The DCIT, Circle-4, Ahmedabad V. Horizon Microtech Pvt. Ltd., Ahmedabad

ITA 1329/AHD/2010

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 0144 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-08-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2006-2007
• Appeal Filed On: 27-04-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUDHANSHU S JHA
• Keywords: Depreciation; Business expenditure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH 'D' BEFORE SHRI MUKUL SHRAWAT, JM & SHRI A N PAHUJA,AM ITA NO.1329/AHD/2010 (ASSESSMENT YEAR:-2006-07) DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-4, NAVJIVAN TRUST BUILDING,OFF ASHRAM ROAD,AHMEDABAD V/S M/S HORIZON MICROTECH PVT. LTD., PLOT NO.311, ROAD NO.4A, KATHWADA, GIDC, AHMEDABAD [PAN: AAACH 4762 M] [APPELLANT] [RESPONDENT] REVENUE BY :- SHRI SUDHANSHU S JHA, DR ASSESSEE BY:- NONE O R D E R A N PAHUJA: THIS APPEAL BY THE REVENUE AGAINST AN ORDER DATE D 19-01-2010 OF THE LD. CIT(APPEALS)-VIII, AHMEDABAD, RAISES THE FOLLOWING GROUNDS: 1. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DIR ECTING THE ASSESSING OFFICER TO GRANT CREDIT FOR THE FIXED DEP OSIT MADE BY THE ASSESSEE IN THEIR NAME AGAINST THE DEMAND OF FBT AS SESSMENT. 1.1 THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN NOT APPRECIATING THE FACT THAT CREDIT CAN ONLY BE GIVEN FOR THOSE AMOUNT S WHICH ARE DEPOSITED IN THE GOVT. A/C. PURSUANT TO THE DEMAND RAISED/SELF DETERMINED. 1.2 THE LD CIT(A) HAS FURTHER ERRED IN LAW AND ON F ACTS IN NOT APPRECIATING THE FACT THAT NO CREDIT CAN BE GIVEN F OR ANY AMOUNT LYING IN A FIXED DEPOSIT IN THE NAME OF ASSESSEE WH EREIN THERE IS NO RESTRAINT ON THE ASSESSEE TO BREAK THE FD AND USED THE SAME ON ITS OWN REQUIREMENT. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFF ICER. 3. IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE L D. CIT(A) MAY BE SET ASIDE AND THAT OF THE ASSESSING OFFICER MAY BE REST ORED TO THE ABOVE EXTENT. ITA NO.1329/AHD/2010 FOR AY 2006-07 M/S HORIZON MICROTECH P LTD. 2 2 AT THE OUTSET, NONE APPEARED ON BEHALF OF THE ASS ESSEE NOR ANY REQUEST FOR ADJOURNMENT WAS RECEIVED DESPITE SE RVICE OF NOTICE[AD ON RECORD]. WE, THEREFORE, DECIDED TO DIS POSE OF THE APPEAL AFTER HEARING THE LEARNED DEPARTMENTAL REPRE SENTATIVE. 3 ADVERTING TO GROUND NOS. 1 TO 1.2 IN THE APPEAL, FACTS, IN BRIEF, AS PER RELEVANT ORDERS ARE THAT AN E-RETURN OF FBT FOR THE YEAR UNDER CONSIDERATION WAS FILED BY THE ASSESSEE ON 21-12-20 06, DECLARING NIL VALUE OF FRINGE BENEFITS. SUBSEQUENTLY, THE RETURN WAS SELECTED FOR SCRUTINY WITH THE SERVICE OF A NOTICE U/S 115WE(2) OF THE INCOME-TAX ACT, 1961 [HEREINAFTER REFERRED TO AS THE ACT] O N 26-12-2007. THE ASSESSING OFFICER[AO IN SHORT] NOTICED THAT THOUG H THE ASSESSEE COMPANY WORKED OUT THE VALUE OF FBT AT RS.5,94,817 /- , IN THE RETURN NIL AMOUNT WAS SHOWN NOR THE ASSESSEE PAID ANY TAX ON THE AMOUNT WORKED OUT BY IT. INSTEAD,THE ASSESSEE HAD MADE AN FDR OF THE FBT AMOUNT IN THE NAME OF THE COMPANY. SINCE THE ASSESSEE DID NOT CONSIDER ALL THE RELEVANT HEADS OF FBT, THE AO WORK ED OUT TOTAL VALUE OF BENEFITS AS UNDER: SECTION NATURE OF EXPENDITURE REVISED WORKING AS PER DETAILS SUBMITTED AMOUNT DECLARED BY ASSESSEE FOR FBT DIFFERENC E 115WB(2)(D) SALES PROMOTION 34004 - 34004 115WE(2)(H) REPAIR RUNNING (INCLUDING FUEL, MAINTENANCE OF MOTOR CAR AND DEPRECIATION THEREON DEPRECIATI ON 201381 574274 NIL INTEREST 49900 ITA NO.1329/AHD/2010 FOR AY 2006-07 M/S HORIZON MICROTECH P LTD. 3 LOAN VEHICLE EXP. 322993 TOTAL AMOUNT FOR CAR 574274 115WB(2)(L) FESTIVAL CELEBRATION 25666 ' 25666 TOTAL DIFFERENCE 59670 ACCORDINGLY, AFTER HAVING A REPLY FROM THE ASSESSEE , THE AO DETERMINED THE VALUE OF TAXABLE FRINGE BENEFITS AT RS.6,14,450/- [RS.5,94,817+ 19,633(20% OF SALES PROMOTION EXPENSES-RS.34,004 + 50% OF FESTIVA L EXPENSES OF RS.25,666/-)] AND DETERMINED TOTAL TAX OF RS. 2,31,640/-. 4. ON APPEAL, THE LEARNED CIT(A) DECIDED THE ISSUE IN THE FOLLOWING TERMS:- 4 THE FIRST GROUND OF APPEAL IS DIRECTED AGAINST T HE ASSESSING OFFICER'S ACTION FOR REJECTING THE APPELLANT'S CLAI M FOR ADJUSTING THE AMOUNT OF FBT AGAINST THE FDRS MADE BY THE APPELLANT. THE SECOND GROUND OF APPEAL IS DIRECTED AGAINST LEVY OF INTEREST U/S 115 WJ(3). SINCE THESE GROUNDS ARE INTER CONNECTED, THEY ARE BEING DECIDED JOINTLY FOR THE SAKE OF CONVENIENCE. 4.1 DURING THE ASSESSMENT PROCEEDINGS THE AO NOTED THAT THE APPELLANT ITSELF HAS WORKED OUT THE AMOUNT OF FRINGE BENEFITS AT RS.5,94,817/-. HOWEVER, IN THE FBT RETURN SAME WAS DECLARED AS NIL . THE ASSESSING OFFICER ALSO OBSERVED THAT THE APPELLANT HAS NOT TA KEN INTO CONSIDERATION THE AMOUNT OF SALES PROMOTION AND FESTIVAL CELEBRAT ION CLAIMED AT RS.34,004/- AND RS.25,666/- RESPECTIVELY FOR THE PU RPOSES OF FBT. HE ACCORDINGLY WORKED OUT THE AMOUNT OF FRINGE BENEFIT ON SUCH EXPENSES AND FURTHER ADDED THE SAME IN THE AMOUNT OF RS.5,94 817/- WORKED OUT BY THE APPELLANT ITSELF AND DETERMINED THE FBT AMOUNT AT RS.6,14,450/- FOR THE RELEVANT PERIOD. THE ASSESSING OFFICER WHILE CO MPLETING THE ASSESSMENT UNDER REFERENCE DID NOT ALLOW THE APPELL ANT THE CREDIT OF FBT DEPOSITED BY THE APPELLANT AS FDR IN THE BANK AS PE R THE DIRECTIONS OF HON'BLE GUJARAT HIGH COURT IN WRIT PETITION NO. 211 24. ITA NO.1329/AHD/2010 FOR AY 2006-07 M/S HORIZON MICROTECH P LTD. 4 4.2 DURING THE APPELLATE PROCEEDINGS THE ID. AR OF THE APPELLANT OBJECTED TO THE ASSESSING OFFICER'S ACTION FOR NOT GRANTING CREDIT 'OF FRINGE BENEFIT TAX DEPOSITED BY THE APPELLANT AS FDR WITH THE BANK AS PER THE DIRECTIONS OF THE HON'BLE GUJARAT HIGH COURT CONTAI NED IN ITS DECISION IN WRIT PETITION NO. 21124 OF 2005. THOUGH THE LD. AR DID N OT FILE THE COPY OF SAID JUDGEMENT YET IT FILED A CLIPPING FROM THE TIMES OF INDIA DATED 18.10.2005 WHICH READ AS UNDER: 'AHMEDABAD: IN A BREATHER OF SORTS FROM THE CONTROV ERSIAL FRINGE BENEFIT TAX (FBT) FOR-MANY ORGANISATIONS, THE GUJARAT HIGH COURT ON TUESDAY ADMITTED TWO WRIT PETITIONS FILED BY THE GUJARAT CH AMBER OF COMMERCE AND INDUSTRY AND KARNAVATI CLUB LTD AND GRANTED INTERIM RELIEF ON CERTAIN DISPUTED ITEMS OF EXPENDITURE. THE COURT ALLOWED THE PETITIONERS AND 'OTHER SIMILA R ASSESSEES' TO PROTECT THEIR INTERESTS BY DEPOSITING SUCH DISPUTED FBT LIA BILITY IN A SEPARATE BANK ACCOUNT TO BE OPENED IN THE EMPLOYERS' NAMES WITH A , SCHEDULED BANK TILL FURTHER ORDERS, A GCCI COMMUNIQUE STATED. A DIVISION BENCH COMPRISING JUSTICES DA MEHTA AND H ARSHA DEVANI TOOK THE VIEW THAT SUCH A PAYMENT WOULD BE TREATED AS FB T PAYMENT AND WOULD NOT ATTRACT ANY LIABILITY FOR PENAL INTEREST. CHALL ENGING THE VALIDITY AND LEGALITY OF CIRCULAR NO 8/2005 DATED AUGUST 29, 200 5 ON FBT ISSUED BY THE CENTRAL BOARD OF DIRECT TAXES, ADVOCATES KH KAJI AN D MUKESH PATE/ ARGUED AGAINST SEVERAL INTERPRETATIONS OF THE ' CBD T RELATING TO LEVY OF FBT IN RESPECT OF LEGITIMATE BUSINESS EXPENDITURE, INCL UDING EXPENDITURE ON NON-EMPLOYEES AND NOT RESULTING IN ANY BENEFITS TO EMPLOYEES.' 4.3 I HAVE CONSIDERED THE FACTS AND SUBMISSION OF T HE ID. AR CAREFULLY. IT IS SEEN THAT THE APPELLANT HAS MADE PAYMENT OF FBT AMOUNTING TO RS.2,24,875/- BY DEPOSITING THE SAME IN SEPARATE BA NK FIXED DEPOSIT ACCOUNTS AS PER THE DIRECTIONS OF HON'BLE GUJARAT H IGH COURT IN WRIT PETITION NO. 21124. IN VIEW OF THIS, THE ASSESSING OFFICER IS DIRECTED TO ALLOW CREDIT TO THE APPELLANT FOR THE TAXES PAID BY IT TOWARDS F BT AS PER THE DIRECTIONS OF HON'BLE GUJARAT HIGH COURT PROVIDED SAME IS DEPO SITED WITH THE DEPARTMENT FOR CLAIMING THE CREDIT THEREOF. IN THES E CIRCUMSTANCES, THE APPELLANT WILL BE SAVED FROM THE INTEREST LIABILITY U/S 115WJ(3) OF THE ACT PROVIDED IT HAS DEPOSITED THE DUE FBT IN THE FIXED DEPOSIT ACCOUNT. HOWEVER, THE ASSESSING