Gujarat State Fertilizers & Chemicals Ltd., Vadodara V. The Dy.CIT, Circle-1(1), Baroda

ITA 1243/AHD/2015

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 6347 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 7 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-01-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2004-2005
• Appeal Filed On: 08-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: O P VAISHNAV
• Assessee Lawyers: S R SHAH
• Section: 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH (BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER & SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER) ITA. NO: 1243/AHD/2015 (ASSESSMENT YEAR: 2004-05) GUJARAT STATE FERTILIZERS & CHEMICALS LTD. P.O. FERTILIZER NAGAR VADODARA-391750 V/S INCOME TAX OFFICER, WARD- 7 (2), AHMEDABAD (APPELLANT) (RESPONDENT) PAN: AAACG7996C APPELLANT BY : SHRI S. R. SHAH, AR RESPONDENT BY : SHRI O. P. VAISHNAV, SR. D.R . ( )/ ORDER DATE OF HEARING : 01 -01-201 8 DATE OF PRONOUNCEMENT : 03-01-2018 PER N.K. BILLAIYA, ACCOUNTANT MEMBER: 1. THIS APPEAL BY THE ASSESSEE IS PREFERRED AGAINST TH E ORDER OF THE LD. CIT(A)-1, VADODARA DATED 13.02.2015 PERTAINING TO A.Y. 2004-0 5. ITA NO. 1243 /AHD/2015 . A.Y. 2004-05 2 2. THE ASSESSEE HAS RAISED TWO SUBSTANTIVE GROUNDS. TH E SUM AND SUBSTANCE OF GROUND NO. 1 RELATES TO THE DISALLOWANCE OF REDUCTI ON OF RS. 6.41 CRORES BEING EXCESS PROVISION OF DOUBTFUL ADVANCES CREDITED TO P ROFIT AND LOSS ACCOUNT MADE FROM THE COMPUTATION OF BOOK PROFIT U/S. 115JB OF THE ACT. 3. FACT SHOWS THAT THIS GRIEVANCE EMANATES FROM THE CO MPUTATION OF INCOME FOR THE IMMEDIATELY PRECEDING ASSESSMENT YEAR A.Y. 2003 -04 WHEREIN WHILE COMPUTING THE BOOK PROFIT U/S. 115JB OF THE ACT. TH E ASSESSEE HAS SHOWN BOOK PROFIT AS COMPUTED ACCORDING TO EXPLANATION GI VEN IN SUB-SECTION(2) AT A NEGATIVE FIGURE OF 6,17,79,72,413/- AND SINCE THE B OOK PROFIT WAS IN NEGATIVE MAT WAS TAKEN AT NIL. WHILE COMPUTING THE TAXABLE I NCOME AND THE BOOK PROFIT FOR THE ASSESSMENT YEAR UNDER CONSIDERATION, THE ASSESSEE HAS WRITTEN BACK THE PROVISIONS FOR DOUBTFUL ADVANCES AS THE SA ME WAS NO LONGER REQUIRED AND WAS DISALLOWED IN EARLIER YEAR. DURING THE COUR SE OF THE ASSESSMENT PROCEEDINGS, THE A.O. WAS OF THE OPINION THAT THE A SSESSEE IS NOT ENTITLED FOR THE REDUCTION OF THE PROVISION FOR DOUBTFUL ADVANCE S MADE FROM THE COMPUTATION OF BOOK PROFIT U/S. 115JB OF THE ACT. T HE LD. CIT(A) CONFIRMED THE ACTION OF THE A.O. 4. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE VEHEMEN TLY STATED THAT SINCE THE PROVISION WAS ADDED BACK IN A.Y. 2003-04, THE ASSES SEE IS VERY MUCH ENTITLED FOR THE REDUCTION OF THE SAME DURING THE YEAR UNDER CONSIDERATION. 5. THE RELEVANT PROVISION APPLICABLE TO THE FACTS IN I SSUE BEFORE US READ AS UNDER:- IF ANY AMOUNT REFERRED TO IN CLAUSES (A) TO (I) IS DEBITED TO THE PROFIT AND LOSS ACCOUNT OR IF ANY AMOUNT REFERRED TO IN CLAUSE (J) IS NOT CREDITED TO THE PROFIT AND LOSS ACCOUNT, AND AS REDUCED BY,]]] ITA NO. 1243 /AHD/2015 . A.Y. 2004-05 3 [(I) THE AMOUNT WITHDRAWN FROM ANY RESERVE OR PROVI SION (EXCLUDING A RESERVE CREATED BEFORE THE 1ST DAY OF APRIL, 1997 OTHERWISE THAN BY WAY OF A DEBIT TO THE PROFIT AND LOSS ]), IF ANY SUCH AMOUNT IS CREDITED TO THE PROFIT AND LOSS]: PROVIDED THAT WHERE THIS SECTION IS APPLICABLE TO A N ASSESSEE IN ANY PREVIOUS YEAR, THE AMOUNT WITHDRAWN FROM RESERVES CREATED OR PROVI SIONS MADE IN A PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR COMMENCING ON OR AFTER THE 1ST DAY OF APRIL, 1997 SHALL NOT BE REDUCED FROM THE BOOK PROFIT UNLE SS THE BOOK PROFIT OF SUCH YEAR HAS BEEN INCREASED BY THOSE RESERVES OR PROVISIONS (OUT OF WHICH THE SAID AMOUNT WAS WITHDRAWN) UNDER THIS EXPLANATION OR EXPLANATIO N BELOW THE SECOND PROVISO TO SECTION 115JA, AS THE CASE MAY BE; OR] 6. IN OUR CONSIDERED OPINION, IN THE LIGHT OF THE AFOR E-STATED RELEVANT PART OF THE APPLICABLE PROVISIONS, THE ASSESSEE HAS RIGHTLY RED UCED TO THE EXCESS PROVISION OF DOUBTFUL ADVANCES CREDITED TO THE PROFIT AND LOS S ACCOUNT. IT IS INCORRECT TO SAY THAT THE BENEFIT OF CLAUSE (I) OF SECTION 115JB OF THE ACT CAN BE TAKEN ONLY IF THE INCOME IS TAXED U/S. 115JB OF THE ACT. 7. CONSIDERING THE FACTS IN TOTALITY IN THE LIGHT OF T HE RELEVANT PROVISIONS OF THE ACT, WE SET ASIDE THE FINDINGS OF THE LD. CIT(A) AN D DIRECT THE A.O. TO ALLOW REDUCTION OF RS. 6,41,25,924/- FROM THE INCOME OF T HE YEAR. GROUND NO. 1 WITH ITS ALL SUB GROUND IS ALLOWED. 8. GROUND NO. 2 RELATES TO THE DENIAL OF CONSEQUENTIAL EFFECT TO THE ORDER OF LD. CIT(A) FOR THE EARLIER YEARS AS DIRECTED BY LD. CIT (A) IN HIS ORDER DATED 03.11.2010. 9. A PERUSAL OF THE ORDER GIVING EFFECT TO ORDER OF TH E ITAT SHOWS THAT THE ASSESSING OFFICER HAS GIVEN EFFECT TO THE ORDER OF THE LD. CIT(A) DATED 10.12.2007 WHILE COMPUTING THE NORMAL PROFIT OF THE ASSESSEE. WE FURTHER FIND ITA NO. 1243 /AHD/2015 . A.Y. 2004-05 4 THAT WHILE COMPUTING THE MAT U/S. 115JB OF THE ACT, THE ASSESSING OFFICER HAS GIVEN EFFECT TO THE ORDER OF THE LD. CIT(A) DAT ED 10.12.2007. WE ALSO FIND THAT THIS ORDER PASSED BY THE A.O. IS DATED 11.07.2 013. IN OUR CONSIDERED OPINION, THE A.O. HAS ERRED IN NOT GIVING EFFECT TO THE ORDER OF THE LD. CIT(A) DATED 01.11.2010. WE ACCORDINGLY DIRECT THE A.O. TO GIVE EFFECT TO THE ORDER OF THE LD. CIT(A) DATED 03.11.2010 ALSO. GROUND NO. 2 IS TREATED AS ALLOWED FOR STATISTICAL PURPOSE. 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 03- 01- 20 18 SD/- SD/- (RAJPAL YADAV) (N. K. BILLAIYA) JUDICIAL MEMBER TRUE COPY ACCOUNTANT MEMBER AHMEDABAD: DATED 03/01/2018 RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHME DABAD