West Bengal Electronics Industry Development Corporation Limited , Kolkata V. DCIT, Corporate Circle - 2(2), Kolkata, Kolkata

ITA 1202/KOL/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 7463 (ITAT-KOLKATA)
• Duration Of Justice: 10 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-04-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 31-05-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SHANKAR HALDER JCITSRDR
• Keywords: Earning of tax free income; Corroborative evidences
• Section: 143(3); 14A

Judgement Text

, A , IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH A KOLKATA BEFORE SHRI J.SUDHAKAR REDDY, ACCOUNTANT MEMBER AND SHRI S.S.GODARA, JUDICIAL MEMBER ITA NO.1202/KOL/2018 ASSESSMENT YEAR: 2012-13 WEST BENGAL ELECTRONICS INDUSTRY DEVELOPMENT CORPORATION LTD. BLOCK- EP,GP, WEBEL BHAWAN, BIDHANNAGAR, SALT LAKE CITY, SECTOR-V, KOLKTA-91 [ PAN NO.AAACW 2411 Q ] / V/S . DEPTY COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE-2(2), KOLKATA /APPELLANT .. /RESPONDENT /BY APPELLANT SHRI PRATYUSH JHUNJHUNWALA, ADVOCATE /BY RESPONDENT SHRI SHANKAR HALDER, JCIT-SR-DR /DATE OF HEARING 20-02-2019 /DATE OF PRONOUNCEMENT 30-04-2019 /O R D E R PER S.S.GODARA, JUDICIAL MEMBER:- THIS ASSESSEES APPEAL FOR ASSESSMENT YEAR 2012-13 ARISES AGAINST THE COMMISSIONER OF INCOME TAX (APPEALS)-1, KOLKATAS O RDER DATED 23.03.2018 PASSED IN CASE NO.ITBA.1008131694(1)/CIT(A)-1/APPEAL_1/201 7-18, INVOLVING PROCEEDINGS 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT. HEARD BOTH THE PARTIES. CASE FILE(S) PERUSED. 2. THE ASSESSEES FORMER SUBSTANTIVE GROUND CHALLEN GES CORRECTNESS OF BOTH THE LOWER AUTHORITIES ACTION DISALLOWING ITS PRIOR PER IOD EXPENDITURE AMOUNTING TO 13,38,016/-. THE CIT(A)S DETAILED DISCUSSION TO TH IS EFFECT READS AS UNDER:- ITA NO.1202/KOL/2018 A.Y 2012-13 WBEIDC. LTD.. VS DCIT, CIR-2(2) KOL. PAGE 2 GROUND NO.2: THIS GROUND PERTAINS TO THE ASSESSING OFFICER ERRED IN MAKING AN ADDITION OF RS.13,38,016/- ON ACCOUNT OF DISALL OWANCE OF PRIOR PERIOD EXPENSES. THE APPELLANTS AR HAS CONTESTED THE DISALLOWANCE O F PRIOR PERIOD EXPENSES AND MADE SUBMISSIONS AS UNDER. DURING THE YEAR UNDER CONSIDERATION, THE COMPANY H AS PAID NET AMOUNT OF RS.13,38,016/- ON ACCOUNT OF STAFF WELFARE, MIS CELLANEOUS EXPENSES, ETC. THE LIABILITY FOR THE SAME HAVING BEEN CRYSTAL LIZED IN RESPECT TO CURRENT YEAR, THE COMPANY ACCOUNTED FOR THE EXPENDI TURE DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR. YOUR KINDSELF IS WELL AWARE THAT COMPANY IS ENTITLED FOR DEDUCTION FOR TH OSE ITEMS CRYSTALLIZED DURING THE YEAR EVEN THOUGH THE SAME RELATES TO EAR LIER YEARS. IT IS SEEN FROM THE ACCOUNTS FURNISHED BY THE ASSES SEE THAT THE ASSESSEE IS FOUND TO HAVE MAINTAINED ITS ACCOUNT ON MERCANTILE BASIS. THEREFORE, ANY PRIOR PERIOD ADJUSTMENT IS NO ALLOWABLE AS PER ACT. HENCE THE CLAIM OF THE ASSESSEE UNDER THE HEAD PRIOR PERIOD ADJUSTMENT TO THE TUNE OF RS.113,38,016/- IS NOT