The DCIT, Circle 2, RAJKOT-GUJARAT V. M/s Bhavani Industries, RAJKOT-GUJARAT

ITA 123/RJT/2008

• Counselvise Citation: 12324914 RSA 2008
• Duration Of Justice: 3 year(s) 5 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-08-2011
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 10-08-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 22-02-2008
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MK SINGH

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT BEFORE SHRI A.L. GEHLOT (AM) AND SHRI N.R.S. GANESA N (JM) I.T.A. NO.123/RJT/2008 (ASSESSMENT YEAR 2004-05) DY.CIT, CIR.2 VS M/S BHAVANI INDUSTRIES RAJKOT C/1-B, 236/3, GIDC AJI IND. ESTATE, RAJKOT PAN : AACFB8046R (APPELLANT) (RESPONDENT) DATE OF HEARING : 10-08-2011 DATE OF PRONOUNCEMENT : 12-08-2011 APPELLANT BY : SHRI MK SINGH RESPONDENT BY: WRITTEN SUBMISSION O R D E R PER N.R.S. GANESAN, JM THIS APPEAL OF THE REVENUE WAS DISPOSED OF BY AN O RDER DATED 29-05- 2009. SUBSEQUENTLY THE REVENUE FILED A MISCELLANEO US APPLICATION IN M.A.NO.05/RJT/2010 SAYING THAT GROUND NO.3 WITH REG ARD TO DISALLOWANCE ON ACCOUNT OF PREPAID INSURANCE EXPENSES WAS NOT DISPO SED OF. ACCORDINGLY THIS TRIBUNAL BY AN ORDER DATED 25-02-2011 IN MA NO.05/R JT/2011 RESTORED THE APPEAL ON FILE ONLY FOR THE PURPOSE OF DISPOSING OF GROUND NO.3 RAISED BY THE REVENUE WITH REGARD TO PREPAID INSURANCE EXPENSES. ACCORDI NGLY, THIS APPEAL WAS POSTED FOR DISPOSING OF GROUND NO.3 WITH REGARD TO PREPAID INSURANCE. 2. EVEN THOUGH THE NOTICE WAS SERVED ON THE ASSESSE E NO ONE APPEARED ON BEHALF OF THE ASSESSEE AT THE TIME OF HEARING. HOW EVER, WRITTEN SUBMISSION WAS ITA NO.123/RJT/2008 2 FILED ON BEHALF OF THE ASSESSEE WITH A REQUEST TO D ISPOSE OF THE APPEAL ON THE BASIS OF THE WRITTEN SUBMISSION. ACCORDINGLY WE HE ARD THE LD.DR AND PROCEEDED TO DISPOSE OF THE APPEAL AFTER CONSIDERING THE WRIT TEN SUBMISSION FILED BY THE ASSESSEE. 3. GROUND NO.3 IS WITH REGARD TO DISALLOWANCE OF RS . 1,30,245 TOWARDS PREPAID INSURANCE EXPENSES. IN THE WRITTEN SUBMISS ION THE ASSESSEE CLAIMS THAT A SIMILAR DISALLOWANCE WAS DELETED BY THIS TRIBUNAL IN THE CASE OF DCIT VS TURBO BEARING PVT LTD ITA NO.447/RJT/08 DATED 17-12-2009. THE ASSESSEE HAS ALSO CLAIMED IN THE WRITTEN SUBMISSION THAT IN ASSESSEE S OWN CASE FOR THE ASSESSMENT YEAR 2005-06 THE CIT(A) ALLOWED THE CLAI M OF THE ASSESSEE WITH REGARD TO PREPAID INSURANCE PREMIUM AND NO APPEAL W AS FILED AGAINST THAT ISSUE BEFORE THIS TRIBUNAL. THEREFORE, ACCORDING TO THE ASSESSEE, THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE ORDER OF THIS TRIB UNAL IN THE CASE OF DCIT VS TURBO BEARING PVT LTD (SUPRA). 4. WE HAVE HEARD THE LD.DR ALSO. HE SUBMITTED THAT HE IS PLACING HIS RELIANCE ON THE OBSERVATIONS MADE BY THE ASSESSING OFFICER. 