HALFFKINE BIO PHARMACEUTICALS CORPORATION LTD, MUMBAI V. ACIT CIR 6(3), MUMBAI

ITA 1344/MUM/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 92287 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 1 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-04-2015
• Appeal Filed By: Assessee
• Bench Allotted: H
• Next Hearing Date: 09-10-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 14-02-2011
• Court: TRIBUNAL
• Department Lawyers: JEETENDRA KUMAR

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL H , BENCH MUMBAI . . , . . , BEFORE SHRI I. P. BANSAL, J M & SHRI R.C.SHARMA , A M ./ ITA NO. 1344 / MUM/20 1 1 ( / ASSESSMENT YEAR : 200 7 - 0 8 ) M/S HAFFKINE BIO - PHARMACEUTICALS CORPORATION LTD., ACHARYA DONDE MARG, PAREL, MUMBAI - 400012 VS. ACIT - 6(3), MUMBAI ./ ./ PAN/GIR NO. : A A AC H 0965 N ( / APPELLANT ) .. ( / RESPONDENT ) /ASSESSEE BY : SHRI DHARMESH SHAH /REVENUE BY : SHRI JEETENDRA KUMAR / DATE OF HEARING : 4 TH FEBRUARY , 201 5 / DATE OF PRONOUNCEMENT 6 TH APRIL, 2015 / O R D E R PER R.C.SHARMA (A.M) : THE ASSESSEE HAS FILED THIS APPEAL AGAINST THE ORDER OF CIT(A), DATED 15 - 11 - 2009 FOR THE ASSESSMENT YEAR 200 7 - 0 8 , IN THE MATTER OF ORDER PASSED U/S.143(3) OF THE ACT , WHEREIN FOLLOWING GR OUNDS HAVE BEEN TAKEN: - 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(APPEAL) ERRED IN UPHOLDING ADDITION OF RS. 2,00,00,000 / - BEING THE PROVISION MADE BY THE APPELLANT FOR REVISION IN PAY SCALES OF THE EMPLOYEES AS RESULT OF THE IMP LEMENTATION OF THE 6TH PAY COMMISSION. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT (APPEAL) ERRED IN HOLDING THAT THE SAID LIABILITY IS NOT QUANTIFIED LIABILITY BUT A CONTINGENT LIABILITY AND THEREFORE NOT ALLOWABLE. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT (APPEAL) FAILED TO APPRECIATE THAT THE APPELLANT BEING A GOVERNMENT COMPANY WOULD BE BURDENED WITH INCREASE IN PAY SCALES OF EMPLOYEES ON IMPLEMENTATION OF 6TH PAY COMMISSION AND ACCORDINGLY ALL PO TENTIAL LIABILITIES NEED TO BE ACCOUNTED FOR DURING THE YEAR ITSELF. ITA NO. 1344 / 1 1 2 2. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE RECORD. FACTS OF THE CASE ARE THAT THE ASSESSEE IS A COMPANY OWNED BY GOVERNMENT OF MAHARASHTRA ENGAGED IN MANUFACTURING OF VACCINES AN D LIFE SAVING DRUGS. THE ASSESSEE FILED ITS RETURN OF INCOME ON 31 - 3 - 2008 DECLARING TOTAL INCOME OF RS.1,61,05,768/ - . THE AO MADE THE ADDITION IN RESPECT OF PROVISION OF RS. 2,00,00 ,00 0/ - MADE ON ACCOUNT OF REVISION IN PAY SCALES OF EMPLOYEES AS A RESULT OF IMPLEMENTATION OF 6 TH PAY COMMISSION , ON THE PLEA THAT THE SAME AMOUNT IS CONTINGENT LIABILITY. BY THE IMPUGNED ORDER, THE CIT(A) CONFIRMED THE ACTION OF THE AO . AGAINST THE ORDER OF CIT(A), THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 3 . WE HAVE CONSIDERE D RIVAL CONTENTIONS AND FOUND FROM THE RECORD THAT 6 TH PAY COMMISSION WAS CONSTITUTED ON 24 - 3 - 2008 AND THE SAME WAS APPROVED BY VARIOUS NOTIFICATIONS OF STATE AND CENTRAL GOVERNMENT. AS PER THE 6 TH PAY COMMISSION, REVISION IN PAY - SCALE WAS EFFECTI VE FROM 1 ST JANUARY, 2006 AND THE RELEVANT FINANCIAL YEAR UNDER CONSIDERATION FOR WHICH PROVISION WAS MADE PERTAINS TO 1 - 4 - 2006 TO 31 - 3 - 2007. SINCE THE 6 TH PAY COMMISSION WAS MADE EFFECTIVE FROM 1 ST JANUARY, 2006, THE RELEVANT PREVIOUS YEAR UNDER CONSIDERA TION FALLS WITHIN THE DATES WHEN 6 TH CPC WAS MADE EFFECTIVE. THEREFORE, IT CANNOT BE SAID THAT PROVISION MADE BY ASSESSEE FOR PAYMENT OF SALARY AS PER 6 TH CPC WAS A CONTINGENT LIABILITY. ASSESSEE HAS ALSO PLACED ON RECORD DETAILED WORKING OF ARREARS OF SAL ARY PAYABLE TO ITS EMPLOYEES AS PER REVISION OF SALARY ACCORDING TO 6 TH PAY COMMISSION, RUNNING IN 16 PAGES AND THE SAME ARE PLACED AT PAGES ITA NO. 1344 / 1 1 3 46 TO 63 OF THE PAPER BOOK. THE DETAIL OF SUCH ARREARS WORKS OUT AT RS.2,54,63,557/ - , AGAINST WHICH ASSESSEE HAS MA DE A PROVISION OF RS.2 CRORES. IT IS ALSO NOT THE CASE OF THE AO THAT IN THE SUBSEQUENT YEAR THIS ARREAR OF SALARY FOR WHICH PROVISION WAS MADE DURING THE YEAR UNDER CONSIDERATION WAS NOT PAID TO THE EMPLOYEES. IN THE INTEREST OF JUSTICE AND FAIR PLAY, WE RESTORE THIS ISSUE BACK TO THE FILE OF THE AO TO VERIFY THE CALCULATION OF ARREARS OF SALARY AS PER 6 TH CPC AND TO DECIDE THE ISSUE AFRESH AS PER LAW . IT IS ALSO PERTINENT TO MENTION HERE THAT ASSESSEE HAS ALSO FILED NOTIFICATION OF GOVERNMENT OF MAHARASHT RA REGARDING SANCTIONING OF REVISED PAY SCALE TO THE EMPLOYEES OF THE ASSESSEE CORPORATION, RESOLUTION PASSED BY MINISTRY OF FINANCE, DEPARTMENT OF EXPENDITURE, NOTIFICATION OF GOVERNMENT OF MAHARASHTRA REGARDING MAKING APPLICATION OF REVISION OF 6 TH PAY C OMMISSION TO THE ASSESSEE. ALL THESE DOCUMENTS WERE NOT BEFORE THE LOWER AUTHORITIES. WE, THEREFORE, DIRECT THE AO TO VERIFY THE QUANTUM OF PROVISION MADE BY ASSESSEE AS PER THE 6 TH PAY COMMISSION IN TERMS OF ABOVE NOTIFICATION. WE DIRECT ACCORDINGLY. 4 . I N THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED IN PART FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 06/04 / 201 5 . SD/ - SD/ - ( . . ) ( I. P. BANSAL ) ( . . ) ( R.C.SHA RMA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED 06/04 /201 5 . . /PKM , . / PS ITA NO. 1344 / 1 1 4 / COPY OF THE ORDER FORWARDED TO : / BY ORDER, / ( ASSTT. REGISTRAR) , / ITAT, MUMBAI 1. / THE APPE LLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A), MUMBAI. 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. //TRUE COPY//