Steel City Securities Limited, Visakhapatnam V. The Assistant Commissioner of Income Tax, Circle-4(1), , Visakhapatnam

CO 62/VIZ/2019

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 2241 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 26 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 19-06-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 24-05-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SUMAN MALIK
• Keywords: Business income; Revised return; Revenue expenditure; Set aside
• Section: 133A; 147; 131; 90; 2; 92

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . . , BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH , ACCOUNTANT MEMBER . / I . T .A.NO S . 87 - 90 /VIZ/201 9 ( / ASSESSMENT YEAR : 20 0 8 - 0 9 TO 2011 - 12 RESPECTIVELY ) ACIT CIRCLE - 4(1) VISAKHAPATNAM VS. M/S STEEL CITY SECURITIES LTD., D.NO.49 - 52 - 5/4 SRI KANYA TOWERS SANKARAMATAM ROAD SANTHIPURAM VISAKHAPATNAM [PAN : AAECS0970L] ( / APPELLANT) ( / RESPONDENT) CO .NO S . 62 - 65/VIZ/2019 (ARISING OUT OF I.T.A NOS. 87 - 90/VIZ/2019) ( / ASSESSMENT YEAR : 2008 - 09 TO 2011 - 12 RESPECTIVELY) M/S STEEL CITY SECURITIES LTD., D.NO.49 - 52 - 5/4 SRI KANYA TOWERS SANKARAMATAM ROAD SANTHIPURAM VISAKHAPATNAM [PAN : AAECS0970L] VS. ACIT CIRCLE - 4(1) VISAKHAPATNAM ( / APPELLANT) ( / RESPONDENT) /REVENUE BY : SMT.SUMAN MALIK, DR / ASSESSEE BY : SHRI G.V.N.HARI, AR / DATE OF HEARING : 14 . 0 6 . 201 9 / DATE OF PRONOUNCEMENT : 19 .06 . 201 9 2 I.T.A. NO S . 87 - 90 /VIZ/201 9 AND CO NOS.62 - 65/VIZ/2019 M/S STEEL CITY SECURITIES LTD.,, VISAKHAPATNAM / O R D E R P ER BENCH : THESE APPEALS ARE FILED BY THE REVENUE AGAINST THE ORDERS OF THE COMMISSIONER OF INCOME TAX (APPEALS) [CIT(A)] - 9, HYDERABAD DATED 27.11.2018 AND CROSS OBJECTIONS FILED BY THE ASSESSEE FOR THE ASSESSMENT YEAR (A.Y).2008 - 09 TO 2011 - 12. SINCE THE G ROUNDS INVOLVED IN THESE APPEALS ARE IDENTICAL, THESE APPEALS ARE CLUBBED, HEARD TOGETHER, DISPOSED OFF IN A COMMON ORDER FOR THE SAKE OF CONVENIENCE AS UNDER AND THE FACTS ARE EXTRACTED FROM THE A.Y. 2008 - 09 FOR THE SAKE OF CONVENIENCE. 2. GROUND NO. 1 AND 5 ARE GENERAL IN NATURE WHICH DOES NOT REQUIRE SEPARATE ADJUDICATION. 3. GROUND NO.2 OF APPEAL IS RELATED TO THE ISSUE OF STAMP DUTY COLLECTED BY THE ASSESSEE FROM THE CLIENTS AND THE DISALLOWANCE OF PURCHASE OF STAMPS FOR WANT OF EVIDENCE. A SURVEY U/S 133A OF THE INCOME TAX ACT, 1961 (IN SHORT ACT) WAS CONDUCTED IN THE BUSINESS PREMISES OF THE ASSESSEE ON 19.02.2015. DURING THE COURSE OF SURVEY PROCEEDINGS, IT WAS FOUND THAT THE AS SESSEE COMPANY HAD COLLECTED A SUM OF RS.1,04,39,483/ - FOR THE A.Y. 3 I.T.A. NO S . 