JSL Industries Ltd., Anand V. The ACIT., Anand Circle, Anand

ITA 1457/AHD/2010

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 67530 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 2 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-08-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 03-07-2013
• Assessment Year: 2005-2006
• Appeal Filed On: 05-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SMITA SRIVASTVA
• Assessee Lawyers: J P SHAH
• Section: 263

Judgement Text

, , , , C, IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD, C BENCH . .. . . .. . , !' !' !' !', , , , #$ #$ #$ #$ %& %& %& %& , , , , &' &' &' &' ( & ' ( & ' ( & ' ( & ' BEFORE S/SHRI G.C. GUPTA, VICE-PRESIDENT AND TEJ RAM MEENA, ACCOUNTANT MEMBER) ITA NO.1457/AHD/2010 [ASSTT.YEAR : 2005-2006] JSL INDUSTRIES LTD. AT & POST : MAGAR TAL. & DIST. ANAND. /VS. ACIT, ANAND CIRCLE ANAND. ( (( (*+ *+ *+ *+ / APPELLANT) ( (( (,-*+ ,-*+ ,-*+ ,-*+ / RESPONDENT) .% / 0 &/ ASSESSEE BY : SHRI J.P. SHAH ( / 0 &/ REVENUE BY : SMT. SMITA SRIVASTVA, CIT-DR 2 / %3'/ DATE OF HEARING : 3 RD JULY, 2013. 456 / %3'/ DATE OF PRONOUNCEMENT : 02-08-2013 &7 / O R D E R PER G.C. GUPTA, VICE-PRESIDENT: THIS APPEAL BY THE ASSESSEE FOR THE ASSESSMENT YEAR 2005-2006 IS DIREC TED AGAINST THE ORDER OF THE CIT-II, BARODA DATED 11.3.2010. 2. THE ONLY ISSUE IN THIS APPEAL OF THE ASSESSEE IS REGARDING THE VALIDITY OF THE ORDER PASSED BY THE CIT UNDER SECTI ON 263 OF THE ACT. ITA NO.1457/AHD/2010 -2 3. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT THE CIT HAS PASSED ORDER UNDER SECTION 263 SETTING ASIDE THE AS SESSMENT TO REFRAME THE SAME ON TWO ISSUES. THE FIRST ISSUE IS REGARDING THE ADDITION OF RS.17.56 LAKHS BEING EXCISE DUTY COMPON ENTS ON THE FINISHED STOCK CARRIED BY THE ASSESSEE AT THE CLOSE OF THE YEAR. HE SUBMITTED THAT THE ASSESSEE WAS FOLLOWING EXCLUSIVE METHOD OF ACCOUNTING FOR VALUATION OF CLOSING STOCK. HE SUBM ITTED THAT IN THIS CASE THE ASSESSEE HAD DEPOSITED AND PAID A SUM OF R S.1.33 CRORES TOWARDS EXCISE DUTY AFTER THE CLOSE OF THE YEAR, BU T BEFORE THE DUE DATE OF FILING OF THE RETURN. THIS AMOUNT OF PAYMENT BE FORE THE DUE DATE OF FILING OF THE RETURN IS SUFFICIENT TO COVER THE AMO UNT OF RS.17.56 LAKHS OF EXCISE DUTY POINTED OUT BY THE CIT. REGARDING S ECOND ISSUE ON WHICH THE CIT HAS EXERCISED HIS JURISDICTION UNDER SECTION 263 OF THE ACT WAS THE ADDITION OF RS.9.72 LAKHS BEING TRADE M ARK FEE PAID FOR USE OF TRADE MARK/LOGO ON THE GOODS MANUFACTURED AN D SOLD BY THE ASSESSEE. HE SUBMITTED THAT THE ASSESSEE HAS ENTER ED INTO AN AGREEMENT WITH M/S.JYOTI PUMP & ELECTRICAL LTD. FOR THE USE OF TRADE MARK JYOTI FOR PUMPS AND MOTORS MANUFACTURED AND SOLD BY THE ASSESSEE. THE PAYMENT FOR THE TRADE MARK IS NOT FO R ACQUISITION OF ANY INTELLECTUAL PROPERTY OR PURCHASE OF DESIGN OR DRAW INGS OR ANY FORMULA, BUT IT WAS PAID DIRECTLY DEPENDING UPON NU MBER OF UNITS MANUFACTURED AND SOLD. HE SUBMITTED THAT THE EXPE NDITURE IS RECURRING NATURE DEPENDING UPON THE USE OF THE TRAD E MARK ON THE SALE OF THE PRODUCTS. HE SUBMITTED THAT THE AMOUNT OF R OYALTY IN THE IDENTICAL CIRCUMSTANCES FOR USE OF TRADE MARK WAS B EING PAID SINCE A.Y. 1998-1999 AND WAS ALLOWED THROUGHOUT THE ASSES SMENT YEARS THEREAFTER. HE SUBMITTED THAT THIS ISSUE IS COVERE D IN FAVOUR OF THE ITA NO.1457/AHD/2010 -3 ASSESSEE WITH THE DECISION OF COMMISSIONER OF INCOM E-TAX VS ASHOKA MILLS LTD., 218 ITR 526 (GUJ). 4. THE LEARNED CIT-DR HAS OPPOSED THE SUBMISSIONS O F THE LEARNED COUNSEL FOR THE ASSESSEE. SHE SUBMITTED TH AT EVERY ORDER, WHICH HAS RESULTED IN ASSESSMENT OF THE ASSESSEE AT A LESSER FIGURE OF INCOME AND CONSEQUENTLY THE LESSER PAYMENT OF TAXES , IS CLEARLY AN ERRONEOUS ORDER AND THEREFORE, THE CIT WAS JUSTIF IED INVOKING THE JURISDICTION UNDER SECTION 263 OF THE ACT. SHE SUB MITTED THAT THE CIT HAS NOT DIRECTED TO MAKE THE ADDITION ON TWO ISSUES NARRATED BY THE ASSESSEE, AND HAS MERELY SET ASIDE THE ORDER OF THE AO WITH DIRECTION TO REFRAME THE ASSESSMENT AFTER PROVIDING REASONABL E OPPORTUNITY OF HEARING TO THE ASSESSEE. SHE HAS RELIED ON THE ORDE R OF THE CIT. 5. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED THE ORDER OF THE CIT PASSED UNDER SECTION 263 OF THE ACT, AND AL SO COPIES OF VARIOUS DOCUMENTS FILED BY THE ASSESSEE IN ITS COMP ILATION. WE FIND THAT THE FIRST ISSUE OF ADDITION FOR EXCISE DUTY CO MPONENTS ON THE FINISHED STOCKS, THE ORDER OF THE AO COULD NOT BE S AID TO BE ERRONEOUS FOR THE REASON THAT THE ASSESSEE HAS DEPOSITED AND PAID A SUM OF RS.1.33 CRORES TOWARDS EXCISE DUTY AFTER THE CLOSE OF THE ACCOUNTING YEAR, BUT BEFORE THE DUE DATE OF FILING OF THE RETU RN. THE ASSESSEE, IS ACCORDINGLY, ENTITLED TO GET THE REBATE ON THE SAME AMOUNT, AS THE AMOUNT PAID BY THE ASSESSEE ON ACCOUNT OF EXCISE DU TY BEFORE THE DUE DATE OF FILING OF THE RETURN IS MUCH MORE THAN THE AMOUNT OF RS.17.56 LAKHS, BEING THE EXCISE DUTY COMPONENTS ON THE FINI SHED STOCK CARRIED BY THE ASSESSEE AT THE CLOSE OF THE YEAR. ACCORDIN GLY, SINCE THE ORDER OF THE AO IS NOT ERRONEOUS ON THIS ISSUE, THE ORDER OF THE CIT PASSED UNDER SECTION 263 ON THIS ISSUE IS CANCELLED. ITA NO.1457/AHD/2010 -4 6. REGARDING THE OTHER ISSUE OF ADDITION FOR TRADE MARK FEE PAID FOR USE OF TRADE MARK BY THE ASSESSEE, WE FIND THAT THE ASSESSEE WAS PAYING ROYALTY SINCE PAST MANY YEARS, AND WAS ALLOW ED BY THE DEPARTMENT YEAR AFTER YEAR, EVEN IN THE SCRUTINY AS SESSMENT. THE ASSESSEE HAS ENTERED INTO AN AGREEMENT WITH JYOTI P UMP & ELECTRICAL LTD. FOR USE OF TRADE MARK JYOTI FOR PUMPS AND MO TORS MANUFACTURED AND SOLD BY THE ASSESSEE. THE PAYMENT FOR TRADE MA RK WAS NOT FOR ACQUISITION OF ANY INTELLECTUAL PROPERTY OR PURCHAS E OF DESIGN OR DRAWINGS OR ANY FORMULA, BUT IS PAID DIRECTLY DEPEN DING UPON NUMBER OF UNITS MANUFACTURED AND SOLD BY THE ASSESSEE. TH E TRADE MARK EXPENDITURE IS OF RECURRING NATURE, AND IS DEPENDIN G UPON THE ACTUAL USE OF THE TRADE MARK ON SALE OF THE PRODUCT, AND I S CLEARLY REVENUE IN NATURE. IN THIS VIEW OF THE MATTER, WE ARE UNABLE TO SUSTAIN THE ORDER OF THE CIT PASSED UNDER SECTION 263 OF THE ACT, ON THIS ISSUE, AND ACCORDINGLY THE SAME IS CANCELLED, AND THE GROUNDS OF THE APPEAL OF THE ASSESSEE ARE ALLOWED. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE. SD/- SD/- ( %& %& %& %& / TEJ RAM MEENA) &' ( &' ( &' ( &' ( /ACCOUNTANT MEMBER ( . .. . . .. . /G.C. GUPTA) !' !' !' !' /VICE-PRESIDENT C OPY OF THE ORDER FORWARDED TO: 1) : APPELLANT 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR, ITAT. BY ORDER DR/AR, ITAT, AHMEDABAD