5. WE HAVE CONSIDERED THE SUBMISSIONS OF THE LD.DR AND HAVE ALSO CONSIDERED THE WRITTEN SUBMISSIONS OF THE ASSESSEE. THE ASSESSING OFFICER DISALLOWED THE CLAIM OF THE ASSESSEE ON THE GROUND THAT THE ENTIRE BILL FOR PAYMENT OF THE INSURANCE PREMIUM WAS NOT PRODUCED B EFORE THE ASSESSING OFFICER. TWO BILLS FILED BEFORE THE ASSESSING OFFI CER PERTAIN TO PREPAID INSURANCE ITA NO.123/RJT/2008 3 PREMIUM. THE ASSESSEE CLAIMS THAT THE ISSUE WAS CO VERED BY THE ORDER OF THIS TRIBUNAL IN THE CASE OF DCIT VS TURBO BEARING PVT L TD (SUPRA). WE HAVE ALSO CAREFULLY GONE THROUGH THE ORDER OF THE TRIBUNAL IN THE CASE OF DCIT VS TURBO BEARING PVT LTD (SUPRA). THE ASSESSEE IN THE CASE OF DCIT VS TURBO BEARING PVT LTD (SUPRA) HAD DEBITED RS.1,49,050 IN THE PROFIT & LOSS ACCOUNT. THE ASSESSING OFFICER DISALLOWED THE SAME ON THE GROUND THAT IT R ELATES TO PREPAID INSURANCE PREMIUM. THE CIT(A) DELETED THE ADDITION. ON FURT HER APPEAL BY REVENUE, THIS TRIBUNAL FOUND THAT THE ASSESSEE WAS CONSISTENTLY F OLLOWING THIS PRACTICE OF PAYING INSURANCE PREMIUM. THE ORDER OF CIT(A) WAS C ONFIRMED. IN THE CASE BEFORE US THE ASSESSEE CLAIMS THAT FOR THE ASSESSME NT YEAR 2005-06 A SIMILAR DISALLOWANCE WAS DELETED BY CIT(A). HOWEVER, THE C OPY OF THE ORDER WAS NOT PRODUCED BEFORE THIS TRIBUNAL. THEREFORE IT NEEDS TO BE VERIFIED. IT IS ALSO NOT KNOWN WHETHER THE ASSESSEE WAS CONSISTENTLY FOLLOWI NG THIS METHOD FOR ALL THE YEARS. IN THE ABSENCE OF ANY MATERIAL WE ARE UNABL E TO RECORD ANY FINDING ON THIS ISSUE. MOREOVER, THE ASSESSEE HAS PRODUCED ONLY TW O BILLS BEFORE THE ASSESSING OFFICER. FOR THE PURPOSE OF CLAIMING THE INSURANCE PREMIUM THE ASSESSEE HAS TO NECESSARILY PRODUCE THE ENTIRE BILLS. THEREFORE, T HE MATTER NEEDS TO BE RECONSIDERED AFTER CONSIDERING ALL THE BILLS ISSUED BY THE INSURANCE COMPANY AND THE METHOD OF ACCOUNTING WHICH IS REGULARLY FOLLOWE D BY THE ASSESSING OFFICER. ACCORDINGLY THE ORDER OF THE LOWER AUTHORITY IS SET ASIDE ON THIS ISSUE AND THE ISSUE OF PREPAID INSURANCE PREMIUM IS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSING OFFICER SHALL RECONSIDER TH E ISSUE IN THE LIGHT OF THE MATERIAL EVIDENCE THAT MAY BE FILED BY THE ASSESSEE TO PROVE THE PAYMENT OF ITA NO.123/RJT/2008 4 INSURANCE PREMIUM AND THEREAFTER DECIDE THE ISSUE I N ACCORDANCE WITH LAW AFTER CONSIDERING THE METHOD OF ACCOUNTING THAT WAS CONSI STENTLY FOLLOWED BY THE ASSESSEE. 6. GROUND NO.3 RAISED BY THE ASSESSEE IS DISPOSED O F ACCORDINGLY. THE OTHER PART OF THE ORDER DATED 29-05-2009 SHALL STAN D AS SUCH. 7. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS PARTLY ALLOWED, FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 12-08-201 1. SD/- SD/- (A.L. GEHLOT) (N.R.S. GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER RAJKOT, DT : 12 TH AUGUST, 2011 PK/- COPY TO: 1. ASSESSEE 2. REVENUE 3. THE CIT(A)-III, RAJKOT 4. THE CIT-II, RAJKOT 5. THE DR, I.T.A.T., RAJKOT (TRUE COPY) BY ORDER ASSTT.REGISTRAR, ITAT, RAJKOT