87 - 90 /VIZ/201 9 AND CO NOS.62 - 65/VIZ/2019 M/S STEEL CITY SECURITIES LTD.,, VISAKHAPATNAM 2008 - 09 TOWARDS STAMP DUTY FROM ITS CLIENTS, BUT NOT REMITTED THE SAME TO THE GOVERNMENT ACCOUNT. HENCE THE ASSESSING OFFICER (AO) REOPENED THE ASSESSMENT FOR THE A.Y. 2008 - 09 TO 2011 - 12 U/S 147 OF THE ACT. 2.1. IN RESPONSE TO THE NOTICE ISSUED, THE ASSESSEE HAS FILED THE REVISED RETURN OF INCOME ADMITTING TOTAL INCOME OF RS.14,45,78,500/ - ON 13.07.2015. THE AO ASKED THE ASSESSEE AS TO WHY THE STAMP DUTY COLLECTED BUT NOT PAID TO THE GOV ERNMENT ACCOUNT SHOULD NOT BE TREATED AS REVENUE RECEIPT IN ITS HANDS. IN RESPONSE, THE ASSESSEE HAS MADE WRITTEN SUBMISSIONS BEFORE THE AO AS UNDER : DURING THE FINANCIAL YEAR 2007 - 08, WE HAVE COLLECTED AN AMOUNT OF RS.1,04,39,483/ - TOWARDS STAMP DUTY FROM THE CLIENTS. OUT OF THE ABOVE, AN AMOUNT OF RS.70,25,000/ - WAS PAID TOWARDS PURCHASE OF STAMPS DURING THE FINANCIAL YEAR 2007 - 08. THESE PAYMENTS WERE MADE BY WAY OF CASH. THE FOLLOWING IS THE SUMMARY OF STAMP DUTY COLLECTION ACCOUNT IN OUR BOOKS OF ACCOUNT FOR THE FINANCIAL YEAR 2007 - 08. SL.NO. DESCRIPTION AMOUNT RS. 1. OPENING BALANCE AS ON 04.04.2007 17,29,950 2. ADD : COLLECTION TOWARDS STAMP DUTY FROM THE CLIENTS DURING THE FINANCIAL YEAR 2007 - 08 1,04,39,438 3. TOTAL 1,24,69,433 4. LESS : A) PURCHASE OF STAMPS PAID IN CHEQUES B) PURCHASE OF STAMPS PAID IN CASH NIL 70,25,000 5. CLOSING BALANCE AS AN 31.03.2008 51,44,433 WE PURCHASE BROKER NOTE STUMPS TO BE AFFIXED ON THE ORIGINAL CONTRACT NOTES TO BE GIVEN TO THE CLIENTS WHICH IS A PRE REQUISITE AS PER THE INDIAN STAMP ACT. WE PURCHASE BROKER NOTE STUMPS THROUGH THE LIASONING AGENTS WHO IN 4 I.T.A. NO S . 87 - 90 /VIZ/201 9 AND CO NOS.62 - 65/VIZ/2019 M/S STEEL CITY SECURITIES LTD.,, VISAKHAPATNAM TURN PURCHASE THE SAME FROM THE STAMP VENDORS AT MUMBAI. WE PAY TO THESE LIAISONING AGENTS FOR THE PROCEDURE TO GIVE BILLS/INVOICES BY THE STAMP VENDORS FOR PURCHASE OF BROKER NOTE STAMPS, ALL THESE PAYMENT WERE SUPPORTED BY SELF MADE VOUCHERS. THE AMOUNT COLLECTED FROM THE CLIENTS TOWAR DS PURCHASE OF BROKER NOTE STAMPS IS PARKED UNDER THE STAMP DUTY ACCOUNT AND SAME IS GROUPED UNDER THE CURRENT LIABILITIES IN THE BALANCE SHEET OF THE RESPECTIVE FINANCIAL YEARS. WHENEVER WE PURCHASE STAMPS, WE DEBIT THE STAMP DUTY ACCOUNT TO THE TUNE OF S TAMPS PURCHASED. WE HAVE NEVER CLAIMED AS EXPENDITURE OF THESE PAYMENTS AND WE HAVE NOT DEBITED THESE PAYMENTS TO THE PROFIT & LOSS ACCOUNT OF THE RESPECTIVE FINANCIAL YEARS' 2.2. THE AO CONSIDERED THE EXPLANATION OF THE ASSESSEE, BUT NOT CONVINCED WITH THE EXPLANATION MADE THE FOLLOWING OBSERVATIONS : 3,2. THE EXPLANATION P UT FORTH BY THE AR, HAS BEEN CONSIDERED. THE CLAIM OF THE ASSESSEE THAT BROKER NOTE STAMPS WERE PURCHASED IN CASH HAS BEEN EXAMINED IN COURSE OF THE SURVEY PROCEEDINGS. ON EXAMINATION OF THE DOCUMENTS, DETAILS AND THE STATEMENTS GIVEN BY THE CONCERNED PERSONS U/S.131 AND U/S.133A OF THE IT. ACT RECORDED IN COURSE OF THE SURVEY PROCEEDING, THE FOLLOWING POINTS EMERGED: I) CASH AMOUNTING TO RS.50,000 / RS.75,000 IN A DAY HAS B EEN DRAWN FROM THE STAMP ACCOUNT TIME TO TIME FOR PURCHASE OF BROKERAGE STAMPS. ONLY SELF - MADE VOUCHERS ARE KEPT AGAINST THE SAID EXPENDITURE. II) SELF - MADE VOUCHERS HAVE BEEN MADE IN THE NAME OF TWO LOW - PAID EMPLOYEES VIZ. SRI P.V. KALI P RASAD AND SRI K .G ANESH SHOWING PAYMENT OF CASH TO THEM FOR PURCHASE OF STAMPS. THE MANAGING DIRECTOR OF THE COMPANY HAS PASSED THE SAID VOUCHERS. III) AFTER USE OF ELECTRONIC CONTRACT NOTES STARTED SINCE LONG TIME BACK, USUALLY NO MANUAL CONTRACT NOTES ARE ISSUED TO CUSTOM ERS AGAINST SHARE TRADING AND, THEREFORE, THERE IS NO APPARENT USE OF MANUAL STAMPS OF SUCH LARGE AMOUNT. IV ) THE ASSESSEE COMPANY COULD NOT FURNISH ANY DETAILS OF CONTACT NOTES FOR WHICH MANUAL STAMPS WERE REQUIRED. FURTHER, IT COULD NOT FURNISH ANY REGISTER/ ACCOUNT TO ACCOUNT FOR PURCHASE, UTILIZATION AND CLOSING STOCK OF SUCH STAMPS CLAIMED TO BE PURCHASED IN SUCH LARGE QUANTITY. V ) NOT A SINGLE BILL/ RECEIPT COULD BE FURNISHED BY THE ASSESSEE 5 I.T.A. NO S . 87 - 90 /VIZ/201 9 AND CO NOS.62 - 65/VIZ/2019 M/S STEEL CITY SECURITIES LTD.,, VISAKHAPATNAM COMPANY AGAINST STAMP PURCHASE. VI ) SRI SATISH KUMAR ARYA, DIRECTOR (OPERATION) OF THE COMPANY SINCE 1996, WHO LOOKS AFTER DAY TO DAY TRADING ACTIVITY HAS CATEGORICALLY STATED IN HIS STATEMENT DATED 19.02.2015 THAT THE COMPANY DOES NOT PURCHASE ANY STAMP IN CASH. VII ) SRI K SATYANARAYANA, DIRECTOR (SURVEILLANCE) OF THE COMPANY ALSO STATED IN HIS STATEMENT DATED 19.02.2015 THAT THE COMPANY HAS NOT BEEN PURCHASING ANY STAMPS IN CASH SINCE LAST 10 YEARS. VIII ) THUS, OUT OF THREE ACTIVE DIRECTORS OF THE COMPANY, TWO DIRECTORS HAVE DENIED PURCHASE OF STAMPS IN CASH. IX ) SRI N: RAMU, C HIEF FINANCE OFFICER OF THE COMPANY, WHO HAS BEEN WORKING IN THE COMPANY SINCE 2005, STATED THAT HE HAS ENTERED THE EXPENDITURE TOWARDS STAMPS PURCHASE IN THE ACCOUNTS BASED ON SELF - MADE VOUCHERS AS IT WAS PASSED BY THE MD, BUT HE DOES NOT KNOW ANYTHING , A BOUT THE PURCHASE OF STAMPS. X ) ALTHOUGH THE EMPLOYEES TO WHOM PAYMENTS ARE SHOWN IN THE VOUCHERS HAVE DEPOSED IN THEIR STATEMENTS RECORDED U/S 131 THAT THEY WERE GIVEN CASH TO PURCHASE STAMPS, THEY COULD NOT TELL FROM WHOM THEY PURCHASED THE SAME. THEY ONLY GAVE VAGUE REPLY THAT THEY PURCHASED THE SAID STAMPS FROM VARIOUS PARTIES NEAR RAILWAY STATION OR NEAR SUB - REGISTRAR OFFICE. XI ) HOWEVER, SRI G. SREERAMA MURTHY, MANAGING DIRECTOR OF THE COMPANY, IN HIS STATEMENT U/S.131 DATED 23.02,2015 STATED THAT THE SAID S TAMPS WERE NOT AVAILABLE IN VISAKHAPATNAM, AND THEREFORE, THOSE WERE PURCHASED FROM STAMP VENDORS IN MUMBAI, AND THE STAMPS WERE SENT BY THE LIAISON AGENTS OF THE COMPANY BY COURIER AND SOMETIMES IN PERSON. HOWEVER, HE COULD NOT TELL THE DETAILS OF ANY LIA ISON AGENT. THUS, THE EMPLOYEES' VERSION AND THE MD'S VERSION ARE CONTRADICTORY. XII ) THE MANAGING DIRECTOR FURTHER STATED THAT THE AMOUNTS 6 I.T.A. NO S . 87 - 90 /VIZ/201 9 AND CO NOS.62 - 65/VIZ/2019 M/S STEEL CITY SECURITIES LTD.,, VISAKHAPATNAM SHOWN AGAINST STAMP PURCHASE WERE ACTUALLY GIVEN TO OTHERS, BUT THE NAME OF THE ABOVE EMPLOYEES WERE WRITTEN IN THE VOUCHERS AS THE ACTUAL RECIPIENTS WERE NOT AVAILABLE AT THE TIME OF PREPARATION OF VOUCHERS. THUS IT WAS ADMITTED THAT THE CONCERNED VOUCHERS ALSO ARE NOT GENUINE. 2.3. THE AO VIEWED THAT PURCHASE OF BROKERAGE STAMPS IN CASH IS BOGUS, AS IT WA S NOT SUPPOR TED WITH ANY CREDIBLE EVIDENCE. THE ASSESSEE ARGUED BEFORE THE AO THAT THE AMOUNT RECEIVED BY THE ASSESSEE WAS IN FIDUCIARY CAPACITY AND SPE NT FOR PURCHASE OF STAMPS AND UTILIZATION OF STAMPS . IT WAS NOT ROUTED THROUGH PROFIT AND LOSS ACCOUNT, HENCE SHOUL D NOT BE TREATED AS REVENUE RECEIPT IN IT S HANDS. THE AO CONSIDERED THE EXPLANATION AND HELD THAT THE AMOUNT RECEIVED BY THE ASSESSEE IS REVENUE RECEIPT AND HAVING NOT REMITTED TO THE GOVERNMENT ACCOUNT, THE SAME IS TAXABLE IN THE HANDS OF THE ASSESSEE. F URTHER THE AO HELD THAT SINCE THE ASSESSEE COULD NOT PRODUCE THE EVIDENCE FOR PURCHASE OF STAMPS, THE SAME IS HELD TO BE BOGUS EXPENDITURE. THE AO RELIED ON THE FOLLOWING DECISIONS : A) P.M.MOHAMMED MEERAKHAN VS. CIT [1969] 73 ITR : FOR THE PURPOSE OF ASCERTAINING PROFITS AND GAINS, IT IS THE DUTY OF THE ASSESSING AUTHORITY TO FIND OUT WHAT PROFIT THE BUSINESS HAS MADE ACCORDING TO THE TRUE ACCOUNTANCY PRACTICE. B) KCP LTD VS CIT [2001] 245 ITR 421 (SC) IF A RECEIPT IS A TRADING RECEIPT THE FACT THAT IT IS NOT SO SHOWN IN THE ACCOUNT BOOKS OF THE ASSESSEE WOULD NOT PREVENT THE ASSESSING AUTHORITY FROM TREATING IT AS TRADING RECEIPT. IT IS THE TRUE NATURE AND QUALITY OF THE RECEIPT AND NOT THE HEAD UNDER WHICH IT IS ENTERED IN THE ACCOUNT BOOKS WHICH IS DECISIVE. 7 I.T.A. NO S . 87 - 90 /VIZ/201 9 AND CO NOS.62 - 65/VIZ/2019 M/S STEEL CITY SECURITIES LTD.,, VISAKHAPATNAM C) CHOWRANGHEE SALES BUREAU P LTD VS CIT [1973] 87 . IF A RECEIPT IS A TRADING RECEIPT, THE FACT WOULD NOT PREVENT THE ASSESSING AUTHORITY FROM TREATING IT AS TRADING RECEIPT. THE SUM REALIZED AS SALES TAX FORMS PART OF TRADING OR BUSINESS RECEIPTS. THE FACT THAT THE ASSESSEE CREDITS THE AMOUNT RECEIVED UNDER THE HEAD 'SALES TAX COLLECTION ACCOUNT' DOES NOT MAKE ANY MATERIAL DIFFERENCE. 2.4. SIMILAR ISSUE IS INVOLVED FOR THE ASSESSMENT YEARS 2009 - 10 TO 2011 - 12 ALSO, THE DETAILS OF THE EXPENDITURE INCURRED AND THE ADDITION MADE BY THE AO FOR THE A.Y. 2008 - 09 TO 2011 - 12 IS AS UNDER : A.Y. OPENING BALANCE RS. COLLECTION TOWARDS STAMP DUTY RS. PURCHASE OF STAMPS / TRANSFER TO P&L ACCOUNT RS. CLOSING BALANCE RS. 2008 - 09 17,29,950 1,04,39,438 70,25,000 51,44,433 2009 - 10 51,44,333 82,60,905 75,50,000 62,55,338 2010 - 11 62,55,338 1,17,92,850 1,75,84,292 4,63,896 2011 - 12 4,63,896 1,08,60,224 1,09,42,858 3,81,262 2.5. THE AO MADE THE ADDITION TOWARDS STAMP DUTY FOR THE A.Y. 2008 - 09 TO 2011 - 12 AS UNDER : A.Y. ADDITION (RS.) 2008 - 09 1,04,39,483/ - 2009 - 10 82,60,905/ - 2010 - 11 79,83,558/ - 2011 - 12 52,92,366/ - 3. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE WENT ON APPEAL BEFORE THE CIT(A) AND THE LD.CIT(A) ALLOWED THE APPEALS OF THE ASSESSEE FOLLOWING 8 I.T.A. NO S . 87 - 90 /VIZ/201 9 AND CO NOS.62 - 65/VIZ/2019 M/S STEEL CITY SECURITIES LTD.,, VISAKHAPATNAM THE ORDER OF THIS TRIBUNAL IN THE ASSESSEES OWN CASE FOR THE A.Y.2012 - 13 IN I.T.A NO.161/VIZ/2017 DATED 14.11.2 018. 4. AGGRIEVED BY THE ORDER OF THE LD.CIT(A), THE REVENUE HAS FILED APPEAL BEFORE THIS TRIBUNAL. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL PLACED ON RECORD. THE ISSUE IS SQUARELY COVERED BY THE DECISION OF THIS TRIBUNAL IN THE A SSESSEES OWN CASE CITED SUPRA. FOR THE SAKE OF CLARITY AND CONVENIENCE, WE EXTRACT RELEVANT PART OF THE ORDER OF THIS TRIBUNAL IN PARA NO.8 WHICH READS AS UNDER : 8. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL PLACED ON RECORD. THE ASSESSEE IS A STOCK BROKER HAVING ITS OFFICES THROUGHOUT THE COUNTRY, WHICH IS UNDISPUTED FACT. THE ASSESSEE HAS TO AFFIX THE STAMPS ON THE CONTRACT NOTES FOR PURCHASE AND SALES OF SHARES AS PER INDIAN STAMP ACT, 1899. IF THERE IS A DELAY IN AFFIXING, IT ATTRACT S PENALTY AS PER THE SEBI GUIDELINES AND EVERY CONTRACT NOTE REQUIRED TO BE PROPERLY STAMPED. A SURVEY OPERATION UNDER SECTION 133A WAS CONDUCTED IN THE BUSINESS PREMISES OF THE ASSESS E E AND NO EVIDENCE WAS FOUND TO ESTABLISH NON - PURCHASE OF STAMPS OR INFL ATION OF EXPENDITURE ON ACCOUNT OF STAMPS PURCHASED BY THE ASSESSEE. THE ASSESSEE STATED THAT A SUM OF RS.31,83,168/ - WAS INCURRED FOR PURCHASE OF STAMPS, WHICH WAS PAID IN CHEQUE AND THE SAME WAS ALLOWED. HE FURTHER SUBMITTED THAT THE STAMPS WORTH OF RS .39,05,000/ - WAS PURCHASED IN CASH AND THE SAID AMOUNT WAS DISALLOWED. THE REASON FOR PURCHASE OF STAMPS IN CASH WAS NON - AVAILABILITY OF STAMPS WITH THE RESPECTIVE GOVERNMENTS. THE LD. CIT(A) OBSERVED THAT THE ASSESSEE COULD NOT FURNISH ANY EVIDENCE TO SH OW THAT THE NON - AVAILABILITY OF STAMPS IN THE STATE OF ANDHRA PRADESH, WHEREAS THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE ASSESSEE IS HAVING OFFICES ALL OVER INDIA AND THE STAMPS PURCHASED FROM GOVERNMENT OF A.P. ARE VALID FOR THE TRANSACTIONS ENTERED INTO IN THE STATE OF ANDHRA PRADESH AND FOR TRANSACTIONS IN MUMBAI, THE STAMPS REQUIRED TO BE PURCHASED FROM MAHARASHTRA. IN THE CASE OF OTHER PARTS OF THE COUNTRY, THE STAMPS REQUIRED TO BE PURCHASED FROM THE RESPECTIVE STATES. THE 9 I.T.A. NO S . 87 - 90 /VIZ/201 9 AND CO NOS.62 - 65/VIZ/2019 M/S STEEL CITY SECURITIES LTD.,, VISAKHAPATNAM ASSESSEE FUR THER STATED THAT ASSESSEE IS HAVING BRANCH AT MUMBAI, FOR WHICH STAMPS PURCHASED FROM MAHARASHTRA GOVERNMENT IS REQUIRED TO BE AFFIXED. THE ASSESSEE PURCHASED THE STAMPS IN CASH FROM LIASIONING AGENTS, STAMP VENDORS AND ACCOUNTED THE SAME IN THE BOOKS OF ACCOUNT AS LIABILITY AND THE ACCOUNT COPY OF THE LEDGER FOR THE STAMP DUTY WAS ENCLOSED IN PAGE NO. 77 TO 120 OF THE PAPER BOOK. AS PER THE LEDGER ACCOUNT OF THE STAMP DUTY, THE ASSESSEE IN ACCOUNTING THE STAMPS FROM HIS STAMPS ACCOUNT. AS AND WHEN, THE STAMPS ARE PURCHASED, THE ACCOUNT IS DEBITED AND AS AND WHEN STAMPS ARE UTILISED FOR EACH SETTLEMENT, THE SAME IS CREDITED TO THE ACCOUNT. THE ASSESSEE HAS ACCOUNTED THE ENTIRE UTILIZATION OF THE STAMP DUTY SETTLEMENT - WISE. THE ASSESSING OFFICER HAS VERI FIED THE LEDGER ACCOUNT COPY, BUT DID