ACIT CEN CIR 30, MUMBAI V. KOPRAN LABORATORIES LTD, MUMBAI

ITA 102/MUM/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 75851 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-03-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 03-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 43B; 143(3); 154

Judgement Text

A IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI .. , . . . . BEFORE SHRI P.M. JAGTAP, AM AND DR. S.T.M. PAVALAN, JM ./ I.T.A. NO.102 /MUM/2013 ( / ASSESSMENT YEAR : 2006-2007 D CIT CENTRAL CIR - 30 ), ROOM NO. 403, 4 TH FLOOR, AAYAKAR BHAVAN, M.K. MARG, MUMBAI 20. / VS. M/S KOPRAN LABORATORIES LTD., PARIJAT HOUSE, 1076, DR. E. MOSES ROAD, WORLI, MUMBAI 400 018. ./ PAN :AAACK4406H ( % / APPELLANT ) .. ( &'% / RESPONDENT ) A PPELLANT BY S HRI MANVENDRA GOYAL R E SPONDENT BY : SHRI BHUPENDRA KARKHANIS * / DATE OF HEARING : 19-3-2014 * / DATE OF PRONOUNCEMENT : 211312014 [ / O R D E R PER P.M. JAGTAP, A.M . : .. , THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST THE ORDER OF LD. CIT(A) - 39, MUMBAI DATED 8-10-2012 WHEREBY HE DELETED THE A DDITIONS OF RS. 8,76,881/- AND 13,237/- MADE BY THE A.O. ON ACCOUNT OF DISALLOWANCE MADE U/S 43B OF THE INCOME TAX ACT, 1961 IN RESPECT OF C USTOM DUTY AND UNPAID STATUTORY LIABILITY OF EARLIER YEARS WRITTEN BACK D URING THE YEAR UNDER CONSIDERATION RESPECTIVELY BY WAY OF RECTIFICATION MADE VIDE ORDER PASSED U/S 154 OF THE ACT. 2. THE ASSESSEE IN THE PRESENT CASE IS A COMPANY WH ICH IS ENGAGED IN THE BUSINESS OF TRADING IN MEDICAL EQUIPMENTS. THE RETU RN OF INCOME FOR THE YEAR ITA 102/M/13 2 UNDER CONSIDERATION WAS FILED BY IT ON 29-11-2006 D ECLARING TOTAL INCOME OF RS. 26,43,103/-. IN THE ASSESSMENT COMPLETED U/S 1 43(3) OF THE ACT VIDE AN ORDER DATED 22-4-2008, THE TOTAL INCOME OF THE ASSE SSEE WAS COMPUTED BY THE A.O. AT RS. 28,40,687/- AFTER MAKING ADDITION ON AC COUNT OF DISALLOWANCE OF CERTAIN EXPENSES. SUBSEQUENTLY, HE PASSED AN ORDER U/S 154 OF THE ACT ON 24-3-2011 MAKING ADDITION TO THE TOTAL INCOME OF TH E ASSESSEE AS COMPUTED VIDE AN ORDER U/S 143(3), INTER ALIA, ON ACCOUNT OF DISALLOWANCE OF CUSTOM DUTY PAID AMOUNTING TO RS. 8,76,881/- U/S 43B OF TH E ACT AND UNPAID STATUTORY LIABILITY OF EARLIER YEARS WRITTEN BACK I N THE CURRENT YEAR AMOUNTING TO RS. 13,237/-. 3. AGAINST THE ORDER PASSED U/S 154 OF THE ACT, AN APPEAL WAS PREFERRED BY THE ASSESSEE BEFORE THE LD. CIT(A) AND AFTER CONSID ERING THE SUBMISSIONS MADE ON BEHALF OF THE ASSESSEE AS WELL AS MATERIAL AVAIL ABLE ON RECORD, THE LD. CIT(A) DELETED BOTH THE ADDITIONS OF RS. 8,76,881/- AND RS . 13,237/- MADE BY THE A.O. FOR THE FOLLOWING REASONS GIVEN IN PARA 11 OF HIS IMPUGNED ORDER:- AN ORDER OF ASSESSMENT HAD EARLIER BEEN MADE UNDER S. 143(3) OF THE ACT WHEN APPARENTLY THE CLAIMS HAD BEEN ALLOWED. BU T THE ORDER UNDER S. 154 AS PASSED IS SILENT ON WHETHER ANY CONTRARY MATERIAL IS ON RECORD THUS WARRANTING RECTIFICATION. FOR INVOKING JURISDI CTION UNDER S. 154 A MISTAKE HAS TO BE APPARENT FROM THE RECORD, RECORD BEING THE PROCEEDINGS AVAILABLE AT THE TIME OF PASSING THE OR DER WHICH IS THE SUBJECT MATTER OF RECTIFICATION. HOWEVER, THE ORDER IS SILENT ON THIS MATTER. FURTHER, RECTIFICATION IS NOT POSSIBLE IF T HE MATTER IS DEBATABLE . THE SUM CLAIMED UNDER S. 43B WAS ON PAYMENT BASIS, WHICH IS BORNE OUT BY THE ACCOUNTS. THE CUSTOMS DUTY OF RS. 8,76,8 81/- WAS PAID DURING THE YEAR AND INCLUDED IN THE VALUE OF CLOSIN G STOCK. THE A.O HAS NOT GIVEN ANY REASON FOR NOT ALLOWING THE SAID SUM. THE LEGAL POSITION IS NOW SETTLED THAT A MISTAKE WHICH IS NOT OBVIOUS, PA TENT AND SELF-EVIDENT AND A MISTAKE ON WHICH CONCEIVABLY TWO VIEWS ARE PO SSIBLE CANNOT BE RECTIFIED BY INVOKING SECTION 154 OF THE ACT. HENCE I AM UNABLE TO SUSTAIN THE ORDER AS PASSED BY THE A.O UNDER S. 154 OF THE ACT AND THE SAID ORDER IS HEREBY CANCELLED.' AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE REVEN UE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL. ITA 102/M/13 3 4. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. IT IS OBSER VED THAT THE ADDITION OF RS. 8,76,881/-WAS MADE BY THE A.O. U/S 43B OF THE ACT O N ACCOUNT OF CUSTOM DUTY PAID DURING THE YEAR UNDER CONSIDERATION WHICH WAS INCLUDED IN THE VALUE OF CLOSING STOCK AS ON 31-3-2006. ACCORDING TO THE A.O., THE SAID CUSTOM DUTY WAS NOT THE EXPENDITURE OF THE ASSESSEE RELATING TO THE YEAR UNDER CONSIDERATION AND THE ASSESSEE THEREFORE WAS NOT ENTITLED FOR DEDUCTION U/S 43B OF THE ACT EVEN THOUGH IT WAS PAID DURING T HE YEAR UNDER CONSIDERATION. AS RIGHTLY SUBMITTED BY THE LD. COU NSEL FOR THE ASSESSEE BEFORE US, THIS ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF BERGER PAINTS LIMITED VS. CIT (2004) 266 ITR 99 (SC) AND THAT OF HONBLE BOMBAY HIGH COU RT IN THE CASE OF CIT VS. BHARAT PETROLEUM CORPORATION LTD., 252 ITR 43. AS HELD IN THESE JUDICIAL PRONOUNCEMENTS, THE AMOUNT OF EXCISE AND CUSTOM DUT Y PAID BY THE ASSESSEE DURING THE RELEVANT YEAR AND INCLUDED IN T HE VALUE OF CLOSING STOCK IS LIABLE TO BE ALLOWED AS DEDUCTION IN TERMS OF THE S CHEME OF SECTION 43B OF THE ACT. SIMILARLY, THE ADDITION OF RS. 13,237/- MADE BY THE A.O. ON ACCOUNT OF REVERSAL OF UNPAID SERVICE TAX OF THE EARLIER YEAR BY THE ASSESSEE IN THE YEAR UNDER CONSIDERATION WAS NOT SUSTAINABLE AS THE SAID UNPAID SERVICE TAX WAS NOT ALLOWED AS DEDUCTION IN THE EARLIER YEAR AND TH E SAME THEREFORE COULD NOT BE BROUGHT TO TAX IN THE HANDS OF THE ASSESSEE IN T HE YEAR UNDER CONSIDERATION U/S 41(1) OF THE ACT. MOREOVER, AS R IGHTLY HELD BY THE LD. CIT(A) IN HIS IMPUGNED ORDER, BOTH THESE ADDITIONS INVOLVE D DEBATABLE ISSUES AND THE SAME THEREFORE WERE BEYOND THE SCOPE OF RECTIFI CATION PERMISSIBLE U/S 154 OF THE ACT. WE, THEREFORE, FIND NO INFIRMITY IN TH E IMPUGNED ORDER OF THE LD. CIT(A) DELETING THE ADDITIONS OF RS. 8,76,881/- AND RS. 13,237/- MADE BY THE A.O. BY WAY OF RECTIFICATION U/S 154 OF THE ACT AND UPHOLDING THE SAME, WE DISMISS THE APPEAL FILED BY THE REVENUE. ITA 102/M/13 4 5. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST ARCH, 2014. . * 6 7 21-03-2014 * SD/- SD/- - (DR. S.T.M. PAVALAN) (P.M. JAGTAP ) JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; 7 DATED 21-03-2014 [ .../ RK , SR. PS ' #%& '& / COPY OF THE ORDER FORWARDED TO : 1. % / THE APPELLANT 2. &'% / THE RESPONDENT. 3. : () / THE CIT(A)39 MUMBAI. 4. : / CIT CENT. II MUMBAI 5. = &? , ? , / DR, ITAT, MUMBAI A BENCH 6. A / GUARD FILE. / BY ORDER, '= & //TRUE COPY// / ( DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI