VINYROYAL PLASICOATES P.LTD, MUMBAI V. ITO 9(3)(3), MUMBAI

ITA 1240/MUM/2013

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 1865 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 10 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-12-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 19-11-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 13-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PAWAN KU MAR BEERLA
• Assessee Lawyers: MAYUR A SHAH
• Keywords: Corroborative evidences; Revised return

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH, MUMBAI BEFORE SHRI N.K . BILLAIYA, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER / I .T A NO S . 1240 & 1243/MUM/2013 ( / ASSESSMENT YEAR S : 2008 - 09 & 2009 - 10 M/S. VINYROYAL PLASTICOATES PVT. LTD., PLOT NO. 60CD, SHLOK BLDG., 1 ST FLOOR, GOVT. IND. EST, CHARKOP, KANDIVLI (W), MUMBAI - 400 067 / VS. THE ITO 9(3) - 3, AAYAKAR BHAVAN, MUMBAI - 400 020 ./ ./ PAN/GIR NO. : AAACV 4165E ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY: SHRI MAYUR A. SHAH / RESPONDENT BY: SHRI PAWAN KUMAR BEERLA / DATE OF HEARING : 08 .1 2 . 2015 / DATE OF PRONOUNCEMENT : 16 .1 2 .2015 / O R D E R PER N.K. BILLAIYA, AM: TH ESE APPEAL S BY THE ASSESSEE ARE PREFERRED AGAINST T WO SEPARATE ORDER S OF THE LD. CIT(A) - 2 0 , MUMBAI D ATED 17 . 1 2 .201 2 AND 27.12.2012 PERTAINING TO ASSESSMENT YEAR S 2008 - 09 AND 2009 - 10 . BOTH THESE APPEALS HAVE COMMON GRIEVANCE BY THE ASSESSEE THEREFORE THEY WERE HEARD TOGETHER AND DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. ITA. NO S . 1240 & 1243/M/13 2 2. GROUND NO. 1 & 2 OF A.Y. 2008 - 09 A RE ALSO SAME AS GROUND NO. 1 & 2 FOR A.Y. 2009 - 10 THOUGH QUANTUM MAY DIFFER, THESE GROUNDS HAVE A COMMON ISSUE WHICH RELATES TO THE DISALLOWANCES OF THE CONTRIBUTION TO EMPLOYEES PROVIDENT FUND WHICH WAS DEPOSITED AFTER THE STATUTORY PERIOD BUT BEFORE FILING THE RETURN OF INCOME. 3. AT THE VERY OUTSET, THE LD. COUNSEL FOR THE ASSESSEE STATED THAT THIS ISSUE IS NOW WELL SETTLED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE BY THE DECISION OF THE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF HINDUSTAN ORGANICS CHEMICALS LTD IN INCOME TAX APPEAL NO. 399 OF 2012 WHEREIN THE HONBLE HIGH COURT HAS FOLLOWED THE RATIO LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF CIT VS ALOM EXTRUSIONS LTD 319 ITR 306. IT IS THE SAY OF THE LD. COUNSEL THAT THE FACTS THE EPF HAVE BEEN DEPOSITED BEFORE FILING THE RETURN OF INC OME WAS BROUGHT TO THE NOTICE OF THE AO BY WAY OF A REVISED COMPUTATION OF INCOME BUT THE SAME WAS NOT ACCEPTED FOR WANT OF REVISED RETURN OF INCOME. THE LD. COUNSEL RELIED UPON THE DECISION OF THE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF CIT VS P RUTHIVI BROKERS AND SHAREHOLDERS PVT. LTD. 349 ITR 336. 4. PER CONTRA, THE LD. DEPARTMENTAL REPRESENTATIVE STRONGLY RELIED UPON THE DECISION OF THE HONBLE HIGH COURT OF GUJARAT IN THE CASE OF CIT VS GUJARAT STATE ROAD TRANSPORT CORPN. 366 ITR 170. 5. W E HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE FACTUAL MATRIX. UNDISPUTEDLY, THE ASSESSEE HAS PAID THE CONTRIBUTIONS WHICH HAVE BEEN RECEIVED FROM THE EMPLOYEES BEYOND THE TIME LIMIT PROVIDED IN THE ACT. HOWEVER, THE SAME HAS BEEN CLAIMED TO HAVE BEEN D EPOSITED ITA. NO S . 1240 & 1243/M/13 3 BEFORE FILING THE RETURN OF INCOME. THEREFORE, THIS ISSUE HAS TO BE CONSIDERED NOW IN THE LIGHT OF THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF ALOM EXTRUSIONS LTD (SUPRA), HONBLE HIGH COURT OF BOMBAY IN THE CASE OF HINDUSTAN ORGANIC S CHEMICALS LTD (SUPRA). WE, THEREFORE, RESTORE THIS ISSUE TO THE FILE OF THE AO. THE AO IS DIRECTED TO VERIFY WHETHER THE AMOUNTS HAVE BEEN DEPOSITED BEFORE FILING THE RETURN OF INCOME AND IF FOUND CORRECT, THEN THE SAME SHOULD BE DECIDED IN THE LIGHT O F THE DECISION REFERRED TO HEREINABOVE. 5.1. SINCE WE HAVE FOLLOWED THE DECISION OF THE HONBLE HIGH COURT OF BOMBAY, WE DO NOT FIND IT NECESSARY TO DWELL INTO THE DECISION OF THE HONBLE HIGH COURT OF GUJARAT. GROUND NO. 1 & 2 OF BOTH THE APPEALS ARE T REATED AS ALLOWED FOR STATISTICAL PURPOSE. 6. IN .A.Y. 2008 - 09 IN ITA NO. 1240 /M/2013 THE THIRD GROUND RELATE TO THE DISALLOWANCE OF INTEREST U/S. 36(1)(III) OF THE ACT AT RS. 6,00,000/ - . 6.1. WHILE SCRUTINIZING THE RETURN OF INCOME AND ON PERUSING THE STATEMENT OF ACCOUNTS, THE AO FOUND THAT IN THE IMMEDIATELY PRECEDING ASSESSMENT YEAR I.E. 2007 - 08, AN ADDITION OF RS. 5,98,549/ - HAS BEEN MADE AS THE ASSESSEE W A S FOUND TO HAVE ADVANCED INTEREST FREE LOANS. DURING THE YEAR UNDER CONSIDERATION ALSO THE AO FOUND THAT THE ASSESSEE HAS ADVANCED INTEREST FREE LOANS. THE ASSESSEE WAS ASKED TO EXPLAIN WHY INTEREST SHOULD NOT BE DISALLOWED AS THE INTEREST BEARING BORROWINGS HAVE BEEN UTILIZED FOR GIVING INTEREST FREE ADVANCES. THE ASSESSEE FILED A DETAILED REPL Y EXPLAINING THE UTILIZATION OF THE BORROWED CAPITAL AND CLAIMING THAT NO BORROWED CAPITAL HAS BEEN UTILIZED FOR GIVING ADVANCE INTEREST FREE. STRONG ITA. NO S . 1240 & 1243/M/13 4 RELIANCE WAS PLACED ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF S.A. BUILDERS LTD 288 ITR 01 AND HONBLE HIGH COURT OF BOMBAY IN THE CASE OF CIT VS RELIANCE UTILITIES AND POWER LTD 313 ITR 340. THE CLAIM OF THE ASSESSEE WAS DISMISSED BY THE AO WHO MADE AN ADDITION OF RS. 6,00,000/ - . 7. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) B UT WITHOUT ANY SUCCESS. 8. DURING THE APPELLATE PROCEEDINGS, THE LD. CIT(A) HAS CALLED FOR A REMAND REPORT FROM THE AO AND THE AO IN HIS REMAND REPORT HAS STATED THAT INTEREST FREE LOANS/DEPOSITS FROM M/S. LE VENCH CANNOT BE VERIFIED AS THERE IS NO EVIDENCE SUBMITTED BY THE ASSESSEE TO JUSTIFY ITS CLAIM THAT THE SAID ADVANCE WAS GIVEN TO ITS RELATED CONCERN M/S. ROYAL CUSHION VINYL PRODUCTS LTD (RCVP). THE AO HAS FURTHER STATED THAT THE ASSESSEE HAS ALSO NOT FILED ANY BANK STATEMENT TO JUSTIFY ITS CLAIM. ON PERUSAL OF THIS REMAND R EPORT, THE LD. CIT(A) OBSERVED THAT NO PROPER COMPLIANCE WAS MADE BY THE ASSESSEE TO THE REQUIREMENT OF THE AO NOR