NOT FIND ANY IRREGULARITY. THOUGH TWO DIRECTORS HAVE STATED THAT THERE WAS NO PURCHASE OF STAMPS, THE EMPLOYEES FROM WHOM THE STATEMENTS WERE RECORDED HAVE CONFIRMED THAT STAMPS WERE PURCHASED. THE MANAGING DIRECTOR O F THE COMPANY HAS STATED THAT BOTH THE DIRECTORS ARE NOT LOOKING AFTER PURCHASE OF STAMPS, THEREFORE, THEY WERE NOT AWARE OF THE FACTUAL BACKGROUND. IT IS UNDISPUTED FACT THAT THE ASSESSEE HAS TO AFFIX THE STAMPS ON EVERY TRANSACTION AND IT IS ALSO A FACT THAT THE ASSESSEE IS OPERATING THROUGHOUT THE COUNTRY AND THE STAMPS PURCHASED FROM THE GOVERNMENT OF ANDHRA PRADESH ARE VALID ONLY FOR THE TRANSACTIONS IN THE STATE. IT IS ALSO MENTIONED IN THE RULES OF INDIAN STAMPS ACT THAT WHENEVER STAMP DUTY PAYABLE UNDER THE ACT IN RESPECT OF ANY INSTRUMENT COULD NOT BE PAID EXACTLY BY REASON OF THE FACT THAT THE NECESSARY STAMPS ARE NOT IN CIRCULATION, THE AMOUNT BY WHICH THE PAYMENT OF DUTY SHALL ON THAT ACCOUNT BE IN DEFECT AND SHALL BE MADE UP BY AFFIXING OF 10 PAISE AND 05 PAISE ADHESIVE STAMPS, AS DESCRIBED IN RULE 16, PROVIDED THAT THE GOVERNMENT MAY DIRECT THAT INSTEAD OF SUCH STAMPS, ADHESIVE COURT FEE STAMPS SHALL BE USED FOR THE PURPOSE. SINCE THE FACTS ARE IDENTICAL, WE SET ASIDE THE ORDER OF THE LD.C IT(A) AND HOLD THAT THE STAMP DUTY COLLECTED BY THE ASSESSEE DURING THE YEAR TAKES THE CHARACTER OF THE REVENUE RECEIPT AND THE STAMPS UTILIZED BY THE ASSESSEE FOR AFFIXING ON THE CONTRACT NOTES IS AN ALLOWABLE EXPENDITURE. ACCORDINGLY, WE DIRECT THE AO TO ALLOW THE EXPENDITURE TO THE EXTENT OF CONSUMPTION OF STAMPS AS PER THE ACCOUNTS. THE APPEAL OF THE REVENUE ON THIS GROUND IS DISMISSED. 10 I.T.A. NO S . 87 - 90 /VIZ/201 9 AND CO NOS.62 - 65/VIZ/2019 M/S STEEL CITY SECURITIES LTD.,, VISAKHAPATNAM 6. THE REVENUE HAS RAISED GROUND NO.2 TO 4 STATING THAT SINCE , THE ITAT HAS HELD THE ISSUE WITH REGARD TO THE STAMP DUTY COLLECTIONS AS REVENUE RECEIPTS, THE LD.CIT(A) OUGHT TO HAVE UPHELD THE ADDITION MADE TO THE EXTENT OF STAMP DUTY COLLECTED BUT NOT UTILIZED DURING THE YEAR. DURING THE APPEAL HEARING, THE LD.DR ARGUED THAT IN THE ORDER PASSED IN THE ASSESSEES OWN C ASE FOR THE A.Y.2012 - 13 VIDE I.T.A. NO.161/VIZ/2017 DATED 14.11.2018, THE HONBLE ITAT HELD THAT THE STAMP DUTY COLLECTION CONSTITUTES THE REVENUE RECEIPTS. THEREFORE, ARGUED THAT THE STAMP DUTY COLLECTION SHOULD BE TREATED AS REVENUE RECEIPT AND ONLY THE EXPENDITURE REQUIRED TO BE ALLOWED TO THE EXTENT OF ACTUAL UTILIZATION. THE LD.DR RELIED ON THE ORDERS OF THE ITAT CITED SUPRA. 