M/s Punjab Agro Inds. Corporation Ltd., Chandigarh V. DCIT, Chandigarh

ITA 1449/CHANDI/2016

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 0315 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 10 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-11-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 26-12-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Section: 115JB

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, B, CHANDIGARH , ! . .., # $, %& BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND DR. B.R.R. KUMAR, ACCOUNTANT MEMBER ./ ITA NOS. 1448 & 1449/CHD/2016 / ASSESSMENT YEARS : 2011-12 & 2012-13 M/S PUNJAB AGRO INDS. CORPORATION LTD., PLOT NO. 2A, SECTOR 28A, CHANDIGARH THE DCIT, CIRCLE 4(1), CHANDIGARH ./PAN NO: AAACP9905G / APPELLANT /RESPONDENT ! /ASSESSEE BY : SH. NAYAN JAIN, ADVOCATE (PROXY FOR SH. MAHINDER ARORA) ' ! / REVENUE BY : SH. MANJIT SINGH, SR.DR # $ % /DATE OF HEARING : 15.11.2018 &'() % / DATE OF PRONOUNCEMENT : 15.11 . 2018 %'/ ORDER PER SANJAY GARG, JUDICIAL MEMBER: THESE APPEALS HAVE BEEN PREFERRED BY THE ASSESSEE A GAINST THE ORDER DATED 27.10.2016 OF THE COMMISSIONER OF INCOME TA X (APPEALS)-2, GURGAON [HEREINAFTER REFERRED TO AS CIT(A)]. 2. AT THE OUTSET, THE LD. COUNSEL OF THE ASSESSEE F AIRLY SUBMITTED THAT THE SOLE ISSUE INVOLVED IN BOTH THE APPEALS FOR DI FFERENT ASSESSMENT YEARS RELATING TO THE DISALLOWANCE OF INTEREST EXPENDITUR E OF RS. 96,17,200/- (FOR ASSESSMENT YEAR 2011-12) AND RS. 97,93,020/- (FOR A SSESSMENT YEAR 2012- 13) RESPECTIVELY, PAYABLE TO GOVERNMENT OF PUNJAB, IS SQUARELY COVERED AGAINST THE ASSESSEE BY THE DECISION OF THE COORDI NATE BENCH OF THE ITA NO. 1448 & 1449/CHD/2016- M/S PUNJAB AGRO INDUSTRIES CORPORATION LTD., CHAN DIGARH 2 TRIBUNAL IN THE OWN CASE OF THE ASSESSEE FOR EARLIE R ASSESSMENT YEARS FROM 2008-09 TO 2010-11 VIDE ORDER DATED 22.9.2016. A CO PY OF THE SAID ORDER HAS ALSO BEEN PLACED IN THE FILE. 3. WE HAVE GONE THROUGH THE ORDER OF THE COORDINATE CHANDIGARH BENCH OF THE TRIBUNAL DATED 22.9.2018 PASSED IN THE OWN C ASE OF THE ASSESSEE IN ITA NOS. 782/CHD/2011 AND 55 & 848/CHD/2013 FOR ASS ESSMENT YEARS 2008-09 TO 2010-11, WHEREIN, THE TRIBUNAL AFTER DET AILED DISCUSSION DECIDED THE SAME AGAINST THE ASSESSEE. THE RELEVANT PART OF THE ORDER OF THE TRIBUNAL DATED 22.9.2018 (SUPRA) IS REPRODUCED ASSE SSEE UNDER:- 4. THE BRIEF FACTS ON THE ISSUE ARE THAT ASSESSEE HAD DEBITED AMOUNT OF RS. 1,04,25,000/- TO THE PROFIT & LOSS ACCOUNT AS INTEREST PAYABLE TO THE PUNJAB GOVERNMENT ON AMOUNT OF RS. 5.5 CRORES RECEIVED BY THE ASSESSEE AS ASSISTANCE IN THE FORM OF LOAN FOR SETTING UP AGRO BASED PROJECT IN THE STATE OF PUNJAB. THE ASSESSING OFFICER HAS MADE ADDITION OF THE SAID INTEREST OF RS. 1,02,00,560/- AFTER ALLOWING 2% EXPENDITURE. 4(I) THE LD. CIT(APPEALS), AFTER CONSIDERING FACTS OF THE CASE AND SUBMISSIONS OF THE ASSESSEE, NOTED THAT ASSESSEE HAD DEBITED INTEREST EXPENDITURE TO THE PROFIT & LOSS ACCOUNT AS INTEREST ON LOAN TAKEN FROM PUNJAB GOVERNMENT. AS PER PROVISIONS OF SECTION 145(1) OF THE INCOME TAX ACT, INCOME UNDER THE HEAD PROFIT AND GAINS OF BUSINESS OR PROFESSION OR 'INCOME FROM OTHER SOURCES' IS TO BE COMPUTED IN ACCORDANCE WITH EITHER CASH OR MERCANTILE SYSTEM OF ACCOUNTING REGULARLY EMPLOYED BY THE ASSESSEE. THE ASSESSEE IS FOLLOWING CASH SYSTEM OF ACCOUNTING IN RESPECT OF RECEIPTS FROM VARIOUS PROJECTS ON CASH BASIS BUT THE RELATED EXPENDITURE IS BEING CLAIMED ON ACCRUAL BASIS. THE LD. CIT(APPEALS), THEREFORE, HELD THAT THIS AMOUNT CLAIMED BY THE ASSESSEE IS NOT ALLOWABLE IN VIEW OF EXPLICIT PROVISIONS OF SECTION 145(1) OF THE ACT. THIS GROUND WAS, ACCORDINGLY, DISMISSED. ITA NO. 1448 & 1449/CHD/2016- M/S PUNJAB AGRO INDUSTRIES CORPORATION LTD., CHAN DIGARH 3 5. THE LD. CIT(APPEALS) ALSO CONSIDERED THE DISALLOWANCE OF INTEREST WHILE CALCULATING BOOK PROFITS UNDER SECTION 115JB OF THE ACT. THE ASSESSING OFFICER ADDED THE AMOUNT OF INTEREST WHILE CALCULATING BOOK PROFITS FOR THE PURPOSE OF SECTION 115JB OF THE ACT. THE LD. CIT(APPEALS) NOTED THAT IN THE CASE OF COMPANY, WHICH IS REQUIRED TO PAY TAX ON BOOK PROFITS UNDER SECTION 115JB HAS TO PREPARE ITS PROFIT & LOSS ACCOUNT IN ACCORDANCE WITH PROVISIONS OF PART-II AND PART-III OF SCHEDULE-VI TO THE COMPANIES ACT, 1956. IN THE CASE OF THE ASSESSEE, INTEREST WAS RECEIVED BEING CREDITED ON CASH BASIS, WHEREAS INTEREST PAID HAS BEEN CLAIMED ON ACCRUAL BASIS AND SO THE ACCOUNTS WERE NOT IN ACCORDANCE WITH PROVISIONS OF SCHEDULE-VI TO THE COMPANIES ACT. THEREFORE, INTEREST CLAIMED IN THE PROFIT & LOSS ACCOUNT HAS TO BE ADDED TO THE DECLARED BOOK PROFITS TO ARRIVE AT THE CORRECT FIGURE OF BOOK PROFITS AND ARGUMENT OF THE ASSESSEE WAS NOT CORRECT. THIS GROUND WAS ALSO DISMISSED. 6. AFTER CONSIDERING RIVAL CONTENTIONS, WE ARE NOT INCLINED TO INTERFERE WITH THE IMPUGNED ORDER. THE LD. COUNSEL FOR THE ASSESSEE ADMITTED THAT ASSESSEE IS A COMPANY WHO IS FOLLOWING CASH SYSTEM OF ACCOUNTING IN RESPECT OF RECEIPTS FROM VARIOUS PROJECTS. HE HAS ALSO ADMITTED THAT RELATED EXPENDITURES ARE, HOWEVER, CLAIMED DEDUCTION ON ACCRUAL BASIS. THE PROVISIONS OF SECTION 145(1) OF THE ACT ARE, THEREFORE, CLEARLY APPLICABLE IN THE CASE OF THE ASSESSEE BECAUSE INCOME UNDER THE HEAD PROFIT AND GAINS OF BUSINESS OR PROFESSION IS TO BE COMPUTED IN ACCORDANCE WITH EITHER CASH OR MERCANTILE SYSTEM OF ACCOUNTING REGULARLY EMPLOYED BY THE ASSESSEE. THE ASSESSEE IS FOLLOWING CASH SYSTEM OF ACCOUNTING REGULARLY IN RESPECT OF ALL TH E INTEREST AMOUNT, THEREFORE, THE RELATED EXPENDITURE CANNOT BE ALLOWED ON ACCRUAL BASIS. 6(I) FURTHER, AS REGARDS CALCULATION OF BOOK PROFIT UNDER SECTION 115JB, THE LD. CIT(APPEALS) HAS GIVEN SAME REASONING AND CONFIRMED THE ADDITION. DURING THE COURSE OF ARGUMENTS, LD. COUNSEL FOR THE ASSESSEE WAS NOT ABLE TO POINT OUT ANY INFIRMITY IN THE ORDER OF LD. CIT(APPEALS) IN DISMISSING THE APPEAL OF THE ASSESSEE. ITA NO. 1448 & 1449/CHD/2016- M/S PUNJAB AGRO INDUSTRIES CORPORATION LTD., CHAN DIGARH 4 7. SINCE ASSESSEES COUNSEL IS NOT ABLE TO MAKE OUT ANY CASE FOR THE ASSESSEE, THEREFORE, WE DO NOT PROPOSE TO INTERFERE WITH THE ORDERS OF AUTHORITIES BELOW. THE APPEAL OF THE ASSESSEE, THEREFORE, STANDS DISMISSED. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISSED. 4. THEREFORE, FOLLOWING THE AFORESAID DECISION OF T HE TRIBUNAL DATED 22.9.2016 (SUPRA), RENDERED IN THE OWN CASE OF THE ASSESSEE FOR EARLIER ASSESSMENT YEARS FROM 2008-09 TO 2010-11, WE DISMIS S BOTH THE APPEALS FILED BY THE ASSESSEE ON IDENTICAL ISSUE. 5. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE HEREBY DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 15.11.2018. SD/- SD/- ( . . , # $ / B.R.R. KUMAR) %& / ACCOUNTANT MEMBER ( / SANJAY GARG ) / JUDICIAL MEMBER DATED : 15.11.2018 .. '+ ,- .- / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. # / / CIT 4. # / ( )/ THE CIT(A) 5. -01 2 , % 2 , 34516 / DR, ITAT, CHANDIGARH 6. 15 7$ / GUARD FILE '+ # / BY ORDER, 8 ' / ASSISTANT REGISTRAR