The ACIT, Circle-5, Ahmedabad V. Parle International Pvt. Ltd., Ahmedabad

ITA 1085/AHD/2006

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 9093 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 4 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-09-2009
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 08-01-2013
• Assessment Year: 2002-2003
• Appeal Filed On: 02-05-2006
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S S PANWAR
• Assessee Lawyers: J P SHAH
• Keywords: Wrong claim; Tax effect; Revised return; TDS
• Section: 143(3); 260A; 143(1); 143(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH A BEFORE SHRI MAHAVIR SINGH, JUDICIAL MEMBER AND SHRI D.C.AGRAWAL, ACCOUNTANT MEMBER DATE OF HEARING : 02/09/09 DRAFTED ON: 08 /09/09 ITA NO.1085/AHD/2006 ASSESSMENT YEAR : 2002-03 THE ASST.CIT CIRCLE-5 AHMEDABAD VS. PARLE INTERNATIONAL LTD. 101, GIDC ESTATE VATVA AHMEDABAD PAN/GIR NO. : AAACP 9018 Q (APPELLANT) .. (RESPONDENT) APPELLANT BY : SHRI S.S. PANWAR, CIT-DR RESPONDENT BY : SHRI J.P.SHAH, AR O R D E R PER D.C.AGRAWAL , ACCOUNTANT MEMBER :- THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE LEARNED CIT(APPEALS)-XI, AHMEDABAD DATED 20/02/20 06 PASSED FOR ASSESSMENT YEAR 2002-03, BY RAISING FOLLOWING GROU NDS:- 1. THE LD. COMMISSIONER OF INCOME TAX (A)XI, AHMED ABAD HAS ERRED IN LAW AND ON FACTS IN DELETING DISALLOWANCE OF RS.97,83,582/- OUT OF SALE PROMOTION & ADVERTISEM ENT EXPENSES MADE B Y THE ASSESSING OFFICER. 2. THE LD. COMMISSIONER OF INCOME TAX (A)-XI, AHMED ABAD HAS FURTHER ERRED IN LAW AND ON FACTS OF THE CASE IN DELETING DISALLOWANCE OF RS.31,65,252/- OUT OF LEGAL AND PROFESSIONAL EXPENSES MADE BY THE ASSESSING OFFICER . ITA NO.1085/AHD/2006 ACIT VS. PARLE INTERNATIONAL LTD. ASST.YEAR 2002-03 - 2 - 3. THE LD. COMMISSIONER OF INCOME TAX (A)-XI, AHMED ABAD HAS FURTHER ERRED IN LAW AND ON FACTS OF THE CASE I N DELETING DISALLOWANCE OF RS.40,77,841/- OUT OF FREIGHT OUTW ARD EXPENSES MADE BY THE ASSESSING OFFICER. 4. THE LD. COMMISSIONER OF INCOME TAX (A)-XI, AHMEDABA D HAS FURTHER ERRED IN LAW AND ON FACTS OF THE CASE I N DELETING DISALLOWANCE OF RS.1,56,34,419/- ON ACCOUNT OF TR ADE MARK USE FEES MADE BY THE ASSESSING OFFICER. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. COMMISSIONER OF INCOME-TAX(A)-XI, AHMEDABAD OUGHT T O HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. 6. IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE L D. COMMISSIONER OF INCOME-TAX(A) MAY BE SET-ASIDE TO T HE ABOVE EXTENT AND THAT OF THE ASSESSING OFFICER BE R ESTORED. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE COMPANY FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2002-03 ON 31-10-2002 DECLARING A LOSS OF RS.21,92,35,585/-. THE ASSESSE E-COMPANY HAS ALSO FILED A REVISED RETURN ON 17/01/2003 SHOWING THE LOSS AT RS.12,41,35,931/-. THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION W AS DULY PROCESSED U/S 143(1) OF THE INCOME TAX ACT, 1961 (IN SHORT THE AC T) ACCEPTING THE RETURN ON 11-3-2003. HOWEVER, THE CASE WAS SELECTED FOR SC RUTINY AND NOTICE U/S 143(2) OF THE ACT WAS ISSUED ON 20-10-2003. THE ASS ESSING OFFICER COMPLETED THE ASSESSMENT U/S 143(3) OF THE ACT ON 2 8-03-2005, WHEREIN HE HAS COMPUTED THE INCOME OF THE ASSESSEE AS UNDER: ITA NO.1085/AHD/2006 ACIT VS. PARLE INTERNATIONAL LTD. ASST.YEAR 2002-03 - 3 - TOTAL LOSS AS PER RETURN OF INCOME (-)RS.12,41,35,931 ADD: ADDITIONS/DISALLOWANCES 1. ADDITION ON ACCOUNT OF WRONG CLAIM OF TDS RS. 92,202 2. SALES PROMOTION & ADVT.EXP. RS. 97,83,58 2 3. LEGAL & PROFESSIONAL EXP. RS. 31,65,252 4. FREIGHT OUTWARD EXP. RS . 