OFFICER WHILE GIVING EFFECT TO THIS ORDER WILL EXAMINE THE JUDGMENT UNDER REFERENCE IN DETAIL AND THE DIRECTION THEREIN ACCORDINGLY. THE APPELLANT WOULD BE ENTITLED FOR TH E BENEFIT OF THE DECISIONS OF REFERRED JUDGMENT OF HON'BLE GUJARAT HIGH COURT ONLY ON THE CONDITION THAT IT CONTAINS GENERAL DIRECTION WITH REGARD TO S IMILARLY PLACED ASSESSEES. IF SUCH DIRECTIONS ARE NOT CONTAINED IN THE JUDGMEN T THE BENEFIT TO THAT EXTENT WOULD BE AVAILABLE TO THE ASSESSEES WHO WERE BEFORE THE HON'BLE COURT. IN VIEW OF THIS BOTH THE GROUNDS OF THE APPE LLANT ARE DISPOSED OFF ACCORDINGLY. ITA NO.1329/AHD/2010 FOR AY 2006-07 M/S HORIZON MICROTECH P LTD. 5 5. THE REVENUE IS NOW IN APPEAL BEFORE US AGAINST THE AFORESAID FINDINGS OF THE LD. CIT(A).THE LEARNED DR MERELY S UPPORTED THE ORDER OF THE AO, WITHOUT PINPOINTING ANY INFIRMITY IN THE AFORESAID DIRECTIONS OF THE LD. CIT(A). 6. WE HAVE HEARD THE LEARNED DR AND GONE THROUGH TH E FACTS OF THE CASE. AS IS APPARENT FROM THE FACTS NARRATED I N THE IMPUGNED ORDERS, THE ASSESSEE DID NOT PAY ANY FBT TO THE GOV ERNMENT ACCOUNT AND INSTEAD, AN AMOUNT OF RS.2,24,875/- WAS DEPOSITED IN A SEPARATE FIXED DEPOSIT ACCOUNT WITH THE BANK AS PE R THE DIRECTIONS OF HON'BLE GUJARAT HIGH COURT IN WRIT PETITION NO. 21124. ACC ORDINGLY, THE LD. CIT(A) DIRECTED THE AO TO ALLOW CREDIT FOR THE TAXES PAID BY THE A SSESSEE TOWARDS FBT AS PER THE DIRECTIONS OF HON'BLE GUJARAT HIGH COURT, PROVIDED THE SAME IS DEPOSITED WITH THE DEPARTMENT FOR CLAIMING THE CREDIT THEREOF. THE LD . DR APPEARING BEFORE US DID NOT POINT OUT ANY INFIRMITY IN THESE DIRECTIONS OF THE LD. CIT(A). IN THESE CIRCUMSTANCES, WHEN THE REVENUE HAVE NOT PLACED ANY MATERIAL BEFORE US SO AS TO ENABLE US TO TAKE A DIFFERENT VIEW IN THE M ATTER, WE ARE NOT INCLINED TO INTERFERE. THEREFORE, GROUND NOS.1 TO 1.2 IN THE AP PEAL ARE DISMISSED. 7. GROUND NOS.2 & 3 IN THE APPEAL ,BEING MERE PR AYER, DO NOT REQUIRE ANY SEPARATE ADJUDICATION AND ARE, THEREFORE, DISMISSED 8. IN THE RESULT, APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE COURT TODAY ON 19 -08-2010 SD/- SD/- (MUKUL SHRAWAT) JUDICIAL MEMBER (A N PAHUJA) ACCOUNTANT MEMBER DATE : 19 -08-2010 ITA NO.1329/AHD/2010 FOR AY 2006-07 M/S HORIZON MICROTECH P LTD. 6 COPY OF THE ORDER FORWARDED TO: 1. M/S HORIZON MICROTECH PVT. LTD., PLOT NO.311, RO AD NO.4A, KATHWADA, GIDC, AHMEDABAD 2. THE DCIT, CIRCLE-4, AHMEDABAD 3. CIT CONCERNED 4. CIT(A)-VIII, AHMEDABAD 5. DR, BENCH-D, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER DEPUTY REGISTRAR ASSISTANT REGISTRAR ITAT, AHMEDABAD