ALLOWED, THEREFORE, REJECTED . I HAVE CAREFULLY CONSIDERED THE OBSERVATIONS OF THE ASSESSING OFFICER IN THE ASSESSMENT ORDER, AND SUBMISSIONS OF THE APPELLANT. THE ASSESSING OFFICER HAS ADDED BACK AN AMOUNT OF RS.5,93,000/- IN THE ASSESS MENT ORDER ON THE GROUND THAT THE APPELLANTS ACCOUNTS WERE MAINTAINED ON ME RCANTILE BASIS. THE APPELLANT HAD STATED THAT IT HAS ALSO OFFERED VARIO US INCOME AMOUNTING TO RS.7,33,397/- THAT HAS CRYSTALLIZED DURING THE YEAR UNDER CONSIDERATION, BUT WHICH RELATES TO EARLIER YEARS. IT WAS ALSO AVERRED THAT IN THE ASSESSMENT ORDER THE AO HA ADDED THE DIFFERENCE OF THE PRIOR PERIOD EXPENDITURE & INCOME TO THE COMPUTATION OF TOTAL INCOME. RELIANCE WAS PLACED ON THE RATIO OF DECISIONS OF THE HON'BLE GUJARAT HIGH COURT IN SAURASHTRA CEMENT & CHEMICAL INDUSTRIES LTD. VS. CIT (1995) 213 ITR 523 (GUJ); TOY ENGG. IN DIA LTD. VS. JCIT (2006) 5 SOT 616 (TMUN), ITO VS. INTRAFAX ENGG CO [38 TTJ 55 1 (DEL), ETC. ON CAREFUL CONSIDERATION, IT IS OBSERVED THAT THE A O HELD THAT THE ASSESSEE WAS UNABLE TO ESTABLISH WHETHER THE AMOUNT HAS BEEN CRY STALLIZED DURING THE FINANCIAL YEAR OR NOT. THE ONUS OF PROVING THE GENU INENESS OF ITS CLAIM LIES SQUARELY UPON THE ASSESSEE, WHICH HE HAS FAILED TO DISCHARGE EITHER DURING THE ASSESSMENT OR APPELLATE PROCEEDINGS. HENCE, THE SAI D LIABILITY IN REGARD TO THE STAFF WELFARE AND MISCELLANEOUS EXPENSES STILL REMA INS A CONTINGENT LIABILITY WHICH HAS NOT CRYSTALLIZED DURING THE YEAR AND THE APPELLANT HAS MERELY MADE A PROVISION FOR THE SAME IN ITS BOOKS OF ACCOUNTS. TH EREFORE, IT IS FOUND THAT THE PROVISION FOR EXPENSES OF RS.13,38,016/- ARE A MERE CONTINGENT LIABILITY AND IT CANNOT BE ALLOWED AS EXPENDITURE. HENCE, AS THE FAC TS OF THE APPELLANTS CASE ARE FOUND TO BE DISTINCT FROM THOSE CITED IN THE DE CISIONS BY THE APP, THE RATIO OF THE JUDICIAL DECISIONS RELIED UPON BY THE A/R ARE F OUND TO BE NOT APPLICABLE TO THE FACTS OF THE INSTANT CASE ACCORDINGLY, I AM OF THE VIEW THAT THERE IS NO INFIRMITY IN THE FINDING OF THE ASSESSING OFFICER A DDITION OF IMPUGNED AMOUNT OF RS.13,38,016/-, WHICH IS CONFIRMED. THIS GROUND IS NOT ALLOWED . ITA NO.1202/KOL/2018 A.Y 2012-13 WBEIDC. LTD.. VS DCIT, CIR-2(2) KOL. PAGE 3 3. THE ASSESSEE VEHEMENTLY CONTENDS DURING THE COUR SE OF HEARING THAT THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING ASSESSI NG OFFICERS IMPUGNED ACTION. IT REITERATES THAT THE IMPUGNED EXPENDITURE ITEMS COMP RISING OF VARIOUS HEAD(S) NAMELY, CONSUMPTION, PROFESSION / LEGAL CHARGES, RATES & TA XES, REPAIRS AND MAINTENANCE, SALARY & WAGES AND BONUS, MISC. ITEMS LESS THAN 30,000/- AND OTHER CREDITS AS WELL AS REVERSALS HAD TAKEN PLACE DURING THE RELEVANT PREVI OUS YEAR. OUR ATTENTION IS INVITED TO A DETAILED COMPILATION OF ALL THE SAID HEAD(S) IN T HE PAPER BOOK COMPRISING OF THE ANNEXURE-1 ONWARDS IN THE NATURE OF RELEVANT LEDGER S, BILLS ETC. THE REVENUES CASE ON THE OTHER HAND IS THAT BOTH THE LOWER AUTHORITIE S HAVE RIGHTLY INVOKED THE IMPUGNED DISALLOWANCE AS THERE IS NO SUPPORTING EVIDENCE OF THE SAID ITEMS TO HAVE BEEN CRYSTALLIZED DURING THE RELEVANT PREVIOUS YEAR. 4. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO RI VAL CONTENTIONS REGARDING INSTANT ISSUE OF PRIOR PERIOD EXPENDITURE DISALLOWA NCE. THE HON'BLE GUJARAT HIGH COURTS DECISION IN PCIT VS. ADANI ENTERPRISES IN TAX APPEAL NO. 566/2016 HOLDS THAT AN ASSESSEES CLAIM OF PRIOR PERIOD EXPENDITURE CAN NOT BE DECLINED IN CASE IT IS ASSESSED AT THE SAME RATE IN THE TWO ASSESSMENT YEA RS IN ISSUE. COUPLED WITH THIS, THE FACT ALSO REMAINS THAT ASSESSEES VOLUMINOUS EVIDEN CE COMPRISED IN THE PAPER BOOK MAKES IT CLEAR THAT THE ITEMS COMPRISING OF VARYING SUMS IN ISSUE HAVE BEEN CRYSTALLIZED ONLY IN RELEVANT PREVIOUS YEAR. TAKES FOR INSTANCE THAT ASSESSEES PRIOR PERIOD ADJUSTMENT OF 42,47,480- REGARDING REPAIR &MAINTENANCE CHARGES RE LATING TO M/S KOLKATA METROPOLITAN WATER & SANITATION AUTHORI TY. THE FACTUAL POSITION IS NO DIFFERENT IN CASE OF OTHER REMAINING HEAD(S) AS WEL L. WE THEREFORE GO BY THE ABOVE LEGAL AND FACTUAL POSITION TO DELETE THE IMPUGNED P RIOR PERIOD EXPENDITURE DISALLOWANCE. THE ASSESSEE SUCCEEDS IN ITS FORMER S UBSTANTIVE GROUND. 5. NEXT COMES THE ASSESSEES LATTER SUBSTANTIVE GRO UND SEEKING TO DELETE SEC. 14A R.W.S. 8D (2)(III) ADMINISTRATIVE EXPENDITURE DISAL LOWANCE AMOUNTING TO 4,11,284/- IN RESPECT OF ITS EXEMPT INCOME AMOUNTING TO 16,07,896/-. THERE IS HARDLY ANY DISPUTE THAT THE IMPUGNED DISALLOWANCE PROVISION REGARDING THE INSTANT THIRD HEAD OF ADMINISTRATIVE EXPENDITURE APPLIES WITH EFFECT FROM ASSESSMENT YEAR 2008-09 ONWARDS. THE ASSESSEES ONLY CASE DURING THE COURSE OF HEARI NG IS THAT BOTH THE LOWER AUTHORITIES HAVE COMPUTED THE IMPUGNED DISALLOWANCE WITHOUT FOL LOWING THIS TRIBUNALS DECISION ITA NO.1202/KOL/2018 A.Y 2012-13 WBEIDC. LTD.. VS DCIT, CIR-2(2) KOL. PAGE 4 IN REI AGRO LTD. VS. DCIT (2013) 144 ITD 141 (KOL) AS UPHELD IN HON'BLE JURISDICTIONAL HIGH COURTS JUDGMENT THAT ONLY THE DIVIDEND INCOME YIELDING INVESTMENTS HAVE TO BE TAKEN INTO CONSIDERATION IN ADMINISTRATIVE EXPENDITURE IMPUGNED HEAD OF EXPENDITURE. WE THEREFORE DIRECT T HE ASSESSING OFFICER TO RE- COMPUTE THE IMPUGNED DISALLOWANCE AS PER LAW KEEPIN G IN MIND THE SAID SETTLED LEGAL POSITION. 6. THIS ASSESSEES APPEAL IS PARTLY ALLOWED IN ABOV E TERMS. ORDER PRONOUNCED IN OPEN COURT ON 30/04/2019 SD/- SD/- ( &) (( &) (J.SUDHAKAR REDDY) (S.S.GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER *DKP-SR.PS ) - 30/04/2019 / KOLKATA / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-WEST BENGAL ELECTRONICS INDUSTRY DEVELOP MENT CORPORATION LTD., BLOCK EP, GP, WEBEL BHAWAN, BIDHANNAGAR, SALT LAKE CITY, SE CTOR-V, KOLKAT-91 2. /RESPONDENT-DCIT, CORPORATE CIRCLE-2(2),P-7, CHOWRI NGHEE SQUARE, 7 TH FLOOR, KOLKATA-69 3. , - / CONCERNED CIT 4. - - / CIT (A) 5. . ((, , , /DR, ITAT, KOLKATA 6. 2 / GUARD FILE. BY ORD ER/ , /TRUE COPY/ ,,