ACIT, Hyderabad V. M/s SMS Pharmaceuticals Ltd., Hyderabad

ITA 1090/HYD/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 53752 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 2 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 20-06-2011
• Assessment Year: 1997-1998
• Appeal Filed On: 13-08-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V SRINIVAS
• Assessee Lawyers: K C DEVADAS
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH, HYDERABAD BEFORE SHRI CHANDRA POOJARI AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NO.1090/HYD/2010 ASSESSMENT YEAR 1997-98 THE ACIT, CIRCLE 16(3), HYDERABAD (GIR NO.P-41) VS M/S SMS PHARMACEUTICAL LTD., HYDERABAD APPELLANT RESPONDENT APPELLANT BY : SHRI V. SRINIVAS RESPONDENT BY : SHRI K.C. DEVADAS DATE OF HEARING : 13.10.2011 DATE OF PRONOUNCEMENT : 31.10.2011 ORDER PER ASHA VIJAYA RAGHAVAN, J.M. THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A) V, HYDERABA D DATED 28.5.2010 AND PERTAINS TO THE ASSESSMENT YEAR 1997- 98. 2. FOR THE ASSESSMENT YEAR THE ASSESSEE COMPANY FIL ED ITS RETURN OF INCOME ON 28.11.1997 DECLARING TOTAL INCOME OF RS.3,57,530/- U/S 115JA OF THE ACT. THE ASSESSING OFFICER COMPLETED THE ASSESSMENT U/S 143(3) OF THE ACT DISA LLOWING AN AMOUNT OF RS.1,18,92,214/- CLAIMED BY THE ASSESS EE AS UN AVAILED MODVAT CREDIT. THE CIT(A) CONFIRMED THE ABOVE ADDITION. THE TRIBUNAL DELETED THE ADDITION OF RS.1,18,92,214/-. THE ASSESSING OFFICER PASSED CONSEQUENTIAL ORDER GIVING EFFECT TO THE RELIEF ALL OWED BY THE TRIBUNAL DETERMINING THE REVISED NET LOSS OF RS.65, 15,294/- AND BOOK PROFITS AT RS.1,30,08,397/- . ITA NO.1090/HYD/2010 M/S SMS PHARMACEUTICALS LTD., HYDERABAD 2 3. AGGRIEVED BY THE CONSEQUENTIAL ORDER, THE ASSESS EE PREFERRED AN APPEAL BEFORE THE CIT(A). THE CIT(A) OBSERVED THAT THE ASSESSING OFFICER WHILE GIVING EFFECT TO T HE ORDER OF THE TRIBUNAL ALLOWED THE RELIEF OF RS.1,18,92,21`4/ - BUT DID NOT ALLOW THE SAME RELIEF WHILE CALCULATING THE BOO KS PROFIT FOR SECTION 115JA OF THE ACT, WHERE HE TOOK THE SAM E FIGURES WHICH WERE THERE IN THE ORIGINAL ASSESSMENT ORDER, THE RELEVANT CALCULATIONS ARE AS BELOW: CONSEQUENTIAL ORDER: THE HONBLE ITAT VIDE ITS ORDER CITED ABOVE HELD T HAT THE UNAVAILED MODVAT CREDIT WAS NOT NOTIONAL AND THE SA ME CAN BE ALLOWED IN THE YEAR WRITTEN OFF IN THE YEAR 1997 -98. ACCORDINGLY, THE ORDER OF THE TRIBUNAL IS GIVEN EFF ECT MODIFYING THE CONSEQUENTIAL ORDER PASSED ON 30.1.20 02 AS UNDER: TOTAL INCOME AS PER CONSEQUENTIAL ORDER DATED30.1.2002 RS.53,76,920 LESS: RELIEF ALLOWED BY THE TRIBUNAL AS ABOVE RS.1,18,92,214 -------------------- REVISED NET LOSS RS.65,15294 ------------------- BOOK PROFIT AS PER ORDER 143(3) DT. 30.3.2000 RS.1,30,83,973 30% OF BOOK PROFITS RS.39,25,192 4. THE BOOK PROFIT OF RS.1,30,83,973/- HAS BEEN AT TAINED AT BY ADDING TO THE NET PROFIT AS PER PROFIT AND LO SS ACCOUNT OF RS.11,91,759/-, A SUM OF RS.1,18,92,214/- BEING LOSS DUE TO UNAVAILED MODVAT CREDIT DEBITED TO PROFIT AN D LOSS ACCOUNT AS PRIOR PERIOD EXPENSES. THE CIT(A) THERE FORE HELD ITA NO.1090/HYD/2010 M/S SMS PHARMACEUTICALS LTD., HYDERABAD 3 THAT IT IS CLEAR THAT EVEN THOUGH THE ASSESSING OFF ICER HAS GIVEN RELIEF IN CALCULATING THE REVISED NET LOSS BY MISTAKE, HE HAS NOT DONE SO FOR THE PURPOSE OF SECTION 115JA, T HEREFORE THE CONTENTION OF THE ASSESSEE IS FACTUALLY CORRECT AND THEREFORE THE CIT(A) DIRECTED THE ASSESSING OFFICER TO RE- COMPUTE THE BOOK PROFITS U/S 115JA OF THE ACT AFTER REDUCING RELIEF GIVEN BY THE TRIBUNAL. 