The ACIT,Vapi Circle, Vapi V. Gujarat Themis Biosyn Ltd., Vapi

ITA 1010/AHD/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 89454 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 1 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-05-2015
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 13-05-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 06-04-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: B L YADAV
• Assessee Lawyers: M K PATEL
• Keywords: Business income; Period of limitation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH AHMEDABAD BEFORE S/SHRI G. D. AGRAWAL, V.P. & RAJPAL YADAV, J.M. ITA NO.1010/AHD/2011 ASST. YEAR 2007-08 ASSTT. COMMISSIONER OF INCOME- TAX, VAPI CIRCLE, VAPI VS GUJARAT THEMIS BIOSYN LTD., 69- C, GIDC, VAPI-396 195. (APPELLANT) (RESPONDENT) PA NO.AABCG 0802C APPELLANT BY SHRI B. L. YADAV, SR. DR RESPONDENT BY SHRI M. K. PATEL, AR DATE OF HEARING: 13/5/2015 DATE OF PRONOUNCEMENT: 15/5/2015 O R D E R PER SHRI RAJPAL YADAV, JUDICIAL MEMBER. THE REVENUE IS IN APPEAL BEFORE US AGAINST THE ORDE R OF CIT(A) DATED 20 TH DECEMBER, 2010 PASSED FOR AY 2007-08. IN THE FIRS T GROUND OF APPEAL IT HAS BEEN PLEADED BY THE REVENUE THAT LD. CIT(A) ERRED IN DELETING THE ADDITION OF R.17,77,820. 2. BRIEF FACTS OF THE CASE ARE THAT ASSESSEE HAS FI LED ITS RETURN ELECTRONICALLY ON 30.10.2007 DECLARING TOTAL INCOME AT NIL. THE CASE ITA NOO.1010/AHD/2011 ASST. YEAR 2007-08 2 OF THE ASSESSEE WAS SELECTED FOR SCRUTINY ASSESSMEN T AND NOTICE UNDER SECTION 143(2) OF THE I.T. ACT, 1961 WAS ISSU ED AND SERVED UPON THE ASSESSEE. ON SCRUTINY OF THE RECORDS IT RE VEALED TO THE AO THAT ASSESSEE HAS SHOWN CREDITORS WITH WHOM NO TRANSACTION/MOVEMENT OF MONEY HAS TAKEN PLACE SINC E LAST THREE YEARS. IN THE UNDERSTANDING OF THE AO, AFTER EXPIRY OF THREE YEARS THE CREDITORS WOULD NOT BE IN A POSITION TO PRESS THE A SSESSEE FOR RECOVERY OF THESE AMOUNTS BECAUSE THE LIMITATION TO FILE A SUIT FOR RECOVERY IS ONLY FOR THREE YEARS. THUS HE CONSTRUCT ED THAT THE LIABILITY TO PAY HAS CEASED AND ASSESSEE OUGHT TO HAVE OFFERE D THESE AMOUNTS WITH ITS INCOME. ACCORDINGLY WITH THE HELP OF SECTION 41(1) HE MADE THE ADDITION OF RS.17,77,820/-.. 3. ON APPEAL THE CIT(A) HAS DELETED THE DISALLOWANC E. 4. AT THE VERY OUTSET THE LD. COUNSEL FOR THE ASSES SEE SUBMITTED THAT SIMILAR ISSUE WAS CONSIDERED IN AY 2006-07 AND THE TRIBUNAL HAS UPHELD THE ORDER OF CIT(A) IN ITA NO.1780/AHD/2010. HE PLACED ON RECORD A COPY OF THE TRIBUNALS ORDER. 5. ON THE OTHER HAND, THE LD. DR RELIED UPON THE OR DER OF A.O. ITA NOO.1010/AHD/2011 ASST. YEAR 2007-08 3 6. ON DUE CONSIDERATION OF THE FACTS AND CIRCUMSTAN CES, WE ARE OF THE VIEW THAT SECTION 41(1) HAS BEEN INCORPORATED I N THE ACT TO COVER A PARTICULAR FACT SITUATION. THIS SECTION APPLIES W HERE A TRADING LIABILITY WAS ALLOWED AS A DEDUCTION IN EARLIER YEARS IN COMP UTING THE BUSINESS INCOME OF THE ASSESSEE AND THE ASSESSEE HA S OBTAINED THE BENEFIT IN RESPECT OF SUCH TRADING LIABILITY IN LAT ER YEAR BY WAY OF REMISSION OR CESSATION OF THE LIABILITY. IN SUCH A CASE THE SECTION SAYS THAT WHATEVER BENEFIT HAS ARISEN TO THE ASSESSEE I N LATER YEAR BY WAY OF REMISSION OF THE LIABILITY WILL BE BROUGHT TO TA X IN THAT YEAR. THE PRINCIPLE BEHIND THE SECTION IS THAT A PROVISION IN TENDED TO ENSURE THAT ASSESSEE DOES NOT GET AWAY WITH A DOUBLE BENEFIT, O NCE BY WAY OF DEDUCTION IN AN EARLIER AY AND AGAIN BY NOT BEING T AXED ON THE BENEFIT RECEIVED BY HIM IN A LATER YEAR WITH REFERE NCE TO THE LIABILITY EARLIER ALLOWED AS A DEDUCTION. MERELY LAPSE OF THR EE YEARS IS NOT SUFFICIENT TO SAY THAT THE LIABILITIES CEASED TO EX IST UNLESS IT HAS BEEN WRITTEN BACK IN THE BOOKS OF ACCOUNT. THE ITAT IN A Y 2005-06 IN THE ASSESSEES OWN CASE HAS CONSIDERED A SIMILAR ISSUE IN ITA NO.2378/AHD/2008 AND OBSERVED THAT HONBLE SUPREME COURT IN THE CASE OF SUGAUL SUGAR WORKS P. LTD. REPORTED IN 236 ITR 518 HAS ITA NOO.1010/AHD/2011 ASST. YEAR 2007-08 4 HELD THAT ON EXPIRY OF PERIOD OF LIMITATION PRESCRI BED IN THE LIMITATION ACT DOES NOT EXTINGUISH THE DEBT BUT ONLY PREVENT T HE CREDITOR FROM ENFORCING THE DEBT. THE EXPIRY OF LIMITATION WILL N OT AUTOMATICALLY EXTINGUISH THE LIABILITY. IT HAS TO BE WRITTEN BACK IN THE ACCOUNTS. NO SUCH STEP HAS BEEN DONE IN THE PRESENT YEAR. THEREF ORE, THE ADDITION CANNOT BE MADE BY THE AO ON AUTOMATIC BASIS. 7. RESPECTFULLY FOLLOWING THE ORDER OF CO-ORDINATE BENCH IN ASSESSEES OWN CASE WE DO NOT FIND ANY MERIT IN THI S GROUND OF APPEAL. IT IS REJECTED. 8. IN THE NEXT GROUND THE GRIEVANCE OF REVENUE IS T HAT LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.2,34,064/- . 9. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE HA S COLLECTED THE AMOUNTS FROM THE EMPLOYEES TO BE CONTRIBUTED TO PF/ ESI ACCOUNTS, BUT IT FAILED TO DEPOSIT THE AMOUNTS WITHIN THE DUE DATE PRESCRIBED UNDER THOSE PF AND ESI ACTS. THE LD. AO, THEREFORE, DISALLOWED THE CLAIM OF ASSESSEE. ITA NOO.1010/AHD/2011 ASST. YEAR 2007-08 5 10. THE LD. COUNSEL FOR THE ASSESSEE CONCEDED THAT THIS ISSUE HAS BEEN DECIDED AGAINST THE ASSESSEE BY THE HONBLE JU RISDICTIONAL HIGH COURT IN THE CASE OF GUJARAT STATE ROAD TRANSPORT C ORPORATION REPORTED AT 366 ITR 170. SINCE THE ASSESSEE FAILED TO DEPOSIT THE EMPLOYEES CONTRIBUTIONS IN THE PF/ESI ACCOUNTS WITH IN THE DUE DATE, THEREFORE, IN VIEW OF HONBLE GUJARAT HIGH COURTS DECISION, IT IS NOT ENTITLED FOR ANY DEDUCTION. THE LD. CIT(A) HAS WRON GLY ALLOWED THIS GROUND OF ASSESSEE. WE ALLOW THE SECOND GROUND OF R EVENUE AND SET ASIDE THE FINDINGS OF CIT(A). WE RESTORE THE ASSESS MENT ORDER ON THIS ISSUE. 11. IN THE RESULT, APPEAL OF THE REVENUE IS PARTLY ALLOWED . ORDER WAS PRONOUNCED IN THE OPEN COURT ON 15/5/201 5. SD/- SD/- (G. D. AGRAWAL) VICE PRESIDENT (RAJPAL YADAV) JUDICIAL MEMBER MAHATA/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER DY. REGISTRAR, ITAT, AHMEDABAD ITA NOO.1010/AHD/2011 ASST. YEAR 2007-08 6 1. DATE OF DICTATION: 13/5/2011 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER: 14/5/2011 OTHER MEMBER: 3. DATE ON WHICH APPROVED DRAFT COMES TO THE SR. P. S./P.S.: 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER FOR PRONOUNCEMENT: __________ 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. P.S./P.S.: 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK: 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK: 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER: 9. DATE OF DESPATCH OF THE ORDER: