The ITO, 1(1), Bhopal V. M/s Surya Traders, Bhopal

ITA 114/IND/2013

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 2952 (ITAT-INDORE)
• Duration Of Justice: 4 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-07-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 27-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R A VERMA

Judgement Text

1 INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI R.C. SHARMA, ACCOUNTANT MEMBER ITA NO.114/IND/2013 A.Y. 2009-10 ITO-1(1), BHOPAL :: APPELLANT VS M/S SURYA TRADERS, BHOPAL PAN ABNFS9868C :: RESPONDENT APPELLANT BY SHRI R.A. VERMA, SR.DR RESPONDENT BY NONE DATE OF HEARING 01.07.2013 DATE OF PRONOUNCEMENT 01.07.2013 O R D E R PER JOGINDER SINGH, JUDICIAL MEMBER THE REVENUE IS AGGRIEVED BY THE IMPUGNED ORDER DATED 17 TH DECEMBER, 2012 OF THE LEARNED CIT(A), BHOPAL, IN DELETING THE ADDITION OF RS. 38,60,800/- ON ACCOUNT OF 2 LICENCE FEE PAID IN ADVANCE ALLEGEDLY BEFORE EXISTENCE OF THE ASSESSEE FIRM. 2. DURING HEARING, WE HAVE HEARD SHRI R.A. VERMA, LEARNED SENIOR DR AND NOBODY IS PRESENT FOR THE ASSESS EE. WE FIND THAT ON 20.5.2013 THE LEARNED SENIOR DR WAS DIRECTED TO EFFECT THE SERVICE OF NOTICE OF HEARING ON THE ASSESSEE. IN COMPLIANCE THE SERVICE OF THE NOTICE WAS EFFECTED UPON THE ASSESSEE AS IS EVIDENT FROM THE LET TER OF THE DEPARTMENT DATED 1.7.2013 MADE AVAILABLE ON RECORD. INSPITE OF SERVICE, THE ASSESSEE CHOSE NOT TO APPEAR, THEREFORE, WE HAVE NO OPTION BUT TO PROCEED EX-PARTE QUA THE ASSESSEE. THE CRUX OF ARGUMENTS ON BEHALF OF THE REVENUE IS IN SUPPORT TO THE ASSESSMENT ORDER. 3. WE HAVE CONSIDERED THE SUBMISSIONS PUT FORTH BY T HE LEARNED SR. DR AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACTS, IN BRIEF, ARE THAT THE ASSESSEE DEBI TED RS.38,60,800/- ON ACCOUNT OF LICENCE FEE IN ITS TRADI NG 3 ACCOUNT. IT WAS NOTICED BY THE ASSESSING OFFICER THAT THE ASSESSEE FIRM WAS CONSTITUTED ON 2.4.2008 WHEREAS THE IMPUGNED LICENCE FEE WAS PAID IN FINANCIAL YEAR 2007-08 IN ADVANCE. THE ASSESSING OFFICER DISALLOWED THE SAME AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. ON APPEAL BEF ORE THE LEARNED CIT(A) IT WAS CLAIMED THAT OLD FIRM UNDER T HE NAME AND STYLE OF M/S RATHORE & COMPANY WAS DISSOLVED AND THE NEW FIRM IN THE NAME OF SURYA TRADERS CAME INTO EXISTENCE WITH EFFECT FROM 2.4.2008 WHICH TOOK OVER THE ASSETS AND LIABILITIES OF THE OLD FIRM AND CAPITAL OF S OME OF THE PARTNERS WHO DID NOT BECOME PARTNER IN THE NEW FI RM WAS RETURNED TO THEM. IT WAS CLAIMED THAT OLD FIRM MADE THE PAYMENT OF LICENCE FEE BEFORE 31.3.2008 IN ORDE R TO OBTAIN THE LICENCE FROM THE STATE EXCISE DEPARTMENT FO R FINANCIAL YEAR 2008-09, AS PER THE CONDITIONS AND DIRECT IVE OF THE STATE EXCISE DEPARTMENT. THE ASSESSEE ALSO FURNISHED THE COPY OF LICENCE ISSUED BY THE STATE EX CISE 4 DEPARTMENT FOR F.Y. 2008-09, ISSUED IN THE NAME OF OL D FIRM AND SUBSEQUENTLY TRANSFERRED IN THE NAME OF NEW FI RM I.E. THE ASSESSEE. THE LEARNED CIT(A) CONSIDERED THE FACTS, THE SUBMISSIONS OF THE ASSESSEE AND CONCLUDED AS UNDER :- IN APPELLATE PROCEEDINGS, AR OF THE APPELLANT SUBMITTED THAT THE PRESENT FIRM UNDER THE NAME AND STYLE OF SURYA TRADERS CAME INTO EXISTENCE W.E.F. A PRIL 2008 AFTER THE DISSOLUTION OF OLD FIRM UNDER THE NA ME AND STYLE OF M/S RATHORE & CO. IT WAS SUBMITTED THAT THE PRESENT FIRM HAD TAKEN OVER THE ASSETS AND LIABILITIES OF THE M/S RATHORE & CO. AND CAPITAL OF SOME OF THE PARTNERS WHO HAD NOT BECOME PARTNER IN THE NEW FIRM WAS RETURNED TO THEM. IT WAS SUBMITTED THA T THE OLD FIRM M/S RATHORE & CO. HAD MADE PAYMENT OF LICENCE FEE BEFORE 31.03.2008 IN ORDER TO OBTAIN LICENCE FROM THE EXCISE DEPARTMENT, STATE GOVERNMEN T FOR THE ENSUING F.Y.2008-09 AS PER CONDITIONS AND DIRECTIVES OF THE STATE GOVERNMENT, EXCISE DEPARTMENT. SINCE, THE PRESENT FIRM HAD TAKEN OVER ALL THE ASSETS AND LIABILITIES OF THE OLD FIRM, THE LIC ENCE FEE IN QUESTION WAS ALSO CARRIED OVER TO THE APPELL ANT FIRM. HE ALSO FURNISHED A COPY OF LICENCE ISSUED BY EXCISE DEPARTMENT FOR F.Y. 2008-09 IN THE NAME OF M/S RATHORE & CO. WHICH WAS SUBSEQUENTLY. TRANSFERRED IN THE NAME OF M/S SURYA TRADERS IN APRIL, 2008. IT WAS, THUS. CONTENDED THAT THE LICENCE FEE WAS PAID IN ADVANCE FOR THE PURPOSE OF TAKING A LICENCE FOR THE YEAR UNDER CONSIDERATION. THE LICENCE FEE WAS PAID AS PER THE REQUIREMENT TO THE EXCISE DEPARTMEN T. STATE GOVT. TO GET THE LICENCE FOR TRADING OF LIQUO R FOR THE F. Y.2008-09 UNDER CONSIDERATION. SINCE THE INCOME DERIVED FROM SUCH LICENCE FEE PAID WAS ALSO PERTAINED TO THE EXPENDITURE OF THE CURRENT YEAR. I T 5 WAS POINTED OUT THAT LICENCE FEES WAS PAID TO SECUR E THE LICENCE TO CARRY OUT THE BUSINESS OF TRADING LI QUOR FOR F.Y. 2008-09 RELEVANT TO A.Y.2009-10 UNDER CONSIDERATION AND HENCE, WAS AN ALLOWABLE EXPENDITURE. IT WAS. THUS, PRAYED THAT DISALLOWANCE OF LICENCE FEES OF RS.38,60,8001- PAID TO THE GOVERNME NT MAY BE ALLOWED. 