ACIT, Bijapur V. Torgal Distilleries Pvt. Ltd., Bijapur

ITA 1172/BANG/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 7708 (ITAT-BANGALORE)
• Duration Of Justice: 7 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-07-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: misc
• Appeal Filed On: 29-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUSAN THOMAS JOSE
• Section: 43B; 142(1); 144

Judgement Text

PAGE 1 OF 4 ITA NO.1 172/BANG/2011 1 IN THE INCOME TAX APPELLATE TRIBUNAL, BANGALORE BENCH B BEFORE SHRI N BARATHVAJA SANKAR, VICE PRESIDENT AND SHRI GEORGE GEORGE K, JUDICIAL MEMBER ITA NO.1172/BANG/2011 (ASSESSMENT YEAR 2001-02) THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE-1, BIJAPUR. VS TORGAL DISTILLERIES PVT. LTD.,, SHIKARKHAN ROAD, BIJAPUR. PAN/GIR NO. BB-14 (APPELLANT) (RESPONDENT) DATE OF HEARING : 03.07.2012 DATE OF PRONOUNCEMENT : 03.07.2012 APPELLANT BY : SMT. SUSAN THOMAS JOSE, JCI T RESPONDENT BY : NONE ORD ER PER GEORGE GEORGE K : THIS APPEAL INSTITUTED BY THE DEPARTMENT IS DIRECT ED AGAINST THE ORDER OF THE CIT(A), BELGAUM DATED 02.09.2011. THE RELEVANT ASSESSMENT YEAR IS 2001-02. 2. THE GROUNDS RAISED READ AS FOLLOWS:- I) IN THE FACTS AND CIRCUMSTANCES OF THE CASE, WHETHER THE CIT(A) ERRED IN ALLOWING THE RENTALS PAYABLE TO THE GOVT. RELYING ON THE DECISION OF HONBLE KARNATAKA WHEN TH E HONBLE SUPREME COURT HAS GRANTED SPECIAL LEAVE TO THE DEPARTMENT TO APPEAL AGAINST THE JUDGEMENTS OF HON BLE KARNATAKA HIGH COURT IN THE CASES OF CIT V SATISH CHANDRA HEGDE FAMILY TRUST 276 ITR 208 AND CIT V PAGE 2 OF 4 ITA NO.1 172/BANG/2011 2 DISTILLERS CO. LTD. 266 ITR 276, REPORTED IN 264 IT R (ST) 139 AND 271 ITR (ST) 47? II) WHETHER IN LAW AND ON FACTS, THE AMOUNT OF RENTAL PAYABLE BY THE ASSESSEE TO THE STATE GOVERNMENT CAN B E ALLOWED AS A DEDUCTION EVEN WHEN THIS SUM HAS NOT B EEN ACTUALLY PAID BY THE ASSESSEE IN VIEW OF THE RESTRICT ION IMPOSED UNDER SECTION 43B OF THE IT ACT, 1961? III) FOR THESE AND OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING, THE ORDER OF THE LEARNED CIT(A) MA Y BE SET ASIDE AND THAT THE ORDER OF THE ASSESSING OFFIC ER BE RESTORED. 3. BRIEF FACTS OF THE CASE ARE AS FOLLOWS:- THE ASSESSEE IS A COMPANY. IT IS ENGAGED IN THE M ANUFACTURE AND SALE OF IMFL AND DEALING IN ARRACKS. FOR THE C ONCERNED ASSESSMENT YEAR, ASSESSMENT WAS COMPLETED UNDER SECTION 144 OF THE A CT AS THERE WAS NO COMPLIANCE BY THE ASSESSEE TO NOTICES ISSUED UNDER S ECTION 143(2) AND 142(1) OF THE ACT. IN THE ASSESSMENT ORDER, THE ASSESSIN G OFFICER HAD MADE AN ADDITION OF RS.80,63,871/- BEING GOVERNMENT RENTALS /KIST PAYABLE FOR THE FINANCIAL YEAR 2000-01. ACCORDING TO THE ASSESSING OFFICER, SINCE THE ASSESSEE HAD NOT FURNISHED ANY PROOF OF HAVING PAID THE AMOUNT BEFORE THE DUE DATE OF FILING OF THE RETURN, THE AMOUNT WAS AD DED BY INVOKING THE PROVISIONS OF SECTION 43B OF THE ACT. 4. AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN A PPEAL BEFORE THE FIRST APPELLATE AUTHORITY. 