5. AGGRIEVED THE DEPARTMENT IN APPEAL BEFORE US AN D RAISED THE FOLLOWING GROUNDS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE HONBLE CIT(A) ERRED IN ALLOWING THE APPEAL OF THE ASSESSEE AND DIRECTING THE ASSESSING OFFICER TO RE- COMPUTE THE BOOK PROFITS U/S 115JA OF THE ACT AFTER REDUCING THE RELIEF GIVEN BY THE TRIBUNAL. 2. THE CIT(A) FAILED TO APPRECIATE THE FACTS THAT THE TRIBUNAL HAS NOT GIVEN ANY FINDING ON CALCULATION O F BOOK PROFIT WHILE GIVING EFFECT TO TRIBUNALS ORDER . 6. WE HEARD BOTH THE PARTIES. THE LEARNED COUNSEL FOR THE DEPARTMENT FILED COPY OF THE ORDER OF THE TRIBU NAL IN ITA NO.377/H/2002 FOR THE ASSESSMENT YEAR 1997-98 AND I TA NO.812/HYD/2003 FOR THE ASSESSMENT YEAR 1995-96 IN THE ASSESSEES CASE WHEREIN THE TRIBUNAL HAS HELD AS FO LLOWS: THE ONLY QUESTION NOW REMAINS AS TO IN WHICH YEAR THE DEDUCTION SHOULD BE ALLOWED. THE UNUTILISED CR EDIT LAPSED ON 1.3.1997, AND THE ASSESSEE WROTE IT OFF I N THE SAME ACCOUNTING YEAR I.E. 1996-97 AND HENCE, IT WOULD BE PROPER IF THE SAME IS ALLOWED IN ASSESSMEN T YEAR 1997-98. WE DIRECT ACCORDINGLY. 7. WE FIND THAT IN THE ORIGINAL ASSESSMENT ORDER T HE INCOME WAS COMPUTED UNDER NORMAL PROVISIONS OF THE INCOME TAX ITA NO.1090/HYD/2010 M/S SMS PHARMACEUTICALS LTD., HYDERABAD 4 ACT. IT IS ONLY AFTER GIVING EFFECT TO THE DIRECTI ONS OF THE HONBLE ITAT, THE INCOME UNDER NORMAL PROVISIONS BE CAME NEGATIVE AND THE ASSESSING OFFICER ASSESSED TAXABLE INCOME U/S 115JA. THEREFORE, THERE IS NO QUESTION OF THE ASSESSING OFFICER DETERMINING THE BOOK PROFITS U/S 115JA AS P ER DIRECTIONS OF THE TRIBUNAL. IN THE BOOKS OF ACCOUN T, THE ASSESSEE HAS DEBITED THE PROFIT AND LOSS WITH RS.1,18,92,214/- BEING UNAVAILED MODVAT WRITTEN, AS PRIOR PERIOD EXPENSES. AS HELD BY THE TRIBUNAL, THE LO SS ON ACCOUNT OF THE UNAVAILED MODVAT ACCRUED THIS YEAR. FURTHER, THIS AMOUNT HAS BEEN DEBITED TO THE PROFIT AND LOSS ACCOUNT. THIS AMOUNT CANNOT BE ADDED BACK UNDER AN Y OF THE EXPLANATIONS U/S 115JA. 8. THEREFORE, WE FIND NO INFIRMITY IN THE ORDERS O F THE CIT(A) AS THE CIT(A) HAS MERELY FOLLOWED THE DIRECT IONS OF THE TRIBUNAL AND DIRECTING THE ASSESSING OFFICER TO RE- COMPUTE THE BOOK PROFITS U/S 115A OF THE ACT WITHOU T ADDING BACK RS.1,18,92,214/- REPRESENTING LOSS DUE TO UNAVAILED MODVAT CREDIT DEBITED TO THE PROFIT AND L OSS ACCOUNT. 8. IN THE RESULT, THE APPEAL FILED BY THE DEPARTME NTAL STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT 31.10.2011 SD/ - (CHANDRA POOJARI) SD/ - (ASHA VIJAYA RAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 31 ST OCTOBER, 2011 ITA NO.1090/HYD/2010 M/S SMS PHARMACEUTICALS LTD., HYDERABAD 5 COPY FORWARDED TO: 1. THE ACIT, CIRCLE 16(3), HYDERABAD 2. M/S SMS PHARMACEUTICALS LTD., 417, NILIGIRI BLOCK, ADITYA ENCLAVE, AMEERPET, HYDERABAD. 3. THE CIT(A) V, HYDERABAD 4. THE CIT, HYDERABAD 5. THE DR, ITAT, HYDERABAD NP/