The ITO, Ward-1(1), Ahmedabad V. M/s. Anar Chemicals Pvt. Ltd., Ahmedabad

ITA 1126/AHD/2015

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 7876 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 4 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-09-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2004-2005
• Appeal Filed On: 01-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRAVIN KUMAR
• Assessee Lawyers: SANJAY R SHAH HEARING CONCLUD
• Keywords: Audit objection; Tax effect

Judgement Text

ITA NO.1126/AHD/2015 ASSESSMENT YEAR: 2004-05 PAGE 1 OF 2 IN THE INCOME TAX APPELLATE TRIBUNAL, AHMEDABAD SMC BENCH, AHMEDABAD [CORAM: PRAMOD KUMAR AM] ITA NO.1126/AHD/2015 ASSESSMENT YEAR: 2004-05 DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 1(1)(1), AHMEDABAD. ..................APPELLANT VS. ANAR CHEMICALS PVT. LTD., ...........................RESPONDENT SANSKRUT, B/H. OLD HIGH COURT, ASHRAM ROAD, AHMEDABAD 380 009. [PAN : AABCA 2795 G] APPEARANCES BY PRAVIN KUMAR FOR THE APPELLANT SANJAY R. SHAH FOR THE RESPONDENT HEARING CONCLUDED ON: 20.09.2018 ORDER PRONOUNCED ON : 20.09.2018 O R D E R 1. BY WAY OF THIS APPEAL, THE ASSESSING OFFICER HAS CHALLENGED CORRECTNESS OF THE ORDER DATED 20 TH JANUARY, 2015, PASSED BY THE LEARNED CIT(A)-1, AHM EDABAD FOR THE ASSESSMENT YEAR 2005-05, ON THE FOLLOWING GROUNDS: (1) THE LD. CIT(A) ERRED IN LAW AND ON FACTS IN DIRECTING THE AO TO ALLOW THE COMMISSION PAYMENT OF RS.2,10,015/- MADE TO MRS . PRITI DESAI DESPITE THE FACT THAT THE ASSESSEE FAILED TO ESTABLISH THAT SHE HAS RENDERED THE SERVICE TO EARN SUCH INCOME. (2) THE LD. CIT(A) ERRED IN LAW AND ON FACTS IN DEL ETING THE ADDITION OF RS.4,27,000/- BEING VALUE OF SCRAP ON ADHOC AND EST IMATED BASIS. (3) THE LD. CIT(A) ERRED IN LAW AND ON FACTS IN DEL ETING THE ADDITION OF RS.3,00,078/- ON ACCOUNT OF CAPITALISATION OF INSTA LLATION/ERECTION EXPENSES OF PLANT & MACHINERIES ON ESTIMATE BASIS. (4) THE LD. CIT(A) HAS FAILED TO APPRECIATE THE OBS ERVATION OF THE AO THAT SUCH PLANT & MACHINERY COULD NOT BE ERECTED/COMMIS SIONED WITHOUT ANY LABOUR OR SERVICE CHARGES, ETC. (5) THE LD. CIT(A) ERRED IN LAW AND ON FACTS IN DEL ETING THE DISALLOWANCE OF INTEREST EXPENDITURE OF RS.2,06,500/- ON ESTIMAT E BASIS DESPITE THE FACT ITA NO.1126/AHD/2015 ASSESSMENT YEAR: 2004-05 PAGE 2 OF 2 THAT THE ASSESSEE HAS FAILED TO PROVE THAT NO INTER EST BEARING FUND HAS BEEN UTILISED. (6) THE LD. CIT(A) ERRED IN LAW AND ON FACTS IN DEL ETING THE DISALLOWANCE OF LOSS OF RS.44,23,861/- DESPITE THE FACT THAT ASS ESSEE HAS DIVERTED PROFIT TO ITS SISTER CONCERN M/S ANAR INTERNATIONAL. 2. AT THE OUTSET, LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE PRESENT APPEAL OF THE REVENUE NEEDS TO BE DISMISSED ON ACCOUNT OF LOW TAX EFFECT IN VIEW OF THE RECENT CBDT CIRCULAR NO.3 OF 2018 DATED 11.07.2018. THE L EARNED DEPARTMENTAL REPRESENTATIVE FAIRLY ADMITTED THAT THE TAX EFFECT INVOLVED IN THIS APPEAL IS LESS THAN THE LIMIT PRESCRIBED BY THE AFORESAID CBDT CIRCULAR. 3. I HAVE HEARD THE LEARNED DEPARTMENTAL REPRESENTA TIVE AND PERUSED THE MATERIAL AVAILABLE ON RECORD. I FIND THAT PRIMA-FACIE THIS A PPEAL OF THE REVENUE IS NOT MAINTAINABLE IN VIEW OF THE RECENT CBDT CIRCULAR NO .3/2018 IN F.NO.279/MISC.142/2007-ITJ (PT) DATED 11 TH JULY, 2018, VIDE WHICH IT HAS BEEN DECIDED BY THE BOARD THAT NO DEPARTMENTAL APPEALS SHOULD BE FILED BEFORE THE TRIBUNAL IF THE TAX EFFECT BY VIRTUE OF THE COMMISSIONER OF INCOME-TAX (APPEALS)S ORDER IS BELOW RS. 20 LACS. THE BOARD HAS PROVIDED EXEMPTIONS AT CLAUSE (10) OF THE INSTRUCTIONS WHEREIN IT HAS BEEN PROVIDED THAT THESE INSTRUCTIONS WILL NOT BE APPLICABLE, WHERE THE CONSTITUTIONAL VALIDITY OF THE PROVISIONS OF AN ACT /RULE IS UNDER CHALLENGE OR WHERE BOARDS ORDER, NOTIFICATION, INSTRUCTION OR CIRCULA R HAS BEEN HELD TO BE ILLEGAL OR WHERE REVENUE AUDIT OBJECTION IN THE CASE HAS BEEN ACCEPT ED BY THE DEPARTMENT OR WHERE THE ADDITION RELATES TO UNDISCLOSED FOREIGN ASSETS/ BANK ACCOUNTS ETC. I FIND THAT THE PRESENT CASE DOES NOT FALL WITHIN THE EXEMPTION CLA USE AND THE TAX EFFECT IS LESS THAN RS.20 LACS. THEREFORE, THE PRESENT APPEAL IS NOT MAINTAINABLE AND HENCE DISMISSED. 4. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. PRONOUNCED IN THE OPEN COURT TODAY ON THE 20 TH SEPTEMBER, 2018. SD/- PRAMOD KUMAR (ACCOUNTANT MEMBER) DATED: AHMEDABAD, THE 20 TH DAY OF SEPTEMBER, 2018. PBN/* COPIES TO: (1) THE APPELLANT (2) THE RESPOND ENT (3) CIT (4) CIT(A) (5) DR (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD