DCIT, CHENNAI V. Biomed Hitech Industries Ltd., CHENNAI

ITA 1155/CHNY/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 9236 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-05-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2007-2008
• Appeal Filed On: 02-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R MEENAKSHISUNDARAM ITP
• Assessee Lawyers: DR B NISCHAL
• Keywords: Business expenditure; Rectification of order
• Section: 143(3); 154

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , D B ENCH, CHENNAI . . . , . , & BEFORE SHRI N.R.S.GANESAN, JUDICIAL MEMBER AND SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ I.T.A.NO.1155/MDS/2014 ( / ASSESSMENT YEAR: 2007-08) ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY CIRCLE-I(1), CHENNAI-600 034. VS M/S. BIOMED HITECH INDUSTRIES LTD. 475, OLD MAHABALIPURAM ROAD, SHOLINGANALLUR, CHENNAI - 600 119. PAN: AAACB1953G ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MR. R.MEENAKSHISUNDARAM, ITP /RESPONDENT BY : DR. B.NISCHAL, JCIT /DATE OF HEARING : 16 TH MARCH ,2016 /DATE OF PRONOUNCEMENT : 25 TH MAY, 2016 / O R D E R PER A. MOHAN ALANKAMONY, AM:- THIS APPEAL IS FILED BY THE REVENUE AGGRIEVED BY THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX, APPEALS(C)-II, CHENNAI DATED 31.01.2014 IN ITA.NO. 350/13- 14 PASSED UNDER SECTION 154 R.W.S.250(6) OF THE A CT. 2. THE REVENUE IN ITS APPEAL HAS RAISED THREE ELABO RATE GROUNDS, HOWEVER THE CRUX OF THE ISSUE IS THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN D ELETING THE DISALLOWANCE MADE BY THE LEARNED ASSESSING OFFI CER FOR 2 ITA NO.1155 /MDS/2014 RS.1,43,49,903/- IN HIS REVISED ORDER INVOKING THE PROVISIONS OF SECTION 154 OF THE ACT, BEING THE INPUT / CENVAT CREDIT ON CAPITAL GOODS CLAIMED BY THE ASSESSEE AS BUSINESS EXPENDITURE. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE L IMITED COMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURING MEDICAL CONSUMABLES FILED ITS RETURN OF INCOME ON 1 6.10.2007 FOR THE RELEVANT ASSESSMENT YEAR 2007-08 ADMITTING LOSS OF RS.5.48 CRORES APPROXIMATELY WHICH WAS REVISED BY I T ON 10.09.2008. SUBSEQUENTLY ASSESSMENT WAS COMPLETED U NDER SECTION 143(3) R.W.S. 147 OF THE ACT ON 18.03.2013. THEREAFTER, THE LEARNED ASSESSING OFFICER INVOKED T HE PROVISIONS OF SECTION 154 OF THE ACT AND AFTER GIVI NG DUE OPPORTUNITY TO THE ASSESSEE DISALLOWED RS.1,43,49,0 93/- BEING THE CENVAT PAYMENT MADE TO THE CENTRAL EXCISE DEPARTMENT WHICH WAS DEBITED IN THE PROFIT AND LOSS ACCOUNT OF THE ASSESSEE. WHILE DOING SO, THE LEARNED ASSES SING OFFICER OBSERVED IN HIS ORDER THAT THE INPUT CREDIT ON CAPITAL GOODS WAS NOT THE PAYMENT MADE DURING THE RELEVANT ASSESSMENT YEAR AND SINCE THE ASSESSEE HAD OPTED FO R SET 3 ITA NO.1155 /MDS/2014 OFF OF THE CENVAT CREDIT AGAINST THE FUTURE LIABILI TIES TO THE CENTRAL EXCISE DEPARTMENT, IT WAS NOT AN ALLOWABLE EXPENSE FOR THE RELEVANT ASSESSMENT YEAR. HOWEVER, ON APPEA L, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) DELETE D THE DISALLOWANCE MADE BY THE LEARNED ASSESSING OFFICER BY OBSERVING AS UNDER:- I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE AND THE SUBMISSIONS MADE BY THE LEARNED AUTHORIZED REPRESENTATIVE. I FIND THE ISSUE UNDER APPEAL TO BE SQUARELY COVERED BY THE DECISION OF THE HONBLE SUP REME COURT AND THE JURISDICTIONAL HIGH COURT RELIED ON B Y THE APPELLANT AS REPORTED IN 349 ITR 360 AND 330 ITR 5 91 RESPECTIVELY. IN THE AFORESAID DECISIONS, IT HAS BE EN MANDATED THAT SECTION 154 CAN BE INVOKED FOR RECTIF ICATION OF MISTAKES WHICH ARE APPARENT OR PATENT ON THE FAC E OF THE RECORD BUT NOT IN RESPECT OF AN ISSUE WHICH IS DEBATABLE. I AGREE WITH THE CONTENTION OF THE APPEL LANT THAT THE DISALLOWANCE MADE BY THE ASSESSING OFFICER UNDE R SECTION 36(1)(VII) CANNOT BE MADE CITING IT TO BE A MISTAKE APPARENT FROM RECORD. THE DISALLOWANCE MADE BY THE ASSESSING OFFICER THEREFORE IS DIRECTED TO BE DELET ED. THE GROUNDS OF APPEAL AS THEY RELATE TO THIS ISSUE ARE THEREFORE ALLOWED. 4. THE LEARNED DEPARTMENTAL REPRESENTATIVE ARGUED B Y REITERATING THE FINDING OF THE LEARNED ASSESSING OF FICER THAT THE CENVAT PAYMENT MADE BY THE ASSESSEE HAS TO BE O NLY ADJUSTED AGAINST THE FUTURE CENVAT LIABILITY INCURR ED TOWARDS THE CENTRAL EXCISE DEPARTMENT AND THEREFORE IT CANN OT BE CLAIMED AS ALLOWABLE DEDUCTION DURING THE RELEVANT 4 ITA NO.1155 /MDS/2014 ASSESSMENT YEAR. HENCE, IT WAS PLEADED THAT THE ORD ER OF THE LEARNED ASSESSING OFFICER MAY BE UPHELD. 5. THE LEARNED AUTHORIZED REPRESENTATIVE ON THE OTH ER HAND, SUBMITTED THAT DURING THE RELEVANT ASSESSMENT YEAR, THE ASSESSEE REALIZED THAT THE CENVAT CREDIT AVAILA BLE WITH THE ASSESSEE CANNOT BE SET OFF AGAINST FUTURE CENVA T LIABILITY BECAUSE SUCH OCCASION WILL NEVER ARISE TO THE ASSESSEE. THEREFORE, THE ASSESSEE WAS JUSTIFIED IN WRITING OFF THE SAME DURING THE RELEVANT ASSESSMENT YEAR. THE L EARNED AUTHORIZED REPRESENTATIVE FURTHER SUBMITTED THAT TH E ISSUE IS DEBATABLE AND CANNOT BE RECTIFIED BY INVOKING THE P ROVISIONS OF SECTION 154 OF THE ACT BECAUSE RECTIFICATION OF MISTAKE UNDER SECTION 154 IS ONLY PERMISSIBLE FOR RECTIFYIN G ANY MISTAKE THAT IS APPARENT ON RECORD. IT WAS THEREFOR E PRAYED THAT THE ORDER OF THE LEARNED COMMISSIONER OF INCOM E TAX (APPEALS) MAY BE UPHELD. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULL Y PERUSED THE MATERIALS AVAILABLE ON RECORD. FROM THE FACTS OF THE CASE IT IS APPARENT THAT THE LEARNED ASSESSING OFFICER HAS 5 ITA NO.1155 /MDS/2014 INVOKED THE PROVISIONS OF SECTION 154 OF THE ACT AF TER PASSING ORDERS UNDER SECTION 143(3) R.W.S. 147 OF THE ACT O N AN ISSUE WHICH IS DEBATABLE AND TO BE DECIDED BY A CONSCIOUS THOUGHT PROCESS. THEREFORE WE ARE OF THE CONSIDERED VIEW TH AT, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS RI GHTLY RELIED IN THE DECISION IN THE CASES OF DIMOSAUR STE ELS LTD. AND JCIT REPORTED IN 349 ITR 360(SC) AND IN THE CAS E OF CIT VS. SOORA SUBRAMANIAN REPORTED IN 330 ITR 591(MAD) WHEREIN IT WAS HELD THAT SECTION 154 OF THE ACT CAN ONLY BE INVOKED FOR RECTIFYING MISTAKE WHICH IS APPARENT ON THE FACE OF THE RECORD BUT NOT IN RESPECT OF AN ISSUE WHICH IS DEBATABLE IN NATURE. IN THESE CIRCUMSTANCES, WE DO NOT FIND IT N ECESSARY TO INTERFERE WITH THE ORDER OF THE LEARNED COMMISSIONE R OF INCOME TAX (APPEALS) ON THIS ISSUE. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 25 TH MAY, 2016 SD/- SD/- ( . . . ) ( . ) (N.R.S.GANESAN) ( A.M OHAN ALANKAMONY ) # % / JUDICIAL MEMBER % / ACCOUNTANT MEMBER # /CHENNAI, ( /DATED 25 TH MAY, 2016 SOMU 6 ITA NO.1155 /MDS/2014 *+ ,+ /COPY TO: 1. APPELLANT 2. RESPONDENT 3. - () /CIT(A) 4. - /CIT 5. + 1 /DR 6. /GF