6.4 I HAVE CAREFULLY CONSIDERED THE SUBMISSION OF T HE APPELLANT AND FACTS OF THE CASE. AS PER THE SCHEME OF EXCISE DEPARTMENT IN ORDER TO OBTAIN LICENCE FOR TRADING IN LIQUOR FOR A FINANCIAL YEAR, LICENCE FEE HAD TO BE DEPOSITED IN ADVANCE BEFORE THE FINANCIAL YEAR I .E. UPTO MARCH 31[ AS ADVANCE SO THAT LICENCE COULD BE GRANTED. IN THE INSTANT CASE ALSO, LICENCE FEES OF RS.38,60,800/- WAS PAID UPTO MARCH, 2008 IN ADVANCE SO AS TO OBTAIN A LICENCE FOR TRADING IN LI QUOR FOR F.Y.2008-09 RELEVANT TO AY. 2009-10 UNDER CONSIDERATION. THUS, IN FACT, THE EXPENDITURE OF TH E LICENCE FEE PERTAINED TO F.Y. 2008-09 RELEVANT TO A.Y.2009-10, BECAUSE THE FEE WAS PAID FOR THE PURPOSE OF OBTAINING LICENCE FOR THE F. Y. 2008-09. WITHOUT PAYING THE LICENCE FEE IN ADVANCE, THE APPELLANT COULD NOT HAVE OBTAINED THE LICENCE FOR TRADING IN LIQUOR FOR F. Y. 2008-09. THUS, THE EXPENDITURE OF LICENCE FEES, THOUGH PAID IN ADVANCE , ACTUALLY ACCRUED AND PERTAINED TO THE PREVIOUS YEAR RELEVANT TO A Y.2009-1 0 UNDER CONSIDERATION. SINCE THE EXPENDITURE WAS INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSES OF THE BUSINESS TO BE CONDUCTED IN PREVIOUS YEAR RELEVANT TO A Y. 2009- 10, THE SAID EXPENDITURE ON LICENCE FEE WAS AN ALLOWABLE DEDUCTION FOR A. Y. 200910. HENCE, THE DISALLOWANCE OF LICENCE FEE OF RS.38,60,800/- IS DELETED. IF THE TOTALITY OF FACTS AVAILABLE ON RECORD, OBSERVATIO N MADE IN THE ASSESSMENT ORDER, CONCLUSION DRAWN IN THE 6 IMPUGNED ORDER AND THE ASSERTION OF THE LEARNED SENIO R DR, IS KEPT IN JUXTAPOSITION AND ANALYSED, WE FIND TH AT AS PER THE SCHEME OF THE STATE EXCISE DEPARTMENT, IN ORD ER TO OBTAIN THE LICENCE FOR TRADING IN LIQUOR, THE ASSESSEE WAS TO DEPOSIT THE LICENCE FEE IN ADVANCE UPTO 31 ST MARCH SO THAT NECESSARY LICENCE COULD BE GRANTED. THUS, THE EXPEND ITURE, THOUGH PAID IN ADVANCE, WAS ACTUALLY INCURRED IN FINANCIAL YEAR RELEVANT TO A.Y. 2009-10 WHOLLY AND EXCLUSIVELY FOR THE PURPOSES OF BUSINESS. IT IS PERTINENT TO MENTION H ERE THAT THE ASSETS AND LIABILITIES OF THE OLD FIRM WERE TAKEN O VER BY THE PRESENT ASSESSEE, THEREFORE, WE FIND NO JUSTIFIC ATION TO INTERFERE WITH THE CONCLUSION DRAWN IN THE IMPUGNED ORDER MORE SPECIFICALLY WHEN THE LICENCE FEE WAS PAID AS PER THE REQUIREMENT/TERMS AND CONDITIONS OF THE STATE EXCISE DEPARTMENT TO GET LICENCE FOR TRADING IN LIQUOR FOR TH E F.Y. 2008-09 RELEVANT TO A.Y. 2009-10 IN THE ABSENCE OF WH ICH 7 THE ASSESSEE COULD NOT HAVE OBTAINED SUCH LICENCE. THE STAND OF THE LEARNED CIT(A) IS ACCORDINGLY AFFIRMED. FINALLY, THE APPEAL OF THE REVENUE STANDS DISMISSED. THIS ORDER WAS PRONOUNCED IN OPEN COURT ON 1.7.2013 AT THE CONCLUSION OF THE HEARING AND IN THE PRESENCE O F THE LEARNED SENIOR DR. SD SD (R.C. SHARMA) (JOGINDER SINGH) ACCOUNTANT MEMBER ACCOUNTANT MEMBER DATED: 2.7.2013 COPY TO: APPELLANT, RESPONDENT, CIT, CIT(A), DR, GU ARD FILE DN/-22