The ACIT, Ahmedabad Circle-1, Ahmedabad V. Aryaman Spinners Pvt.Ltd., Ahmedabad

ITA 110/AHD/2011

• Counselvise Citation: 11020514 RSA 2011
• Duration Of Justice: 8 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-10-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2004-2005
• Appeal Filed On: 17-01-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K PATEL
• Assessee Lawyers: URVASHI SHODHAN A R
• Keywords: Agreed addition; Assessment record

Judgement Text

, , , , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD , .'.#$%, '& ' ' BEFORE SHRI MUKUL KR.SHRAWAT, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ./ I.T.A. NO.110/AHD/2011 ( ) * ) * ) * ) * / / / / ASSESSMENT YEAR : 2004-05) THE ACIT AHMEDABAD CIRCLE-1, AHMEDABAD ) ) ) ) / VS. M/S.ARYAMAN SPINNERS PVT.LTD. H.P. HOUSE OPP.TOWN HALL ELLISBRIDGE, AHMEDABAD + '& ./,- ./ PAN/GIR NO. : AABCA 8482 G ( +. / // / APPELLANT ) .. ( /0+. / RESPONDENT ) +. 1 ' / APPELLANT BY : SHRI A.K. PATEL, D.R. /0+. 2 1 ' / RESPONDENT BY : MS.URVASHI SHODHAN, A.R. )3 2 & / / / / DATE OF HEARING : 30/09/2011 4$* 2 & / DATE OF PRONOUNCEMENT : 14.10.11 '5 / O R D E R PER SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER : THIS IS AN APPEAL AT THE BEHEST OF THE REVENUE WH ICH HAS EMANATED FROM THE ORDER OF LEARNED CIT(APPEALS)-VI, AHMEDABAD DATED 03/11/2010 PASSED FOR A.Y. 2004-05 AND THE ONLY GROUND RAISED BY THE REVENUE IS AS FOLLOWS:- 1. THE LD. CIT(A) ERRED IN LAW AND ON FACTS IN DEL ETING THE ADDITION ON ACCOUNT OF EXCESS POWER & FUEL AND OTHE R ITA NO.110/AHD/ 2011 ACIT VS. M/S.ARYAMAN SPINNERS PVT.LTD. ASST.YEAR - 2004-05 - 2 - MANUFACTURING EXPENSE AMOUNTING TO RS.83,07,834/- M ADE BY THE A.O. 2.1. FACTS IN BRIEF AS EMERGED FROM THE CORRESPONDI NG ASSESSMENT ORDER PASSED U/S.143(3) OF THE ACT DATED 15/12/2006 WERE THAT THE ASSESSEE IS IN THE BUSINESS OF TRADING AND MANUFACT URING COTTON YARN. IT WAS OBSERVED BY THE AO THAT THE UNDER THE HEAD POWER AND FUEL EXPENSES A SUM OF RS.56,09,135/- AND UNDER THE HEA D MANUFACTURING EXPENSES A SUM OF RS.64,55,055/- WA S INCURRED FOR THE PRODUCTION OF 71,850 KGS. THE ASSESSEE WAS ASK ED TO GIVE THE WORKING OF AVERAGE COST OF PRODUCTION FOR THE YEAR UNDER CONSIDERATION. AS PER THE WORKING OF THE ASSESSE E AVERAGE COST PER UNIT WAS CALCULATED AT RS.5.70, AS AGAINST THE AVER AGE COST PER UNIT OF RS.4.53 OF PRECEDING YEAR. ACCORDING TO AO, THE EX PLANATION WAS NOT CONVINCING AND THEREFORE ADDITIONAL EXPENSES WE RE WORKED OUT AS PER FOLLOWING CHART:- TOTAL PRODUCTION IN 2002-03 X UNIT CONSUMED IN 1998-99 TOTAL PRODUCTION IN 1998-99 = 718250 S 1701076 = 775622 1575250 ACTUAL UNIT CONSUMED = 2232601 EXCESS UNIT CONSUMED = 1456979 AVG.COST PER UNIT = RS.5.70 EXCESS EXPENSES DISALLOWABLE = RS.83,07,834/- ITA NO.110/AHD/ 2011 ACIT VS. M/S.ARYAMAN SPINNERS PVT.LTD. ASST.YEAR - 2004-05 - 3 - THE SAID ADDITION WAS CHALLENGED. 3. LD.CIT(A) HAS FOLLOWED THE PAST HISTORY AND DELE TED THE ADDITION AS FOLLOWS:- 2.3. I HAVE CONSIDERED THE FACTS OF THE CASE; ASSE SSMENT ORDER AND APPELLANTS SUBMISSION. ASSESSING OFFICER MENT IONED IN THE ORDER THAT APPELLANT AGREED FOR THIS ADDITION. APPELLANT DISPUTED THIS AND SUBMITTED THAT IT HAS NEVER AGREE D FOR SUCH ADDITION. IN THIS REGARD, THE ORDER SHEET NOTINGS OF ASSESSING OFFICER FROM ASSESSMENT RECORDS WAS CALLED FOR AND FOUND THAT THERE WAS NO SUCH ADMISSION. BESIDES THIS, APPELLA NT SUBMITTED AFFIDAVIT THAT IT HAS NEVER AGREED FOR TH IS ADDITION. IN VIEW OF THIS AND ALSO THE FACT THAT APPELLANT WA S CONTESTING THE SIMILAR ADDITION IN EARLIER YEARS AND ALSO GOT FAVORABLE ORDER FROM ITAT OF THE SAME ISSUE, I FIND NO BASIS FOR ASSESSING OFFICERS REMARK OF AGREED ADDITION. THE IDENTICAL ISSUE CAME UP IN EARLIER YEARS WHEREI N SIMILAR ADDITIONS MADE BY THE ASSESSING OFFICER IN ASSESSME NT YEAR 2000-01 AND ASSESSMENT YEAR 2001-02 WERE ALLOWED BY ITAT, AHMEDABAD. COMMISSIONER OF INCOME TAX (APPEALS) HA S DELETED THIS ADDITION IN ALL THE YEARS UP TO ASSESS MENT YEAR 2003-04 (IMMEDIATELY PRECEDING YEAR). THE RELEVANT PARA IN APPEAL ORDER FOR ASSESSMENT YEAR 2003-04 IS QUOTED BELOW:- I HAVE CONSIDERED THE ASSESSMENT ORDER AND THE ABO VE SUBMISSIONS. I FIND THAT THE ENTIRE BASIS FOR DISALLOWANCE IS THE METHOD ADOPTED BY THE AO IN ASSESSMENT YEAR 99-2000. HOWEVER, FOR THE VARIOUS YEARS UP TO ASSESSMENT YEAR 2002-03 THE SAME BASIS ADOPTED HAS NOT BEEN APPROVED IN THE APPELLATE PROCEEDINGS AND CIT(A) HAS DELETED THOSE ADDITIONS. I ALSO APPRECIATE THAT THE APPELLANT HAS BETTER YIELD WHICH IS 89% AS COMPARED TO 70% IN ASSESSMENT YEAR 2002-0 3 ITA NO.110/AHD/ 2011 ACIT VS. M/S.ARYAMAN SPINNERS PVT.LTD. ASST.YEAR - 2004-05 - 4 - AND 40% IN ASSESSMENT YEAR 2001-02. THAT APART THE MACHINERY IS VERY OLD AND IT REQUIRES MORE CONSUMPT ION OF POWER. THIS FACT IS FURTHER SUPPORTED BY THE OBSERVATION OF THE AO THAT LARGE REPAIR EXPENSES INCURRED BY THE APPELLANT. IN VIEW OF THIS THE EXPLANATION OF THE ASSESSEE CANNOT BE RULED OUT. T HE ADDITION MADE IS ACCORDINGLY DELETED AS HELD IN EAR LIER YEARS BY RESPECTIVE CIT(A)S. FACTS BEING IDENTICAL IN THIS YEAR ALSO, RESPECTFUL LY FOLLOWING THE ORDERS OF MY LEARNED PREDECESSORS, THE ADDITION MADE BY THE ASSESSING OFFICER IS DELETED. 4. HAVING HEARD THE SUBMISSIONS OF BOTH THE SIDES, WE HAVE NOTICED THAT ON IDENTICAL LINES, RESPECTED CO-ORDIN ATE BENCH D AHMEDABAD IN REVENUES APPEAL FOR A.Y. 2003-04 BEAR ING ITA NO.2317/AHD/2007 ORDER DATED 28/04/2010 TITLED AS D CIT VS. ARYAMAN SPINNERS PVT.LTD. HAS DEALT WITH THIS ISSU E IN FAVOUR OF THE ASSESSEE IN THE FOLLOWING MANNER:- 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS A VAILABLE ON RECORD. BOTH THE PARTIES AGREED THAT SIMILAR ISS UE HAS COME UP BEFORE THE TRIBUNAL IN THE CASE OF ONE OF THE GR OUP COMPANIES M/S.SHREENATH SPINNERS PVT.LTD. IN ITA NO.2199/AHD/2004 FOR ASSESSMENT YEAR 2001-02 DATED 7.12.2007 AND THE TRIBUNAL HAS DISMISSED THE APPEAL OF THE REVENUE AND CONFIRMED THE ORDER OF THE LEARNED CIT( A). THE TRIBUNAL WHILE DOING SO OBSERVED TO QUOTE AS UNDER: 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS ITA NO.110/AHD/ 2011 ACIT VS. M/S.ARYAMAN SPINNERS PVT.LTD. ASST.YEAR - 2004-05 - 5 - AVAILABLE ON RECORD. WE FIND THAT SIMILAR ISSUE HA S COME UP BEFORE THE TRIBUNAL IN THE ASSESSEES OWN C ASE IN THE ASSESSMENT YEAR 2000-01. THE TRIBUNAL HAS DISMISSED THE APPEAL OF THE REVENUE AND CONFIRMED T HE ORDER OF THE LEARNED CIT(A). THE TRIBUNAL WHILE DO ING SO OBSERVED TO QUOTE AS UNDER: 4.1 WHILE THE REVENUES CASE IS ONE OF THE INABILITY OF THE ASSESSEE TO EXPLAIN THE SAID INCREASE, RECKONED WITH REFERENCE TO THE EXPENDITURE INCURRED UNDER THE SAID HEAD IN THE PRECEDING YEAR, THE ASSESSEES CASE IS THAT THERE I S NO SCOPE FOR DISALLOWANCE OF THE POWER EXPENDITURE, THE SAME BEING ONLY PAID TO THE GOVERNMENT, SO THAT THERE IS NO DOUBT AS TO ITS GENUINENESS. THE VARIOUS OF THE POWER EXPENDITURE COULD BE FOR ON VARIETY OF REASONS AND THERE IS NO PRESUMPTION OF THE UNIFORMITY OF THE SAME ACROSS DIFFERENT YEARS. THE TOTAL EXPENDITURE, WE FIND, IS NOT ONLY TOWARD THE POWER CHARGES PAID TO THE ELECTRICITY BOARD, I.E. A GOVERNMENT ORGANIZATION, BUT ALSO INCLUDES DIESEL EXPENSES FOR D.G. SET, WHICH, IN FACT, HAVE BEEN BOOKED UNDER A SEPARATE HEAD OF ACCOUNT. ALSO, THE CONSUMPTION OF ENERGY HAS A RELATIONSHIP, WHICH MAY NOT BE LINEAR, WITH THE PRODUCTION, WHICH ASPECT HAS ALSO BEEN EXAMINED, AND WOULD, THEREFORE, MERIT CONSIDERATION. THE ISSUE, THEREFORE, IS ONE OF FACTUAL DETERMINATION, RATHER THAN ONE OF LAW, BEING THE VALIDITY OF THE ASSESSEES CLAIM FOR EXPENDITURE U/S.37(1) OF THE ACT IN GIVEN FACTS AND CIRCUMSTANCES OF THE CASE. IN THE INSTANT YEAR ALSO WE FIND THAT THE A O FOUND THAT PROPORTIONATE EXPENDITURE INCURRED BY THE ASSESSEE ON ELECTRICITY WAS HIGHER THAN THAT INCURRED IN THE ITA NO.110/AHD/ 2011 ACIT VS. M/S.ARYAMAN SPINNERS PVT.LTD. ASST.YEAR - 2004-05 - 6 - ASSESSMENT YEAR 1999-2000. GENUINENESS OF