ANY DOCUMENTARY EVIDENCES HAVE BEEN FILED BEFORE THE LD. CIT(A). THE LD. CIT(A) CONFIRMED THE ADDITION MADE BY THE AO. 9. AGGRIEVED BY WH ICH THE ASSESSEE IS BEFORE US. 10. THE LD. COUNSEL FOR THE ASSESSEE DREW OUR ATTENTION TO EXHIBIT 16 TO 18 OF THE PAPER BOOK POINTING OUT THAT PURCHASES OF RS. 23,90,66,573/ - HAVE BEEN MADE FROM THE RELATED PARTY RCVP. THE LD. COUNSEL FURTHER DREW OUR ATTENTION TO EXHIBIT - 24 WHICH IS THE SUBMISSION MADE BEFORE THE AO. THE LD. COUNSEL POINTED OUT THAT IT WAS EXPLAINED TO THE AO THAT RCVP WHICH IS A SISTER CONCERN OF THE ASSESSEE IS CARRYING ON THE BUSINESS OF THE DEALERS AND MANUFACTURERS ITA. NO S . 1240 & 1243/M/13 5 OF VINYL FLOO RING. SINCE RCVP WAS FACING FINANCIAL CRUNCH AND THEREFORE WAS NOT IN A POSITION TO MEET OUT ITS EXPORT ORDERS TO ONE OF ITS CUSTOMERS M/S. LE VENCH, AN ARRANGEMENT WAS MADE BY WHICH M/S. LE VENCH WAS TO PLACE ORDER WITH RCVP AND GIVE ADVANCE TO THE ASSES SEE. THIS ADVANCE RECEIVED FROM M/S. LE VENCH WAS FORWARDED TO THE SISTER CONCERN RCVP. RCVP SUPPLIED THE RELATED MATERIAL TO THE ASSESSEE AND THE AMOUNT WAS ADJUSTED AGAINST THE SUPPLIES MADE. THE LD. COUNSEL ALSO DREW OUR ATTENTION TO THE AMOUNT OF ADV ANCE RECEIVED FROM M/S. LE VENCH QUA EXPORT SALES TO M/S. LE VENCH QUA AMOUNT RECEIVABLE FROM RCVP. IT IS THE SAY OF THE LD. COUNSEL THAT THE REVENUE AUTHORITIES HAVE NOT APPRECIATED THIS FACTUAL MATRIX IN THE CORRECT PERCEPTIVE AND THEREFORE ADDITIONS M ADE DESERVES TO BE DELETED. 11. PER CONTRA, THE LD. DR SUPPORTED THE FINDINGS OF THE REVENUE AUTHORITIES. 12. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE SUBMISSIONS MADE BY THE LD. COUNSEL. WE HAVE ALSO CONSIDERED VARIOUS EXHIBITS CAREFULLY. IN O UR CONSIDERED OPINION, THE FOLLOWING FACTUAL MASTRIX NEED TO BE CONSIDERED: ASST. YEAR ADVANCES RECEIVED FROM LE VENCH EXPORT SALES TO LE VENCH ADVANCE OUTSTANDING TO LE VENCH AT YEAR END AMOUNT R ECEIVABLE FROM RCVP AT YEAR END 2005 - 06 11,94,48,799 8,23,70,231 3,70,78,568 2 , 93,38,702 2006 - 07 36,35,41,035 26,80,21,551 13,25,98 ,052 7,07,21,764 2007 - 08 38,93,24,942 30,87,93,809 21,31,29,185 11,10,88,997 2008 - 09 22,28,20,382 26,12,41,213 17,47,08,354 17,41,09,742 ITA. NO S . 1240 & 1243/M/13 6 WE, THEREFORE, RESTORE THIS ISSUE TO THE FILE OF THE AO. THE AO IS DIRECTED TO VERIFY THE AFOREMENTIONED TRANSACTIONS. THE ASSESSEE IS DIRECTED TO EXPLAIN THE AFOREMENTIONED TRANSACTION WITH SUPPORTING EVIDENCES. THE AO WILL DECIDE THE ISSUE AFRESH . I F THE AFOREMENTIONED TRANSACTIONS SEEM TO BE CORRECT , NO ADDITION IS CALLED. GROUND NO. 3 IS TREATED AS ALLOWED FOR STATISTICAL PURPOSE. 13. IN THE RESULT, THE APPEALS FILED BY THE ASSESSEE ARE TREATED AS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 16 TH DECEMBER , 2015 . SD/ - SD/ - ( PAWAN SINGH ) (N.K. BILLAIYA) /JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED : 16 TH DECEMBER , 2015 . . ./ RJ , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . / BY ORDER, //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI