Asst. Comm. of Income-tax, Pune V. M/s. Biostar Pharmaceutical Pvt. Ltd., Pune

ITA 1138/PUN/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 9743 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-09-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2002-2003
• Appeal Filed On: 09-09-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS ANN KAPTHUAMA
• Assessee Lawyers: KUSAI GOAWALA
• Section: 43B

Judgement Text

1 INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV JUDICIAL MEMBER AND SHRI R.K. PANDA ACCOUNTANT MEMBER ITA NO. 1138/PN/2011 (ASSESSMENT YEAR 2002-03) ASST. COMMISSIONER OF INCOME TAX, CIRCLE-8, PRATYAKSHA KAR BHAVAN, DR. AMBEDKAR MARG, NEAR AKURDI RAILWAY STATION, AKURDI, PUNE 411 044. .. APPELLANT VS. BIOSTAR PHARMACEUTICAL PVT. LTD., T-82, MIDC BHOSARI, PUNE 411 018. PAN NO. AABCB 1519M .. RESPONDENT ASSESSEE BY : SRI KUSAI GOAWALA DEPARTMENT BY : MRS. ANN KAPTHUAMA DATE OF HEARING : 14-09-2012 DATE OF PRONOUNCEMENT : 14-09-2012 ORDER PER R.K. PANDA, AM : THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINS T THE ORDER DATED 08-06- 2012 OF THE CIT(A)-V, PUNE RELATING TO ASSESSMENT YEARS 2002-03. 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE IS A COMPANY CARRYING ON BUSINESS OF TRADING IN PHARMACEUTICALS. DURING THE PREVIOUS YEAR RELATING TO A.Y. 2002-03 THE ASSESSEE HAS COLLECTED STATE EXCISE DUT Y OF RS.83,54,842/- FROM CUSTOMERS IN RESPECT TO THE ADDITIONAL DEMAND RAISE D BY THE STATE EXCISE DEPARTMENT. THE SAID AMOUNT WAS CHALLENGED BY THE ASSESSEE BY FILING A WRIT PETITION BEFORE THE HONBLE BOMBAY HIGH COURT. THE FINAL DECISION OF THE HONBLE HIGH COURT IS PENDING. AS PER THE DIRECTIONS OF TH E HONBLE HIGH COURT, THE ASSESSEE COMPANY HAS PROVIDED 100% BANK GUARANTEE A GAINST THE DEMAND TO THE STATE EXCISE DEPARTMENT. AN AMOUNT OF RS.83,54,842 /- WAS KEPT IN SEPARATE FDRS WITH THE BANK AND NOT CREDITED TO THE GOVERNM ENT ACCOUNT. IN THE NOTE 2 CONTAINED IN THE AUDIT REPORT ATTACHED WITH THE RET URN OF INCOME FOR THE IMPUGNED ASSESSMENT YEAR IT WAS CLAIMED BY THE ASSESSEE COMP ANY TO TREAT THIS LIABILITY AS DEEMED TO BE DISCHARGED AND THAT THE AMOUNT OF RS.8 3,54,842/- IS DEEMED TO HAVE BEEN PAID U/S.43B OF THE INCOME TAX ACT. THE EXCIS E DUTY SO COLLECTED DURING THE YEAR WAS NOT CREDITED TO THE P&L ACCOUNT BUT WAS SH OWN AS PAYABLE UNDER THE HEAD CURRENT LIABILITIES. SINCE THE AMOUNT OF ST ATE EXCISE DUTY WAS NOT ACTUALLY CREDITED BY THE ASSESSEE COMPANY TO THE GOVERNMENT ACCOUNT, THEREFORE, THE AO HELD THAT THE SAME CANNOT BE TREATED AS PAID AND DE DUCTION U/S.43B CANNOT BE ALLOWED AS CLAIMED BY THE ASSESSEE. HE ACCORDINGLY MADE ADDITION OF RS.83,54,842/- U/S.43B OF THE INCOME TAX ACT. 3. BEFORE THE LEARNED CIT(A) IT WAS SUBMITTED THAT THE ASSESSEE HAD COLLECTED THE SAID AMOUNT OF STATE EXCISE DUTY THE PAYMENT OF WHICH HAS BEEN STAYED BY THE HONBLE HIGH COURT. IT WAS SUBMITTED THAT AS PER T HE SAID ORDER NO PAYMENT WAS REQUIRED TO BE MADE IN LIGHT OF THE BANK GUARANTEE ISSUED BY THE ASSESSEE. IT WAS SUBMITTED THAT THE ASSESSEE DID NOT CREDIT THE SAME TO THE TRADING ACCOUNT AND HAS NEVER CLAIMED DEDUCTION IN RESPECT OF THE SAID STAT E EXCISE DUTY. IT WAS ARGUED THAT SINCE NO DEDUCTION HAS BEEN CLAIMED BY THE ASS ESSEE THERE IS NO QUESTION OF DISALLOWING THE SAME U/S.43B OF THE INCOME TAX ACT. THE ORDERS OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y. 1995-96, 1996-97 AND 1 998-99 WERE RELIED UPON. 4. BASED ON THE ARGUMENTS ADVANCED BY THE ASSESSEE AND FOLLOWING THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y. 199 6-97 AND 1997-98 VIDE I.T. APPEAL NOS.861A AND 864/PN/1999 ORDER DATED 29-06-2 005 THE LEARNED CIT(A) ALLOWED THE CLAIM OF THE ASSESSEE. 4.1 AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE REV ENUE IS IN APPEAL BEFORE US WITH THE FOLLOWING GROUND : 3 WHETHER ON FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) WAS JUSTIFIED IN LAW IN HOLDING THAT FURNISHING OF BANK GUARANTEE AGAINST E XCISE DUTY LIABILITY PURSUANT TO THE ORDER AND DIRECTION OF HONBLE HIGH COURT TANTAMOUN T TO ACTUAL PAYMENT WITHIN THE MEANING OF SEC.43B OF THE I.T. ACT, 1961?. 5. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY B OTH THE SIDES AND PERUSED THE ORDERS OF THE AO AND THE CIT(A). WE FIND THE L EARNED CIT(A) WHILE ALLOWING THE CLAIM OF THE ASSESSEE AT PARA 6 OF THE ORDER HE LD AS UNDER : 6. I HAVE CONSIDERED THE SUBMISSION OF THE APPELLA NT AND MATERIAL AVAILABLE ON RECORD. IT IS NOTICED THAT THE IAT, PUNE BENCH, IN THE APPELLANTS OWN CASE FOR A.Y. 1996- 97 & 1997-98 ITA NOS. 861A & 864/PN/2009 ORDER DA TED 29-06-2005 HAS ALLOWED THIS PARTICULAR POINT IN FAVOUR OF THE APPELLANT. THE R ELEVANT PORTION OF THE ITAT ORDER IS BEING REPRODUCED BELOW FOR THE SAKE OF CLARITY. UNDER THESE FACTUAL CIRCUMSTANCES, THE CONTENTION RAISED BEFORE US WAS LIMITED TO THE ISSUE THAT ONCE THE ASSESSEE HAS FURNISHED A BANK G UARANTEE AS PER THE DIRECTIONS OF THE HONBLE COURT AND THE LIABILITY WAS NOT CLAIMED AS EXPENDITURE, THEN THERE WAS NO OCCASION FOR THE DISALLOWANCE U/S.43B OF THE I.T. A CT. EMPHASIS WAS GIVEN ON A DECISION OF NUCHEM PLASTICS LTD. 444 TTJ 261, WHEREIN THE CO ORDINATE BENCH HAS HELD THAT THE DISPUTED EXCISE DUTY WAS DEPOSITED BY FURNISHING A BANK GUARANTEE IN VIEW OF THE HIGH COURT ORDER, SO THE ASSESSEE HAD INDEMNIFIED THE SU RETY. ONCE THE GUARANTEE WAS FURNISHED, THEN THE ASSESSEE HAD NOTHING TO DO AFTE R MAKING THE PAYMENT IN PURSUANCE OF THE COURT ORDERS. WHEN THE BANK DISCHARGES THE OBLIGATIONS TO THE CENTRAL EXCISE AUTHORITIES, THE DISCHARGE OF THOSE OBLIGATIONS CAN BE TAKEN AS, IN ANY SENSE OF THE TERM, A PAYMENT MADE BY THE ASSESSEE TO CENTRAL EXCISE AU THORITIES. THEREFORE, THE EXPRESSION ACTUALLY PAID USED IN SECTION 43B WAS HELD AS FULLY SATISFIED WHEN THE ASSESSEE PAID THE MONEY TO THE BANK IN FULL DISCHAR GE OF OBLIGATION TO PAY THE EXCISE DUTY IN ENTIRETY. FROM THE SIDE OF THE REVENUE, TH E ONLY CONTENTION WAS THAT THE EXCISE DUTY COLLECTED WAS PART OF THE TRADING RECEIPTS AND IN THIS REGARD, DRAWN SUPPORT FROM THE ORDER OF CHOWRANGHEE SALES, 87 ITR 542. THIS A SPECT HAS ALSO BEEN CONSIDERED IN ONE OF THE DECISIONS BY BOMBAY BENCH OF THE TRIBUNA L IN THE CASE OF SUNIL SILK MILLS, 46 ITD P.4, WHEREIN IT WAS HELD THAT EVEN ASSUMING THA T EXCISE DUTY WAS TO BE TREATED AS PART OF TRADING RECEIPT OF ASSESSEE AND ITS PROFIT AND LOSS ACCOUNT WAS TO BE RE-CASTED, THE ASSESSEE HAD TO BE REGARDED AS HAVING PAID EXCI SE DUTY IN COMPLIANCE OF THE ORDER OF THE COURT AND HAD TO BE EXCLUDED FROM ASSESSEES TR ADING RECEIPTS. THESE VIEWS AND SEVERAL OTHER PRECEDENTS DEFINITELY SUPPORT THE VER DICT OF THE LD. CIT(A). DUE TO THIS REASON, WE FIND NO FORCE IN THE AFORE-CITED GROUND OF THE REVENUE AND RESPECTFULLY RELYING UPON THE PRECEDENTS, WE HEREBY CONFIRM THE FINDING OF THE LD. CIT(A). 6. IT IS THE SUBMISSION OF THE LEARNED DR THAT DEPA RTMENT HAS NOT ACCEPTED THE DECISION OF THE TRIBUNAL AND HAS PREFERRED AN APPEA L U/S.260A OF THE INCOME TAX ACT WHICH IS PENDING FOR DISPOSAL. SINCE THE LEARN ED CIT(A) HAS FOLLOWED THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y. 1996-97 AND 1997-98 AND SINCE THE DECISION OF THE TRIBUNAL HAS NOT YET BEEN REVERSED BY A HIGHER COURT, THEREFORE, RESPECTFULLY FOLLOWING THE DECISION OF T HE TRIBUNAL AND IN ABSENCE OF ANY CONTRARY MATERIAL BROUGHT TO OUR NOTICE WE FIND NO INFIRMITY IN THE ORDER OF THE 4 CIT(A) ALLOWING THE CLAIM OF THE ASSESSEE. IN THIS VIEW OF THE MATTER WE UPHOLD THE ORDER OF THE CIT(A) AND THE GROUND RAISED BY TH E REVENUE IS DISMISSED. 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARING ITSELF, I.E. ON 14-09-12. SD/- SD/- (SHAILENDRA KUMAR YADAV) (R.K. PANDA) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE DATED: THE 14 TH SEPTEMBER 2012 SATISH COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. DEPARTMENT 3. CIT(A)-V, PUNE 4. THE D.R, A PUNE BENCH 5. GUARD FILE BY ORDER // TRUE COPY // SENIOR PRIVATE SECRETARY ITAT, PUNE BENCHES, PUNE