THE EXPENDITURE INCURRED IS NOT IN DOUBT. THERE IS NO MATERIAL BROUGHT ON RECORD BY THE REVENUE TO SHOW T HAT THE ASSESSEE HAS MADE UNACCOUNTED PURCHASES OF RAW MATERIALS OR HAS MADE UNACCOUNTED OF RAW MATERIALS OR HAS MADE UNACCOUNTED SALES DURING THE YEAR UNDER CONSIDERATION. THUS, THE FACTS IN THE YEAR UNDER A PPEAL ARE IDENTICAL TO THE FACTS OF THE ASSESSMENT YEAR 2 000- 01. THE LEARNED DR COULD NOT SHOW ANY GOOD REASON FOR NOT FOLLOWING THE ORDER OF THE TRIBUNAL IN THE ASSESSMENT YEAR 2000-01. IN THE ABOVE FACTS AD CIRCUMSTANCES OF THE CASE, FOLLOWING THE DECISION O F THE TRIBUNAL IN THE ASSESSMENT YEAR 2000-01 WE CONFIRM THE ORDER OF THE LEARNED CIT(A) AND DISMISS THE GROUND OF APPEAL OF THE REVENUE. 7. IN THE INSTANT CASE ALSO, WE FIND THAT THE A O FOUND THAT PROPORTIONATE EXPENDITURE INCURRED BY THE ASSESSEE ON ELECTRICITY WAS HIGHER THAN THAT INCURRED IN THE AS SESSMENT YEAR 1999-2000. GENUINENESS OF THE EXPENDITURE INC URRED IS NOT IN DOUBT. THERE IS NO MATERIAL BROUGHT ON RECO RD BY THE REVENUE TO SHOW THAT THE ASSESSEE HAS MADE UNACCOUN TED PURCHASES OF RAW MATERIALS OR HAS MADE UNACCOUNTED SALES DURING THE YEAR UNDER CONSIDERATION. THUS, THE FAC TS IN THE CASE OF THE ASSESSEE ARE IDENTICAL TO THE FACTS OF M/S.SHREENATH SPINNERS PVT.LTD. IN THE ASSESSMENT YEAR 2001-02. THE LEARNED DEPARTMENTAL REPRESENTATIVE COULD NOT SHOW ANY GOOD REASON FOR NOT FOLLOWING THE ABOVE QUOTED ORDE R OF THE TRIBUNAL. IN THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE, FOLLOWING THE ABOVE QUOTED ORDER OF THE TRIBUNAL, W E CONFIRM THE ORDER OF THE LEARNED CIT(A) AND DISMISS THE GRO UND OF APPEAL OF THE REVENUE. ITA NO.110/AHD/ 2011 ACIT VS. M/S.ARYAMAN SPINNERS PVT.LTD. ASST.YEAR - 2004-05 - 7 - 5. FROM THE PAST HISTORY OF THE CASE, IT IS EVIDENT THAT ON IDENTICAL FACTS THIS ISSUE HAS ALREADY BEEN ADJUDICATED UPON, THEREFORE RESPECTFULLY FOLLOWING THOSE DECISIONS, WE HEREBY A FFIRM THE VIEW TAKEN BY THE LD.CIT(A) AND DISMISS THIS GROUND OF T HE REVENUE. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS D ISMISSED. ORDER SIGNED, DATED AND PRONOUNCED IN THE COURT ON 14. 10. 2011. SD/- SD/- ( A.K. GARODIA ) ( MUKUL KR. SHRAWAT ) ACCOUNTANT MEMBER JUDICIAL MEM BER AHMEDABAD; DATED 14/ 10 /2011 6..), .)../ T.C. NAIR, SR. PS '5 2 /7 8'7* '5 2 /7 8'7* '5 2 /7 8'7* '5 2 /7 8'7*/ COPY OF THE ORDER FORWARDED TO : 1. +. / THE APPELLANT 2. /0+. / THE RESPONDENT. 3. 9 / CONCERNED CIT 4. 9() / THE CIT(A)-VI, AHMEDABAD 5. 7<# /) , , / DR, ITAT, AHMEDABAD 6. # =3 / GUARD FILE. '5) '5) '5) '5) / BY ORDER, 07 / //TRUE COPY// > >> >/ // / , , , , ( DY./ASSTT.REGISTRAR) , , , , / ITAT, AHMEDABAD