. 8. WE HAVE HEARD THE PARTIES AND PERUSED THE RELEVA NT MATERIAL ON RECORD. THE LD. AR HAS PLACED ON RECORD A COPY OF THE JUDGMENT OF THE HON'BLE JURISDICTIONAL HIGH COURT I N CIT VS. HINDUSTAN PIPE UDYOG LTD. (2013) 31 TAXMANN.COM 351 (ALL) IN WHICH DEDUCTION OF EXCESS DEPRECIATION DUE TO CHANG E IN METHOD FROM STRAIGHT LINE TO WRITTEN DOWN VALUE METHOD HAS BEEN APPROVED U/S 115J OF THE ACT. THE HON'BLE GUJARAT HIGH COURT IN DCIT VS. GUJARAT FILAMENTS LTD. (2016) 66 TAXMANN.C OM 375 ITA NOS.1714 & 2027/DEL/2009, 4984/DEL/2010 CO NO.398/DEL/2010 7 (GUJ) HAS APPROVED THE DEDUCTION OF EXCESS DEPRECIATION DUE TO CHANGE OF METHOD IN THE COMPUTATION U/S 115JB OF TH E ACT. NO CONTRARY DECISION HAS BEEN BROUGHT TO OUR NOTICE BY THE LD. DR. RESPECTFULLY FOLLOWING THE PRECEDENT, WE APPROVE TH E DECISION OF THE LD. CIT(A) ON THIS ISSUE. THIS GROUND FAILS. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED AND THAT OF THE REVENUE IS DISMISSED. ASSESSMENT YEAR 2007-08 10. GROUND NO.1 OF THE REVENUES APPEAL IS AGAINST THE DELETION OF ADDITION OF RS.1,84,83,960/- ON ACCOUNT OF INCENTIVE ON SALE OF LEVY SUGAR AS REVENUE RECEIPT AS AGAINST THE CAPITAL RECEIPT CLAIMED BY THE ASSESSEE. THIS YEAR, THE LD. CIT(A) TOOK A CONTRARY VIEW FROM THE ONE TAKEN IN THE PRECEDING Y EAR AND DELETED THE ADDITION. BOTH THE SIDES ARE CONSENSUS AD IDEM THAT THE FACTS AND CIRCUMSTANCES OF THIS GROUND ARE MUTATIS MUTANDIS SIMILAR TO THOSE OF GROUND NO.1 OF THE ASSESSEES A PPEAL FOR THE ASSESSMENT YEAR 2006-07. FOLLOWING THE VIEW TAKEN ITA NOS.1714 & 2027/DEL/2009, 4984/DEL/2010 CO NO.398/DEL/2010 8 HEREINABOVE, WE APPROVE THE ACTION OF THE LD. CIT(A ) IN DELETING THE ADDITION. THIS GROUND IS NOT ALLOWED. 11. GROUND NO.2 IS AGAINST THE DELETION OF ADDITION OF RS.4,12,208/- MADE BY THE ASSESSING OFFICER ON ACCO UNT OF PROVISION MADE FOR STORAGE OF MOLASSES TANK. HERE AGAIN, BOTH THE SIDES ARE IN AGREEMENT THAT THE FACTS AND CIRCU MSTANCES OF THE GROUND ARE SIMILAR TO THOSE TAKEN IN APPEAL FOR THE ASSESSMENT YEAR 2000-01. RELEVANT DISCUSSION HAS B EEN MADE AT PARA 9 OF THE TRIBUNAL ORDER FOR THE ASSESSMENT YEA R 2000-01, IN WHICH SUCH ISSUE HAS BEEN DECIDED IN THE ASSESSEES FAVOUR. RESPECTFULLY FOLLOWING THE PRECEDENT, WE UPHOLD THE IMPUGNED ORDER ON THIS SCORE. 12. THE LAST GROUND IS AGAINST THE DELETION OF DISA LLOWANCE OF RS.75,000/- ON ACCOUNT OF UNVERIFIABLE EXPENSES. T HE ONLY ISSUE TAKEN BY THE ASSESSEE IN ITS CROSS OBJECTION IS AGA INST THE CONFIRMATION OF ADDITION OF RS.75,000/-. THE FACTS AND CIRCUMSTANCES OF THE DISALLOWANCE OF RS.1,50,000/- MADE BY THE ITA NOS.1714 & 2027/DEL/2009, 4984/DEL/2010 CO NO.398/DEL/2010 9 ASSESSING OFFICER OUT OF EXPENSES ON ACCOUNT OF SEL F MADE VOUCHERS AND ITS REDUCTION BY THE LD. CIT(A) TO RS. 75,000/- ARE SIMILAR TO THOSE OF THE PRECEDING YEARS. FOLLOWING THE VIEW TAKEN HEREINABOVE, WE UPHOLD THE DISALLOWANCE AT TH E LEVEL SUSTAINED BY THE LD. CIT(A). THUS, THE GROUND OF T HE REVENUE AND THE CROSS OBJECTION OF THE ASSESSEE ARE NOT ALL OWED. 13. IN THE RESULT, THE APPEAL OF THE REVENUE AND TH E CROSS OBJECTION OF THE ASSESSEES STAND DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 13.12.2017. SD/- SD/- [KULDIP SINGH] [R.S. SYAL] JUDICIAL MEMBER VICE PRESIDENT DATED, 13 TH DECEMBER, 2017. DK ITA NOS.1714 & 2027/DEL/2009, 4984/DEL/2010 CO NO.398/DEL/2010 10 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT AR, ITAT, NEW DELHI.