5. DURING THE FIRST APPELLATE PROCEEDINGS, THE LEA RNED AR REFERRED TO THE CIT(A)S ORDER ON THE SAME ISSUE IN THE CASE OF SHRI M J TORGAL AND CONTENDED THAT THE PAYMENT OF LEASE RENTALS UNDER KA RNATAKA EXCISE PAGE 3 OF 4 ITA NO.1 172/BANG/2011 3 LICENCES RULE IS NOT A LIABILITY COVERED UNDER SECTI ON 43B OF THE ACT AS HELD BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V SHRI BALAJI & CO. & OTHERS REPORTED IN 246 ITR 750. THE CIT(A) ALLOW ED THE APPEAL OF THE ASSESSEE BY FOLLOWING HIS ORDER IN THE CASE OF SHRI MANOJI J TORGAL (APPEAL NO.41/BJP/2008-09 DT.27.11.2009). 6. THE REVENUE BEING AGGRIEVED IS IN APPEAL BEFORE US. 7. THE LEARNED DR SUBMITTED THAT THOUGH THE ISSUE IN QUESTION IS SQUARELY COVERED BY THE JUDGEMENT OF THE HONBLE JURI SDICTIONAL HIGH COURT IN THE CASE OF SHRI BALAJI & CO. SUPRA, THE MATTER HA S NOT ATTAINED FINALITY SINCE SLP HAS BEEN ADMITTED BEFORE THE HONBLE APEX COURT AND THE CIVIL APPEAL IS YET TO BE DISPOSED OFF. 8. NONE WAS PRESENT ON BEHALF OF THE ASSESSEE. 9. WE HAVE HEARD THE LEARNED DR AND PERUSED THE MA TERIALS ON RECORD. THE JURISDICTIONAL HIGH COURT IN THE CASE OF SHRI BALAJI & CO. CITED SUPRA HAD HELD THAT THE LEAST RENTALS LIABILITY IN R ESPECT OF VENDING OF ARRACK IS NOT COVERED WITHIN THE PURVIEW OF SECTION 43B OF THE ACT. THE RELEVANT FINDING OF THE HONBLE JURISDICTIONAL HIGH COURT RE ADS AS FOLLOWS:- THE PROVISIONS OF SECTION 17 OF THE KARNATAKA EXCI SE ACT, 1965,HAVE REFERRED TO THE POWER TO GRANT LEASE OF THE RIGHT TO MANUFACTURE. SECTION 24 HAS CONFERRED THE ADDITIONAL POWER ON THE STATE GOVERNMENT TO ACCEPT PAYMENT OF A SUM OR LEVY SUCH LICENCE FEE OR PRIVILEG E FEE AS MAYBE PRESCRIBED, IN CONSIDERATION OF GRANT OF LE ASE OR LICENCE OR BOTH, BY OR UNDER THIS ACT. THIS POWER I S IN ADDITION TO ANY EXCISE DUTY OR COUNTERVAILING DUTY LEV IABLE UNDER SECTIONS 22 AND 23. IF THE LEGISLATURE HAS U SED PAGE 4 OF 4 ITA NO.1 172/BANG/2011 4 SPECIFIC LANGUAGE THEN IT CANNOT BE STRETCHED TO IN CLUDE CERTAIN SUMS WHICH ARE NOT IN THE NATURE OF PAYMENT MENTIONED BY THE LEGISLATURE. PAYMENT OF LEASE MONEY/RENTAL MAY BE A STATUTORY LIABILITY BUT HOWEVER ANY STATUTORY LIABILITY DOES NOT COME WITHIN THE PURVI EW OF SECTION 43B. IT IS ONLY THAT STATUTORY LIABILITY W HICH IS IN THE NATURE OF TAX, DUTY, CESS OR FEE TO WHICH THE PROVISIONS OF SECTION 43B ARE ATTRACTED. SINCE THE KIST/RENTAL COULD NOT BE CONSIDERED TO BE FALLING U NDER EITHER OF THE ITEMS, THE PROVISIONS OF SECTION 43B CANNOT BE ATTRACTED AND AS SUCH WE ARE OF THE VIEW THAT TH E TRIBUNAL WAS JUSTIFIED IN LAW IN HOLDING THAT THE K IST AMOUNT PAYABLE TO THE GOVERNMENT BY THE ASSESSEE COUL D NOT BE BROUGHT WITHIN THE PURIEW OF THE PROVISIONS OF SECTION 43B OF THE INCOME-TAX ACT, 1961. 9.1 IN THE LIGHT OF THE ABOVE SAID JUDGEMENT OF TH E HONBLE JURISDICTIONAL HIGH COURT, WE UPHOLD THE ORDER OF T HE CIT(A) AND DISMISS THE APPEAL OF THE REVENUE. IT IS ORDERED ACCORDINGLY. 10. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. THE ORDER PRONOUNCED ON THE 03 RD DAY OF JULY, 2012 AT BANGALORE. SD/- SD/- (N BARATHVAJA SANKAR) (GEORGE GEORGE K) VICE PRESIDENT JUDICIAL MEMBER COPY TO : 1. THE REVENUE 2. THE ASSESSEE 3. THE C IT CONCERNED. 4. THE CIT(A) CONCERNED. 5. DR 6. GF MSP/ BY ORDER SENIOR PRIVATE SECRETARY, ITAT, BA NGALORE.