40,77,841 5. TRADE MARK USER FEES RS.1,56,34,419 ------------------- RS. 3,27,53,296 TOTAL LOSS RS. 9,13,82,635 =========== 3. FROM THE ABOVE, IT IS CLEAR THAT THE ASSESSING O FFICER HAS MADE CERTAIN ADDITIONS/DISALLOWANCES. HOWEVER, THE ASSES SED INCOME WAS DETERMINED AT LOSS. 4. ON APPEAL, THE LEARNED CIT(APPEALS) ALLOWED TH E APPEAL OF THE ASSESSEE AND, HENCE, THE REVENUE IS IN APPEAL BEFOR E THE TRIBUNAL. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS. SHRI J.P. S HAH, LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT EVEN IF THE ORDER OF THE ASSESSING OFFICER IS UPHELD, THE INCOME OF THE ASSESSEE WOUL D BE NEGATIVE, AND, THEREFORE THE TAX EFFECT WOULD APPARENTLY BE LESS T HAN RS.2.00 LACS. HE, THEREFORE, SUBMITTED THAT IN VIEW OF THE CBDT INSTR UCTION NO.2 OF 2005 OF 24-10-2005 (F. NO.279/MISC.-64/05-ITJ), THE REVENUE SHOULD NOT HAVE FILED THIS APPEAL BEFORE THE TRIBUNAL ON 04-05-2006 BECAUSE THE TAX EFFECT IS LESS THAN RS.2.00 LACS. RELIANCE WAS PLACED ON T HE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS MANG ALAM RICINUS LTD. (2008) 174 TAXMAN 186 (DELHI). IN OUR CONSIDERED VI EW, THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE AND AGAI NST THE REVENUE BY THE ITA NO.1085/AHD/2006 ACIT VS. PARLE INTERNATIONAL LTD. ASST.YEAR 2002-03 - 4 - DECISION OF THE HONBLE DELHI HIGH COURT (SUPRA). I N THE CASE OF MANGALAM RICINUS LTD. (SUPRA), THE ASSESSING OFFICER DISALL OWED AN AMOUNT OF RS.70,58,000/- BEING INTEREST LIABILITY CLAIMED BY THE ASSESSEE. THE ORDER OF THE ASSESSING OFFICER WAS REVERSED BY THE LEARNED CIT(APPEALS). THE REVENUE FILED AN APPEAL BEFORE THE TRIBUNAL AND THE TRIBUNAL CAME TO THE CONCLUSION THAT EVEN IF ORDER OF THE ASSESSING OFFI CER IS UPHELD, THE INCOME OF THE ASSESSEE WOULD BE NEGATIVE AND, THERE FORE, THE TAX WOULD BE CERTAINLY LESS THAN RS.1 LAC. ON THIS BASIS, THE TR IBUNAL DECLINED TO INTERFERE IN THE APPEAL. THE REVENUE HAS CHALLENGED THE ORDER OF THE TRIBUNAL BEFORE THE HONBLE HIGH COURT OF DELHI U/S. 260A OF THE AC T, AND THE HONBLE HIGH COURT UPHELD THE ORDER OF THE TRIBUNAL, OBSERV ING AS UNDER: 5. WE ARE IN AGREEMENT WITH THE VIEW OF THE TRIBUN AL THAT EVEN IF THE ORDER OF THE ASSESSING OFFICER IS UPHELD THE TAX RECOVERY SO FAR AS THE REVENUE IS CONCERNED WOULD BE NIL. IN THE EV ENT THE QUESTION HAS ANY IMPACT ON SUBSEQUENT YEARS, WE LEAVE IT OPE N TO THE REVENUE TO RAISE IT IN THE SUCCEEDING YEARS, IF NEED ARISES . 6. RESPECTFULLY FOLLOWING THE JUDGMENT OF THE HON BLE HIGH COURT OF DELHI IN THE CASE OF MANGALAM RICINUS LTD. (SUPRA), WE HOLD THAT IN VIEW OF THE CBDT INSTRUCTION NO.2 OF 2005 DATED 25-120-2 005, THE REVENUE SHOULD NOT HAVE FILED THIS APPEAL BEFORE THE TRIBUN AL. THE HONBLE DELHI HIGH COURT IN THE CASE OF MANGALAM RICINUS LTD. (SU PRA) ALSO OBSERVED AS UNDER: 9. WE MAKE IT CLEAR THAT IN THE CASE THE ISSUE ARI SES IN THE SUCCEEDING YEARS AND HAS ANY TAX EFFECT, IT IS LEFT OPEN FOR CONSIDERATION. ITA NO.1085/AHD/2006 ACIT VS. PARLE INTERNATIONAL LTD. ASST.YEAR 2002-03 - 5 - 7. IN OUR VIEW OF THE ABOVE, WE DIRECT THE REVENUE TO FOLLOW THE DIRECTIONS/GUIDELINES GIVEN BY THE HONBLE HIGH COU RT OF DELHI IN THE CASE OF MANGALAM RICINUS LTD.(SUPRA), IF NEED ARISES. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER SIGNED, DATED AND PRONOUNCED IN THE COURT ON 11/09/2009. SD/- SD/- ( MAHAVIR SINGH ) ( D.C .AGRAWAL ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 11/ 09 /2009 T.C. NAIR COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT(APPEALS)-XI, AHMEDABAD 5. THE DR, AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT.REGISTRAR), ITAT, AHMEDABAD