7. ON THE OTHER HAND, THE LD.AR RELIED ON THE ORDERS OF THE LD.CIT(A). 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL PLACED ON RECORD. THE ITAT, IN ITS ORDER DATED 14.11.2018 SUPRA HELD THAT THE STAMP DUTY COLLECTION PARTAKES THE CHARACTER OF THE REVENUE RECEIPT AND THE EXPENDITURE INCURRED IS THE REVENUE EXPENDITURE. DURING THE APPEAL HEARING, THE LD.DR DID N OT BRING ANY OTHER CASE LAW TO CONTROVERT THE ORDER OF THIS TRIBUNAL. THEREFORE, WE HOLD THAT THE STAMP DUTY COLLECTED BY THE 11 I.T.A. NO S . 87 - 90 /VIZ/201 9 AND CO NOS.62 - 65/VIZ/2019 M/S STEEL CITY SECURITIES LTD.,, VISAKHAPATNAM ASSESSEE DURING THE YEAR PAR TAKES THE CHARACTER OF THE REVENUE RECEIPT AND THE STAMPS UTILIZED BY THE ASSESSEE FOR AFFIXING ON TH E CONTRACT NOTES IS AN ALLOWABLE EXPENDITURE. IN THE INSTANT CASE , THE DEPARTMENT HAS ARGUED TO TREAT THE CLOSING BALANCE AS INCOME . HOWEVER, WE ARE OF THE CONSIDERED VIEW THAT OPENING BALANCE HAS TO BE REDUCED FROM THE CLOSING BALANCE AND THE NET DIFFERE NCE IS TO BE ADDED TO THE RETURNED INCOME. ACCORDINGLY , WE REMIT THE ISSUE BACK TO THE FILE OF THE AO TO WORK OUT THE ADDITION ON THE ABOVE LINES AND TO DECIDE THE CORRECT AMOUNT OF ADDITION TO BE MADE . IT IS NEEDLESS TO SAY THAT THE AO SHOULD GIVE OPPORTUNITY TO THE ASSESSEE BEFORE GIVING EFFECT TO THIS ORDER. ACCORDINGLY, THE APPEALS OF THE REVENUE IN GROUND NO.3& 4 ARE PARTLY ALLOWED FOR STATISTICAL PURPOSE. 9. CROSS OBJECTIONS ARE TIME BARRED BY 7 DAYS AND THE ASSESSEE HAS NOT FILED CONDONATION PETITION FOR DELAY IN FILING THE CO, HENCE DISMISSED IN LIMINE. 10. IN THE RESULT, APPEALS OF THE REVENUE ARE PARTLY ALLOWED FOR STATISTICAL PURPOSE AND THE CROSS OBJECTIONS OF THE ASSESSEE ARE DISMISSED IN LIMINE. 12 I.T.A. NO S . 87 - 90 /VIZ/201 9 AND CO NOS.62 - 65/VIZ/2019 M/S STEEL CITY SECURITIES LTD.,, VISAKHAPATNAM ORDER PRONOUNCED IN THE OPEN COURT ON 19 TH JUNE 2019. SD/ - SD/ - ( . . ) ( . ) ( D.S. SUNDER SINGH ) (V. DURGA RAO) /ACCOUNTANT MEMBER /JUDICIAL MEMBER /VISAKHAPATNAM /DATED : 19 .0 6 .2019 L.RAMA, SPS / COPY OF THE ORDER FORWARDED TO: - 1. / THE ASSESSEE - M/S STEEL CITY SECURITIES LTD., D.NO.49 - 52 - 5/4 SRI KANYA TOWERS, SANKARAMATAM ROAD, SANTHIPURAM, VISAKHAPATNAM 2. / THE REVENUE ACIT , CIRCLE - 4(1) , VISAKHAPATNAM 3. THE PR. COMMISSIONER OF INCOME TAX - 2 , VISAKHAPATNAM 4. THE COMMISSIONER OF TAX (APPEALS) - 9 , HYDERABAD 5 . , , / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // SR. PRIVATE SECRETARY ITAT, VISAKHAPATNAM