Unitex Fasions (India) Private Limited, CHENNAI V. ITO Corporate Ward 3(3), CHENNAI

ITA 1014/CHNY/2019

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 6650 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-07-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2012-2013
• Appeal Filed On: 11-04-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R CLEMENT RAMESH KUMAR
• Section: 115JB

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: CHENNAI , , ' BEFORE SHRI GEORGE MATHAN , JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER ./ ITA NO.1014/CHNY/2019 /ASSESSMENT YEAR: 2012-13 M/S.UNITEX FASHIONS (INDIA)- PVT. LTD., NO.21-A, PALVADI MAIN STREET, NERKUNDRAM, CHENNAI-600 107. VS. THE INCOME TAX OFFICER, CORPORATE WARD-3(3), CHENNAI. [PAN: AAACU 4779 R ] ( ) /APPELLANT) ( *+) /RESPONDENT) ) , / APPELLANT BY : MR.KURIACHAN, CA *+) , /RESPONDENT BY : MR.R.CLEMENT RAMESH- KUMAR, ADDL.CIT , /DATE OF HEARING : 29.07.2019 , /DATE OF PRONOUNCEMENT : 29.07.2019 / O R D E R PER GEORGE MATHAN, JUDICIAL MEMBER : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-7, CHENNAI, IN ITA NO.100(T)/CIT(A)-7/2017-18 DATED 25.01.2019 FOR THE AY 2012-13. ITA NO.1014/CHNY/2019 :- 2 -: 2. MR. R.CLEMENT RAMESH KUMAR, ADDL.CIT, REPRESENTED ON BEHALF OF THE REVENUE AND MR.KURIACHAN, CA, REPRESENTED ON BE HALF OF THE ASSESSEE. 3. IT WAS SUBMITTED BY THE LD.AR THAT THE ASSESSMENT HAD ORIGINALLY BEEN COMPLETED U/S.143(3) ON 05.03.2015. SUBSEQUEN TLY, AN ORDER U/S.263 HAD BEEN PASSED ON 31.03.2017 SETTING ASIDE THE ASSESSMENT ORDER WITH A DIRECTION TO LOOK INTO THE VARIOUS ISS UES. THE AO PASSED CONSEQUENTIAL ORDER, WHEREIN, THE AO WHILE COMPUTIN G THE INCOME OF THE ASSESSEE MADE DISALLOWANCE TO AN EXTENT OF RS.60,77 ,160/- REPRESENTING THE ADDITION OF DIFFERENCE IN 10% OF WRITTEN OFF ST OCK IN TRADE TO AN EXTENT OF RS.11,80,588/-, DISALLOWANCE OF CLAIM OF DELAYED PAYMENT CHARGES TO AN EXTENT OF RS.38,68,470/- AND DISALLOWANCE OF DIF FERENTIAL AMOUNT WITH RESPECT TO ASSESSEES CLAIM U/S.43B DISALLOWED U/S. 40 DURING THE PREVIOUS YEAR TO AN EXTENT OF RS.10,29,101/-. IT WAS A SUBM ISSION THAT AS THE ASSESSEE WAS HAVING LOSS, THE BOOK PROFITS OF THE A SSESSEE WAS COMPUTED U/S.115JB OF THE ACT, UNDER THE PROVISIONS OF MAT. IN COMPUTATION OF THE BOOK PROFITS, FOR THE PURPOSE OF MAT, THE AO MADE T HE ADDITION OF RS.60,77,160/-. IT WAS A SUBMISSION THAT IN VIEW O F THE PROVISIONS OF EXPLANATION TO SUB-SECTION 1A OF SECTION 115JB OF T HE ACT, THE ADJUSTMENT MADE TO THE TOTAL INCOME UNDER THE REGULAR PROVISIO NS OUGHT NOT TO HAVE BEEN ADDED TO THE BOOK PROFITS. THE LD.AR ALSO PLA CED RELIANCE ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE O F M/S.APOLLO TYRES LTD., VS. CIT REPORTED IN 255 ITR 273. IT WAS A SU BMISSION THAT THE ITA NO.1014/CHNY/2019 :- 3 -: LD.CIT(A) HAD WITHOUT CONSIDERING THE SUBMISSIONS O F THE ASSESSEE DISMISSED THE ASSESSEES APPEAL. IT WAS A PRAYER TH AT THE ADDITIONS REPRESENTING THE AMOUNT OF RS.60,77,160/- WAS NOT L IABLE TO BE ADDED WHEN COMPUTING THE BOOK PROFITS U/S.115JB OF THE AC T. 4. IN REPLY, THE LD.DR VEHEMENTLY SUPPORTED THE ORDER OF THE AO AND THE LD.CIT(A). 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. 6. A PERUSAL OF THE PROVISIONS OF SEC.115JB AND THE E XPLANATION PROVIDED THERETO CLEARLY SHOWS THAT THE THREE DISAL LOWANCES WHICH HAVE BEEN MADE BY THE AO AND WHICH HAVE RESULTED IN AN A DDITION OF RS.60,77,160/- DOES NOT FALL UNDER ANY PROVISIONS O F ADJUSTMENTS THAT CAN BE MADE UNDER THE EXPLANATION TO SEC.115JB FOR THE PURPOSE OF INCREASING THE BOOK PROFITS OF THE COMPANY IN RESPECT OF COMPU TATION UNDER MAT. THIS BEING SO, IN VIEW OF THE PRINCIPLES LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF M/S.APOLLO TYRES LTD. VS. CIT REPORTED IN 255 ITR 273, REFERRED TO SUPRA, WHEREIN, IT HAS BEEN CATEGORICAL LY HELD AS FOLLOWS: 9. THEREFORE, WE ARE OF THE OPINION, THE ASSESS ING OFFICER WHILE COMPUTING THE INCOME UNDER SECTION 115-J HAS ONLY THE POWER OF EXAMINING WHETHER THE BOOKS OF ACCOUNT ARE CERTIFIES BY THE AUTHORITIES UNDER THE COMPANIES AC T AS HAVING BEEN PROPERLY MAINTAINED IN ACCORDANCE WITH THE COMPANIES ACT. THE ASSESSING OF FICER THEREAFTER HAS THE LIMITED POWER OF MAKING INCREASES AND REDUCTIONS AS PROVIDED FOR IN THE EXPLANATION TO THE SAID SECTION. TO PUT IT DIFFERENTLY, THE ASSESSING OFFICER DOES N OT HAVE THE JURISDICTION TO GO BEHIND THE NET PROFIT SHOWN IN THE PROFIT AND LOSS ACCOUNT EXC EPT TO THE EXTENT PROVIDED IN THE EXPLANATION TO SECTION 115-J . ITA NO.1014/CHNY/2019 :- 4 -: WE ARE OF THE CONSIDERED OPINION THAT THE SAID AMO UNT OF RS.60,77,160/- CANNOT BE ADDED IN COMPUTING THE BOO K PROFITS U/S.115JB OF THE ACT. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON THE 29 TH DAY OF JULY, 2019 IN CHENNAI. SD/- SD/- ( ) ( INTURI RAMA RAO ) /ACCOUNTANT MEMBER ( ) (GEORGE MATHAN) /JUDICIAL MEMBER /CHENNAI, 3 /DATED: 29 TH JULY, 2019. TLN , *45 65 /COPY TO: 1. ) /APPELLANT 4. 7 /CIT 2. *+) /RESPONDENT 5. 5 * /DR 3. 7 ( ) /CIT(A) 6. /GF