Uma Laboratories Pvt.Ltd., Ahmedabad V. The Income tax Officer, Ward-4(4), Baroda

ITA 1315/AHD/2012

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 9713 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 7 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-02-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 18-01-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 15-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER ./ ITA.NO.1315/AHD/2012 /BLOCK ASSTT. YEAR: 2005-2006 M/S.UMA LABORATORIES P.LTD. 613, GIDC ESTATE, MAKARPURA BARODA. PAN : AAACU 2855 N VS ITO, WARD-4(4) BARODA. %& / (APPELLANT) '( %& / (RESPONDENT) ASSESSEE BY : SHRI UMAIDSINGH BHATI REVENUE BY : SHRI ALOK KUMAR, DR / DATE OF HEARING : 18/01/2016 / DATE OF PRONOUNCEMENT: 01 /02/2016 )*/ O R D E R THE ASSESSEE IS IN APPEAL AGAINST THE ORDER OF THE LD.CIT(A)-III, BARODA DATED 04.04.2012 PASSED FOR THE ASSTT.YEAR 2005-06. 2. GROUND NOS.1 AND 2 ARE THE ONLY SUBSTANTIAL GROU ND OF APPEAL. IN THESE GROUNDS, THE ASSESSEE HAS PLEADED THAT THE LD.CIT(A ) HAS ERRED IN CONFIRMING THE ADDITION OF RS.2,50,000/- AND RS.1,21,402/-. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HA S FILED ITS RETURN OF INCOME ON 24.10.2005 DECLARING TOTAL INCOME AT RS.4,29,364 /-. THE ASSESSEE AT THE RELEVANT TIME WAS ENGAGED IN THE RESEARCH AND DEVEL OPMENT ACTIVITY IN PHARMACEUTICALS. ON SCRUTINY OF THE ACCOUNTS, IT R EVEALED THAT THE ASSESSEE HAD CLAIMED CREDIT OF TDS OF RS.1,70,387/-. THE GR OSS RECEIPTS FOR WHICH TDS HAS BEEN DEDUCTED COMES TO RS.35,91,402/-, WHER EAS THE ASSESSEE- ITA NO.1315/AHD/2012 2 COMPANY HAD SHOWN INCOME OF RS.32,20,000/-. THUS, THERE WAS A DIFFERENCE OF RS.3,71,402/-. THE ASSESSEE HAD CONTENDED THAT IN THIS DIFFERENCE OF RS.3,71,402/-, THERE IS AN AMOUNT OF RS.2,50,000/- FOR WHICH M/S.ATUL LTD. HAS GIVEN TDS CERTIFICATE IN ASSTT.YEAR 2005-06. T HE ASSESSEE HAS RECOGNIZED THIS RECEIPT IN THE SUBSEQUENT YEAR, AND THEREFORE, THIS AMOUNT OUGHT NOT TO BE INCLUDED IN THE TOTAL RECEIPT OF TH E ASSESSEE. THE LD.AO HAS REJECTED THIS CONTENTION OF THE ASSESSEE. 4. ON APPEAL, THE LD.CIT(A) HAS OBSERVED THAT AS PE R SECTION 199 OF THE ACT, AS APPLICABLE TO THE ASSTT.YEAR 2005-06, THE C REDIT OF TAX PAID BY AN ASSESSEE IN FORM OF TDS DEDUCTED ON THE PAYMENT OF RECEIPT BY IT, IS TO BE GIVEN IN THE ASSESSMENT MADE UNDER THIS ACT FOR THE ASSESSMENT YEAR FOR WHICH SUCH INCOME IS ASSESSABLE. IN OTHER WORDS, T HE CREDIT OF TAX IN THE FORM OF TDS CAN ONLY BE GIVEN TO AN ASSESSEE IN THE YEAR IN WHICH CORRESPONDING INCOME IS BEING OFFERED BY THE ASSESSEE. THE LD.CO UNSEL FOR THE ASSESSEE ON THE STRENGTH OF THE DECISION OF THE ITAT, THIRD MEM BER IN THE CASE OF SMT. VARSHA G. SALUNKE VS. DCIT, 98 ITD 147 (TM) (MUM) C ONTENDED THAT INCOME OF AN ASSESSEE IS TO BE RECOGNIZED AS PER TH E METHOD OF ACCOUNTANCY FOLLOWED BY THE ASSESSEE. IF THE INCOME OF THE ASS ESSEE HAS TO BE ACCOUNTED IN THE SUBSEQUENT YEAR, THEN IT COULD NOT BE PRE-PONED TO ASSTT.YEAR 2005-06. WHEN I CONFRONTED THE LD.COUSNEL FOR THE ASSESSEE A BOUT THE CREDIT OF TDS CLAIMED BY THE ASSESSEE IN THE ASSTT.YEAR 2005-06, THE LD. COUNSEL FOR THE ASSESSEE CONTENDED THAT THIS CREDIT MAY BE DENIED T O THE ASSESSEE IN THIS YEAR. HE SUBMITTED THAT A DIRECTION TO THIS EFFECT CAN BE GIVEN TO THE AO. 5. THE LD.DR, ON THE OTHER HAND, UNABLE TO CONTROVE RT THIS CONTENTION OF THE ASSESSEE. ITA NO.1315/AHD/2012 3 6. ON DUE CONSIDERATION OF THE FACTS AND CIRCUMSTAN CES, I AM OF THE VIEW THAT THIRD MEMBER DECISION OF THE ITAT, MUMBAI, HAS OBSERVED THAT SECTIONS 198 AND 199 DO NOT IN ANY WAY CHANGE THE YEAR OF AS SESSABILITY OF INCOME. ACCORDING TO THE METHOD OF ACCOUNTING EMPLOYED BY T HE ASSESSEE. THUS, INCOME WITH RESPECT TO THE JOB WORK DONE WITH ATUL LTD. HAS BEEN RECOGNIZED BY THE ASSESSEE IN THE ASSTT.YEAR 2006-07. ACCORDI NG TO THE ASSESSEE, THE JOB WORK WAS DONE IN THE MONTH OF MAY, 2015, AND THEREF ORE, THE JOB WORK RECEIPT WAS SHOWN IN THE ASSTT.YEAR 2006-07. ATUL LTD. HAS DEDUCTED TDS ON ADVANCE AMOUNT PLUS SERVICE TAX. THIS DEDUCTION O F TAX WOULD NOT PRE-PONE ACCRUAL OF INCOME IN THE ASSTT.YEAR 2005-06. RESPE CTFULLY FOLLOWING THE ORDER OF ITAT, MUMBAI, THIRD MEMBER CASE, I ALLOW T HE FIRST GROUND OF APPEAL AND GIVE THE FOLLOWING DIRECTIONS TO THE AO: THE LD.AO SHALL NOT INCLUDE AN AMOUNT OF RS.2,50,00 0/- IN THE TOTAL INCOME OF THE ASSESSEE IN THE ASSTT.YEAR 2005-06. SIMULTANEOUSLY, THE CREDIT FOR TDS REPRESENTING THIS RECEIPT WILL NOT BE ADMIS SIBLE TO THE ASSESSEE IN THE ASSTT.YEAR 2005-06. THE CREDIT FOR THE TDS HAS TO BE VERIFIED AND TO BE GIVEN IN THE YEAR ON WHICH SUCH RECEIPTS ARE OFFERED FOR TAXATION. 7. IN THE NEXT GROUND OF APPEAL, THE GRIEVANCE OF T HE ASSESSEE RELATES TO CONFIRMATION OF ADDITION OF RS.1,21,402/-. ACCORDI NG TO THE ASSESSEE THIS AMOUNT REPRESENTS SERVICE TAX. THE AO WAS OF THE V IEW THAT SERVICE TAX OUGHT TO HAVE BEEN CREDITED IN ITS PROFIT & LOSS ACCOUNT AND THEN SHOULD HAVE BEEN DEBITED IN ORDER TO CLAIM THE EXPENSES. THE STAND OF THE LD.COUNSEL FOR THE ASSESSEE IS THAT IN SERVICE TAX NO ELEMENT OF INCOM E IS INVOLVED. HE PLACED ON RECORD DETAILS EXHIBITING THE AMOUNTS COLLECTED TOW ARDS SERVICE TAX, BUT, THE LD. COUNSEL FOR THE ASSESSEE COULD NOT RECONCILE CO MPLETE DETAILS. HE SUBMITTED THAT OUT OF TOTAL AMOUNT, ROUGHLY RS.74,0 00/- MIGHT BE DISALLOWED. ITA NO.1315/AHD/2012 4 CONSIDERING INCOMPLETENESS OF THE FACTUAL DETAILS, THIS GROUND IS ALLOWED FOR LIMITED PURPOSE I.E. THE AO WOULD AGAIN GO THROUGH THE DETAILS OF RS1,21,402/- AND PROVIDE AN OPPORTUNITY TO THE ASSE SSEE TO EXPLAIN AS TO HOW THIS TOTAL AMOUNT OR ANY PART OF THE TOTAL AMOUNT R EPRESENT SERVICE TAX. IN OTHER WORDS, THE ISSUE REGARDING ADDITION OF RS.1,2 1,402/- IS SET ASIDE TO THE FILE OF THE AO FOR RE-ADJUDICATION AND THE ASSESSEE IS DIRECTED TO SUBMIT THE COMPLETE DETAILS ABOUT THIS AMOUNT. IN VIEW OF THE ABOVE, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE COURT ON 1 ST FEBRUARY, 2016 AT AHMEDABAD. SD/- (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED 01/02/2016